Why is it important for QOFs to have a proper carried interest agreement in place?
I'm not sure it takes on any special importance in a QOZ entity. Carried interest is not eligible for QOZ tax treatment. Any attempt to structure around that is asking for trouble. The QOZ program is good enough on its own; trying to extract more benefits than intended would be a nice excuse for the IRS to try and make an example out of you, especially if the Executive Branch changes over to Democratic control.
Carried interest is one of the primary economic benefits for sponsors in most private equity deals. Carried interest is normally described in the operating agreement itself.
To distinguish between qualifying and non-qualifying investments.
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