Generally speaking, OZones can be very beneficial. You have missed the 7 year benefit (which I believe was a 15% forgiveness of tax). You still have the 5 year benefit (which I believe is 5-10% forgiveness of tax). The big benefit is the 100% forgiveness of capital gains on your new 10 year investment. This can be big!!

IMO, the big problem for individuals are 1) you have to pay the tax in 2028 (I believe), but you won't have the corresponding cash from your investment, so be aware and stash some cash 2) unless you do a direct deal, you are going into one of relatively small amount of OZ funds.. The sponsor will fee the hell out of you. 3) none of these funds have proven results because none have been around 10 years to sell assets. They will have internal valuations, but I like to see actual performance.

I have done a few of these direct and have co-invested with a big fund, so I'm very familiar with them although I'm a little fuzzy on the details (sorry for all the "I believe" qualifiers).

Don't let the OZ factor sway you too much. At the end of the day if it's a dog it's a dog. OZ is awesome when it applies to a good deal. Evaluate the opportunity on its merits first, then call the OZ aspect gravy. That's how pros do it.

Your spidey sense is probably right. I had a number of clients that had huge capital gains they wanted to shelter and they decided OZ first before looking into the process. A few created QOFs and didn't realize there is a testing requirement. Those testing and cash deployment dates were delayed due to covid and now they are having trouble finding ways to deploy that much cash in a short period of time. I suspect there will soon be a number of QOFs with unhappy partners because they weren't able to meet the requirements to continue the capital gain deferral.