If the sale is structured as a sale of the actual project by the applicable qualified opportunity fund (QOF) or qualified opportunity zone business (QOZB), then you may be able to both receive the windfall proceeds AND eventually benefit from the 10-year gain exemption under the OZ rules. The sale of the project for cash will generate gain to the QOF, which (if the QOF is a pass-through) will be allocated to you. But note that this gain is separate from the deferred gain that you invested in the QOF-- this deferred gain will not necessarily be triggered by the sale. The QOF can distribute the sales proceeds to you, to the extent of the gain recognized (because it will have given you an equal amount of outside basis in your QOF interest). It is critical that this sale occur three years (or at least two years) after your investment in the QOF, as you stated. The proceeds that remain in the QOF (which are equal to your original capital investment) should not be distributed but should be reinvested instead into another qualifying project. There is a rule that generally gives you 12 months to reinvest the sales proceeds into such a new project. This new project may then qualify for the 10-year gain exemption.
