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Why are LLCs and partnerships generally the preferred entities for QOF’s and QOZB’s?

And when would a C Corp structure be beneficial for a QOZB if the entity meets the requirements of IRC Section 1202?

  • Matthew Rappaport
    January 14, 2020

    LLCs are inherently flexible, and through filing an entity classification election, they may choose almost any tax status. A state law LLC can be eligible for Section 1202 by electing taxation as a C-Corp. Generally, by choosing a state law form as an LLC, you leave all of your options open regarding tax treatment. State law partnerships or corporations may afford other benefits, depending on individual facts and circumstances, but the allure of the LLC's flexibility is pretty overwhelming.

  • Brad Cohen
    January 14, 2020

    Per the statute, only corporations, partnerships and LLCs (taxed partnerships) qualify. In order to establish a flow through a single level of tax with flexibility, partnerships and LLCs are almost always the desired structure.


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