To my recollection, the regulations allow you to do this and still get full tax benefits.
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How does the QOZ system work under Indian tribal law?
Can I set up a QOF entity that’s chartered under Indian tribal law rather than state or federal law? Would that have any impact on the tax obligations or benefits the QOF would incur?
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Yes, an entity established under the law of a federally recognized Indian tribe is eligible to be a QOF. The entity will be subject to a federal income tax under the code and the QOF benefits, same as an for an entity organized under state law.
I personally have not set up an entity formed under tribal law. I do think an entity could be formed however to attract non-tribal dollars to a tribal-owned investment. The non-tribal investors could thereby benefit from a QOF investment.
I'd suggest you discuss it with a tax attorney.
There are many OZ census tracts which fall into tribal lands. To participate, the project or business must substantially operate in the OZ and meet other tests. The OZ statute defines Qualified Opportunity Zone Partnerships and Stock as entities which is a domestic corporation. This generally includes entities organized in one of the 50 states, the District of Columbia or a U.S. possession. There is no specific reference to tribal lands, but there are clearly tribal OZ census tracts. See IRC Section 1.400Z-2(d)(2)(B) &(C). General definitions of a "Domestic Corporation" includes: A business entity formed under a Federal or State statute or a statute of a federally recognized Indian tribe if the statute describes or refers to the entity as incorporated or as a corporation, body corporate or body politic. Therefore, it would appear that a charter under tribal law would qualify; however, I would consult with an attorney before moving forward.
I have experience with tribal law. Nevertheless, the fund to be a QOF must be an entity taxed as a corporation or partnership for federal income tax purposes.
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