If you rent the space and meet all other tests, your business is ok. The massage and suntan parlors will not qualify.
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What if my OZ business facility includes some of the activities listed on the “sin” list?
My motel, which is located in an OZ, has both massage and suntan operations run by independent contractors inside my facility. Does that mean I don’t qualify as a QOZB?
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There's nothing in the current guidance that actually says this, but I have been advising clients that sin businesses incidental to a non-sin business should be fine. I define "incidental" the same way as the 199A rules, which state that roughly 5-10% (depending on gross revenue) of top-line receipts or less shouldn't render the entire enterprise a sin business. Once you reach that threshold, you figure to have problems under the literal language of the statute and the anti-abuse rules.
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