If it moves to another OZ, this should be OK. If it moves out of the OZ, the parent QOF risks falling out of compliance.
Answers
If a business moves from one opportunity zone (OZ) to another OZ, then there generally shouldn't be any adverse OZ consequences. On the other hand, if the business moves out of an OZ but doesn't move into another OZ, then the moved tangible assets would fail the test that "substantially all" of their use occur in an OZ and the business may also fail the requirement (for qualified opportunity zone businesses (QOZB)) that it derive at least 50% of its income from an active trade or business in an OZ. This could cause the business to fail to qualify as a QOZB, and therefore cause any qualified opportunity fund (QOF) invested in it to incur penalties or to fail to qualify as a QOF. In this latter case, an eligible investor in the QOF wouldn't suffer any "recapture," but would have an "inclusion event," which would cause him to recognize the deferred gain that he had invested in the QOF and his interest in the QOF would no longer be a "qualifying investment" (for purposes of the 10-year exclusion).
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