Does it matter which state my business is located in?
The LLC must comply with the QOF requirements, state in the organization documents and operating agreements that it will operate as a QOF. It really does not matter where the Fund is located. What is important that the investments the fund makes qualify as OZBP. Special rules apply to entities created in possessions and territories.
In order to become a Qualified Opportunity Fund, an LLC needs to (i) be a regarded entity for tax purposes (i.e., have at least two members or elect to be treated as a corporation), (ii) have a statement in its charter or operating agreement (or preferably both) stating its purpose of investing in qualified opportunity zone property and describing the qualified opportunity zone business in which it is engaged, (iii) meet the applicable 90% asset test on the testing dates and (iv) elect on Form 8996 to be treated as a qualified opportunity fund. The state in which it does business does not matter.
Once you set up your LLC in any state have your accountant “check the box” the LLC is recognized by the IRS like a C corp. The CPA will know on the first 1065 to include the designation as a QOF.
You can locate in any of the U.S. states or territories. You file IRS Form 8996 with the entity's first tax return to self-certify.
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