As we enter into the third year of the federal Qualified Opportunity Zone (QOZ) program we have a slightly clearer picture of how taxpayers are using this flexible and impactful program.
Not surprisingly, the vast majority of early Qualified Opportunity Funds (QOFs) formed through Dec. 31, 2019 are focused on real estate projects as they begin directing their investments into Qualified Opportunity Zone Businesses (QOZBs). Preliminary reports in 2019 indicated that only about 5% of public QOFs were focused on operating businesses. However as the Treasury Department provided more guidance through new sets of proposed and final regulations, taxpayers and the OZ community have come to realize that using the OZ program for operating businesses can yield even greater long-term benefits for both OZ communities and investors compared to real estate projects alone.
OZ PROGRAM PARTICIPATION
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