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If you want to start a software company in a QOZ with, say, $1M of recent capital gains, more cash than you expect to use in the short term, what does the QOZB
by bagels 5y ago
If you want to start a software company in a QOZ with, say, $1M of recent capital gains, more cash than you expect to use in the short term, what does the QOZB do with the cash to avoid breaking the 90% rule?
- urthor 5y agoFrom the article: > No more than 5% of a QOZB’s assets can be “nonqualified financial property”. Nonqualified financial property includes most types of financial assets such as stocks and bonds but excludes cash, loans with a term of 18 months or less, and accounts receivable acquired in the ordinary course of business. Cash on hand is ignored. However, I speculate that if you put said cash in an interest gathering bank account, the IRS might have a firmer view. So you're likely capitalizing the business with cash on hand that cannot attract meaningful interest.