What is a Qualified opportunity zone business and how to fund it

A Qualified opportunity zone business can be easily created. An example would be a new regional OSE institute that acquires a piece of land and builds from the ground up or a new OSE regional Node that has structure in place but substantial new builds or manufacturing will be carried out on the property.

A Qualified Opportunity Zone Business (QOZB) is an active trade or business, structured as a corporation or partnership, that operates within a Qualified Opportunity Zone and meets specific criteria to qualify for the program's tax benefits.

To qualify, the business must have substantially all of its tangible property located within the Opportunity Zone, derive at least 50% of its gross income from the active conduct of a trade or business in the zone, use a substantial portion of its intangible property in that active business, and have less than 5% of its property basis attributable to nonqualified financial property.

A Qualified Opportunity Fund (QOF) can invest in a QOZB by acquiring an ownership interest in the business, such as stock or a partnership interest.

The QOF must ensure that the QOZB meets all the required criteria, including the 50% gross income test and the tangible property location requirement.

The investment is considered a qualifying asset for the QOF's 90% asset test, which requires that at least 90% of the fund's assets be invested in Qualified Opportunity Zone property, measured twice annually.

The QOF must also ensure that the property used by the QOZB was either originally used in the zone by the business or substantially improved by the QOZB.