Single member QOF help

Member since 2020 · 137 posts · 158 votes

I'm interested in investing in opportunity zones, but prefer to invest alone. Much of what I'm reading references partnerships and I've read that single member LLC can't be a QOF. Am I required to Involve someone else in my investment in order to qualify?

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Scott McIntosh

Attorney · Lexington, KY · Member since 2019 · 41 posts · 37 votes

@James York
A QOF must be a corporation or partnership — the IRS needs a regarded entity to be able to collect tax information about where QOF investment is flowing bad about compliance with the OZ investment requirements.

Most of my clients who want a self-directed QOF create a simple husband-wife partnership, though you could do the same with a trusted friend or family member, too. The partnership does not need to be 50/50– it could be 99.9% and .1%, and both partners are not required to have capital gains.

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
4y
Correct or you can elect S-corp. Be careful with S-Corp and Real estate.
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James York
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Member since 2020 · 137 posts · 158 votes
4y
Quote from @Ashish Acharya:

Correct or you can elect S-corp. Be careful with S-Corp and Real estate.

@Ashish Acharya am I confusing terms or do I actually need at least one other unrelated person involved? If so, do they need to be involved at a high level or do I just need “some” of their capital gains?

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Scott McIntosh
Attorney · Lexington, KY · Member since 2019 · 41 posts · 37 votes
4y
@James York
A QOF must be a corporation or partnership — the IRS needs a regarded entity to be able to collect tax information about where QOF investment is flowing bad about compliance with the OZ investment requirements.

Most of my clients who want a self-directed QOF create a simple husband-wife partnership, though you could do the same with a trusted friend or family member, too. The partnership does not need to be 50/50– it could be 99.9% and .1%, and both partners are not required to have capital gains.
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Tom Shallcross
Rental Property Investor · Chicago · Member since 2018 · 613 posts · 1k+ votes
4y
Yes, exactly what @Scott McIntosh said. I am a single person LLC for my typical investments and for the LLC for our QOF my wife and I have that exact 99.9% .1% partnership.
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Gregg Klovens
Member since 2019 · 1 post · 0 votes
4y
Yes.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
4y
Look to see if you can find a partner who will be okay with a .01% interest.
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