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What evidence should be used to prove that an OZ investment of intangible property meets the requirement?

How can funds prove that a substantial portion of the intangible property investment is used in the active conduct of a QOZB?


Answers
  • Matthew Rappaport
    October 22, 2020

    Facts and circumstances. There's no set method, but you'll need to present some documents showing the IP you own in a QOZB is being put to work in the business itself. I have two things to add on this front. If you're thinking of trying to game the system by putting unrelated IP into the QOZB so you can get tax-free treatment on it while technically meeting the statutory and regulatory requirements, don't do it. If the IRS catches wind of it, they'll apply the anti-abuse rules.

  • Brad Cohen
    October 26, 2020

    There is a lot of law on what is an active trade or business.

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