# Prop. Treas. Reg. § 1.1400Z2(d)-2: Qualified opportunity zone business property.

Proposed regulation, not in force. REG-115420-18, 91 FR 57968, published 2026-09-11 <https://www.federalregister.gov/documents/2026/09/11/2026-18574/information-reporting-regarding-qualified-opportunity-zones-and-updated-qualified-opportunity-fund>. Interprets 26 U.S.C. § 1400Z-2.

Par. 5. Section 1.1400Z2(d)-2 is amended by: 1. Revising paragraph (d)(1), the heading of paragraph (d)(3), revising paragraph (d)(3)(i), and the heading of paragraph (d)(3)(ii); 2. Adding paragraph (d)(3)(iii); 3. Revising the first sentence of paragraph (d)(4)(i); and 4. Adding paragraph (e)(3). The additions and revisions read as follows:

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(d) * * *

(1) In general. In the case of tangible property that is owned or leased by either a QOF or qualified opportunity zone business, during substantially all of the QOF's or qualified opportunity zone business's holding period for the tangible property, substantially all of the use of the tangible property must be in a qualified opportunity zone.

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(3) Substantially all of a QOF's or qualified opportunity zone business's holding period for owned or leased tangible property —(i) In general. For purposes of determining whether the holding period requirement in paragraph (d)(1) of this section is satisfied, the term substantially all means at least 90 percent. The holding period is applied on a semiannual basis, based on the entire time the QOF or qualified opportunity zone business has owned or leased such property. Thus, on each semiannual testing date of the QOF or the qualified opportunity zone business, the tangible property satisfies the 90-percent qualified opportunity zone business property holding period requirement of section 1400Z-2(d)(2)(D)(i)(II) only if, during at least 90 percent of the period during which the QOF or qualified opportunity zone  business has owned or leased the property, the property has satisfied the 70-percent use test in paragraph (d)(4) of this section.

(ii) Semiannual qualified opportunity zone business property test by a QOF. * * *

(iii) Semiannual qualified opportunity zone business property test by a qualified opportunity zone business. For purposes of determining satisfaction of the 90-percent qualified opportunity zone business property holding period test described in paragraph (d)(3)(i) of this section in the case of a qualified opportunity zone business, the determination of whether property satisfies the 70-percent use test is made on a semiannual basis on the last day of the first 6-month period and the last day of the qualified opportunity zone business's taxable year and pursuant to paragraph (d)(4) of this section.

(4) * * *

(i) * * * Tangible property used in a trade or business of a QOF or qualified opportunity zone business satisfies the substantially all requirement of paragraph (d)(1) of this section if and only if the tangible property is qualified tangible property. * * *

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(e) * * *

(3) Applicability date. The rules of paragraphs (d)(1), (d)(3)(i) through (iii), and (d)(4)(i) of this section apply to taxable years ending on or after [date of publication of final regulations in the Federal Register ].