De Minimis Exception is a term used in various contexts within financial and legal industries, including the Qualified Opportunity Fund (QOF) industry. In general, the phrase “De Minimis” is a Latin term that means “about minimal things”. In the legal and financial world, a De Minimis Exception usually refers to a situation where, because the value or effect of an action is so small, the normal rules do not apply. This is often used to disregard or excuse negligible differences or errors.

In the context of QOFs, this could apply to a situation where a small or negligible portion of a fund’s assets does not meet the necessary requirements to be considered a qualified investment under the rules of the QOF program. However, because the amount is so small, it may not disqualify the entire fund from the tax benefits associated with being a QOF.