Treasury is still mulling over whether the gain from an early (pre-10-year) disposition can be rolled into another investment without triggering income tax. They seem to be attempting to resolve that in taxpayers' favor, but they are unsure whether they have the authority under the code/committee reports. The new regulations do provide relief from for purposes of not counting the proceeds from an early disposition as non-QOZ property (e.g., for the 70%/90% semi-annual tests). So as along as the QOF reinvests the funds within 12 months and they invest in financial instruments with maturities of 18 months or less, they will be counted as QOZ property.
