Deferral of Gain Invested in a QOF

Official source

If you have an eligible gain, you can invest that gain in a QOF and elect to defer part or all of the gain that you would otherwise include in income until you sell or exchange the investment in the QOF or December 31, 2026, whichever is earlier. If you make the election, you only include gain to the extent, if any, the amount of realized gain is more than the aggregate amount invested in a QOF during the 180-day period beginning on the date the gain was realized. You may also be able to permanently exclude the gain from the sale or exchange of any investment in a QOF if the investment is held for at least 10 years.

If you elect to defer tax on an eligible gain by investing in a QOF, you will need to complete a Form 8997 for each year you hold the investment and for the year you dispose of the investment. If you have held that investment for more than 5 years, see the Instructions for Form 8997 for additional information regarding the basis of that investment.

QOF.

A QOF is any investment vehicle that is organized as either a corporation or partnership for the purpose of investing in eligible property that is located in a qualified opportunity zone.

How to report.

Report the eligible gain as you normally would on Schedule D. See the Form 8949 instructions for how to report the deferral. See the Form 8997 instructions for additional reporting instructions.

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Deferral of Gain Invested in a QOF

Official source

If you have an eligible gain, you can invest that gain in a QOF and elect to defer part or all of the gain that you would otherwise include in income until you sell or exchange the investment in the QOF or December 31, 2026, whichever is earlier. If you make the election, you only include gain to the extent, if any, the amount of realized gain is more than the aggregate amount invested in a QOF during the 180-day period beginning on the date the gain was realized. You may also be able to permanently exclude the gain from the sale or exchange of any investment in a QOF if the investment is held for at least 10 years.

If you elect to defer tax on an eligible gain by investing in a QOF, you will need to complete a Form 8997 for each year you hold the investment and for the year you dispose of the investment. If you have held that investment for more than 5 years, see the Instructions for Form 8997 for additional information regarding the basis of that investment.

QOF.

A QOF is any investment vehicle that is organized as either a corporation or partnership for the purpose of investing in eligible property that is located in a qualified opportunity zone.

How to report.

Report the eligible gain as you normally would on Schedule D. See the Form 8949 instructions for how to report the deferral. See the Form 8997 instructions for additional reporting instructions.