What is the 50-percent-of-gross-income test

The 50-percent-of-gross-income test requires that each taxable year, a Qualified Opportunity Zone (QOZ) business must earn at least 50 percent of its gross income from business activities within a QOZ. The regulations provide three safe harbors that a business may use to meet this test. These safe harbors consider any of the following:

1. Whether at least half of the aggregate hours of services received by the business were performed in a QOZ;
2. Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or
3. Whether necessary tangible property and necessary business functions were located in a QOZ.

Sources:
§ 501. Exemption from tax on corporations, certain trusts, etc.
§ 170. Charitable, etc., contributions and gifts
Publication 557 (1/2024)
Publication 526 (2023)
Notice 2007-50
§ 1.170A-8. Limitations on charitable deductions by individuals.