The Tax Cuts and Jobs Act of 2017 provided for the deferral of capital gains if invested in certain economically distressed census tracts designated as Qualified Opportunity Zones (QOZ). A Qualified Opportunity Fund (QOF) is a corporation or partnership created for the purpose of investing in QOZs. To encourage investment, the TCJA allows a taxpayer to defer a taxable capital gain by electing to invest in QOFs and QOZs.
Form 8996 is used by a corporation or partnership to certify that it is organized for the purpose of investing in QOZ property. This form must be filed annually with the firm's tax return to ensure that the QOF meets the 90% investment standard as required per section 1400Z-2 of the TCJA Section 13823. If the entity fails to meet the 90% investment standard Form 8996 is used to calculate the penalty.
Partnership
To indicate that the partnership is a QOF, from the Main Menu of the partnership return (Form 1065) select:
- Schedule B
- Additional Other Information
- Qualified Opportunity Fund (8996) - Answer Yes to the question, then complete the form.
Corporation
To indicate that the corporation is a QOF, from the Main Menu of the corporation return (Form 1120) select:
- Schedule K
- Other Schedule K Questions
- Qualified Opportunity Fund (8996) - Answer Yes to the question, then complete the form.
S Corporation
To indicate that the S corporation is a QOF, from the Main Menu of the S corporation return (Form 1120-S) select:
- Schedule B
- Qualified Opportunity Fund (8996) - Answer Yes to the question, then complete the form.
Note: This article provides information about Form 8996 in the TaxSlayer Pro program. It is not intended as Tax Advice.
Additional Information: