Yes, there are restrictions on the types of businesses that can receive Qualified Opportunity Fund (QOF) investments. QOFs are designed to promote economic growth in designated low-income communities, known as Qualified Opportunity Zones (QOZs). While many businesses can benefit from QOF investments, there are certain “sin businesses” that are explicitly excluded. These include:
- Golf courses
- Country clubs
- Massage parlors
- Hot tub facilities
- Suntan facilities
- Racetracks or other facilities used for gambling
- Stores where the principal business is the sale of alcoholic beverages for consumption off-premises
In addition to these exclusions, a business must meet specific criteria to qualify for QOF investments. The business must:
- Be located within a Qualified Opportunity Zone
- Generate at least 50% of its gross income from active business conduct within the QOZ
- Have a substantial portion of its intangible property used in the active conduct of its business
- Maintain a minimum of 70% of its tangible property as Qualified Opportunity Zone Business Property
Please note that the regulations governing QOF investments are subject to change. Always consult with a qualified professional or the IRS for the most up-to-date information and guidance.
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