86 OPPORTUNITY ZONE MAGAZINE | ISSUE 2 • VOLUME 2
WHAT HAPPENS WHEN YOUR QOF FAILS TO FIND A
SUITABLE INVESTMENT ?
By Joseph B . Darby III , Jill Homan and Dan Kowalski
Steps investors should think about when it comes to the process of decertification of a Qualified Opportunity Fund .
The IRS issued “ corrections ” to the final Opportunity Zone regulations ( the “ Final Regulations ”) on August 5 , 2021 , addressing two specific areas :
1 ) the decertification of QOFs ( the “ First Correction ”), and
2 ) the proper application of the Working Capital Safe Harbor ( WCSH ) and , in particular , rules governing the 70 % tangible property test ( the “ Second Correction ”).
We offered our initial thoughts on these two corrections in the Opportunity Zone Magazine article “ The Quiet Corrections .”
However , both corrections continue to be extremely interesting – and crucially important in structuring a successful QOF / QOZB investment . This article offers our additional insights on the important – and almost entirely undefined – process of decertification .
“ THROWING IN THE TOWEL ” FOR A QUALIFIED OPPORTUNITY FUND
Many taxpayers who recognized capital gain in 2018 through 2020 dropped that gain into their own “ home baked ” private Qualified Opportunity Fund ( QOF ) with the expectation
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