What are the requirements? Does the partnership need to be located in an OZ?
It is quite common and quite simple for a partnership to be designated as a qualified opportunity fund (QOF). The partnership can be organized or formed in any state. One must file the IRS Form 8996 to certify that the partnership is a QOF. This form is also used to annually report whether the QOF met the investment standard during its tax year.
In order to become a Qualified Opportunity Fund, a partnership needs to (i) have a statement in its charter (if a limited partnership) or partnership agreement (or preferably both) stating its purpose of investing in qualified opportunity zone property and describing the qualified opportunity zone business in which it is engaged, (ii) meet the applicable 90% asset test on the testing dates and (iii) elect on Form 8996 to be treated as a qualified opportunity fund. The partnership does not need to be located in an opportunity zone.
Generally speaking, a partnership can elect (on Form 8996) to be treated as a Qualified Opportunity Fund (QOF) if it is organized for the purpose of investing in a Qualified Opportunity Zone (QOZ) property. They are subject to an investment standard, whereby 90% of the QOF's assets are to be QOZ property.
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