It can't be done without creating an inclusion event, but rather, the resulting capital gain would be deferred into the new QOF, and all relevant timers under the statute would restart.
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How can investor transfer funds from one QOZF to another?
Can an investor in a QOZF take his capital gains out of the existing QOZF and transfer them to another QOZF without creating an inclusion event?
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No, that would create an inclusion event unless it was a recission of the original investment into the first QOF and then the second QOF investment was made within the original 180-day window. Research recission doctrine if you think might help. That QOF would need to agree to allow that and an offering document (PPM) may preclude it. One QOF can invest into another QOF's QOZB however.
Technically, no. Pulling the fund out of a QOF results in an inclusion event for which gain is recognized. However, the gain from an inclusion event can be invested in the new QOF. Therefore, the tax from the inclusion event is deferred, just like the original investment. However, the holding period starts again for both the 5/7 years for gain elimination and 10 years for no gain on a future sale.
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