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gains in an OZ Fund. They also pro­vide guid­ance on the meth­ods to be used in cal­cu­lat­ing com­pli­ance with the 90 per­cent test, and they clar­ify that the re­quire­ment that ‘sub­stan­tially all’ of a Qual­i­fied Op­por­tu­nity Zone busi­ness’s tan­gi­ble prop­erty con­sist of Qual­i­fied Op­por­tu­nity Zone busi­ness prop­erty will be sat­is­fied if 70 per­cent of its tan­gi­ble prop­erty qual­i­fies.”

A crit­i­cal is­sue, which may be ad­dressed in forth­com­ing guid­ance, re­gards the sale of Op­por­tu­nity Zone fund in­ter­ests, ac­cord­ing to Blaivas. “A tech­ni­cal read­ing of the code pro­vi­sions ap­pears to re­quire that in or­der to ob­tain the ben­e­fit of a fair-mar­ket value step-up af­ter 10 years, the OZ fund in­ter­est must be sold — the OZ fund it­self could not sell its OZ busi­ness prop­erty or OZ eq­uity in­ter­ests,” he said. “As a re­sult, if a sin­gle owner wants to form an OZ fund, it would need to ei­ther form it as a cor­po­ra­tion or, if it were formed as a part­ner­ship, the owner would also need to form a cor­po­ra­tion to own an in­ter­est in the part­ner­ship in or­der for the OZ fund to be re­spected as a part­ner­ship for fed­eral in­come tax pur­poses.”


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