If a qualified opportunity fund (QOF) fails the 90% requirement, it is subject to a penalty for each month it fails to meet the requirement in an amount generally equal to the amount by which it misses satisfying the 90% requirement, multiplied by the underpayment rate for the month, unless either the QOF has reasonable cause for the failure, or the one-time Qualified Opportunity Zone Business (QOZB) cure is applicable.
There's a penalty calculated on Form 8996. As tax penalties go, it's not that severe, but the Qualified Opportunity Fund (QOF) will owe penalties until it comes back into compliance. It's also a major problem for syndicated funds to incur any penalties because they're responsible to their investors.
The Qualified Opportunity Fund (QOF) must compute penalties in form 8996.
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