Formulár 8996 Inštrukcie
Pokyny pre formulár 8996, Qalified Opportunity Fund
Rev. December 2023
Súvisiace formuláre
- Formulár 8996 - Kvalifikovaný podporný fond
Department of the Treasury
Internal Revenue Service
Instructions for Form 8996
Qualified Opportunity Fund
(Rev. December 2023)
Section references are to the Internal Revenue Code unless
otherwise noted.
Cash not immediately invested. If an investor
contributes cash to your QOF, but you are unable to
immediately invest the cash into a QOZ property, you can still
meet the 90% investment standard. You may exclude the
cash from the calculation of the 90% investment standard if
the following requirements are met:
General Instructions
Future Developments
You received the cash in exchange for stock or partnership
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For the latest information about developments related to
Form 8996 and its instructions, such as legislation enacted
after this form and instructions were published, go to IRS.gov/
interest in the QOF;
The contribution or exchange occurred not more than 6
•
months before the test from which it is excluded; and
Between the date of the fifth business day after the
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contribution or exchange and the date of the semiannual test,
the amount was held continuously in cash, cash equivalents,
or debt instruments with a term of 18 months or less.
Purpose of Form
The Tax Cuts and Jobs Act (TCJA), section 13823, added
section 1400Z-1 to provide for the designation of certain
census tracts as qualified opportunity zones (QOZs) and
added section 1400Z-2 to provide certain benefits for
investments in these QOZs through investment in qualified
opportunity funds (QOFs). Taxpayers that invest in QOZ
property through a QOF can defer the recognition of certain
QOF reinvestment in QOZ property. If a QOF receives
proceeds from the return of capital or the sale or disposition
of QOZ property and reinvests such proceeds in QOZ
property within 12 months of the distribution, sale, or
disposition, then the proceeds are treated as QOZ property
for purposes of the 90% investment standard, but only to the
extent that until reinvested the proceeds are continuously
held in cash, cash equivalents, or debt instruments with a
term of 18 months or less.
U.S. territory. A U.S. territory is any jurisdiction other than
the 50 states and the District of Columbia where there is a
designated QOZ, which includes the following U.S. territories:
American Samoa, Guam, the Commonwealth of the Northern
Mariana Islands, the Commonwealth of Puerto Rico, and the
U.S. Virgin Islands.
A corporation or partnership uses Form 8996 to certify that
it is organized to invest in QOZ property. In addition, a
corporation or partnership files Form 8996 annually to report
that the QOF meets the 90% investment standard of section
1400Z-2 or to figure the penalty if it fails to meet the
investment standard. Form 8996 is not filed by QOZ
for more information and guidance.
Definitions
Total assets. Total assets includes cash, investments,
furniture, fixtures, equipment, receivables, intangibles, and
any items of value owned or leased by the investment
vehicle. In determining satisfaction of the 90% investment
standard, an investment vehicle may choose for some items
to be excluded from total assets. These optionally excludable
items are inventory property and certain property that the
corporation or partnership received solely in exchange for
stock in, or a partnership interest in, the investment vehicle.
Qualified opportunity zone (QOZ). For a complete list of
QOZs, see Notice 2018-48 and Notice 2019-42. You can find
Notice 2019-42 can be found at IRS.gov/IRB/
Qualified opportunity fund (QOF). A QOF is an
investment vehicle organized as a corporation or a
partnership for the purpose of investing in QOZ property
(other than another QOF). To be eligible to be a QOF, such
an investment vehicle must be organized under the laws of
one of the 50 states, a federally recognized Indian tribe (see
Pub. 4267 for further information), the District of Columbia, or
a U.S. territory. A QOF must hold at least 90% of its total
90% investment standard. The 90% investment standard
is determined by the average of the percentage of QOZ
property held in the QOF as measured on:
To determine if you meet the requirements for exclusion of
property received for equity in the investment, see Cash not
immediately invested, earlier.
An item excluded from total assets is not included in Part
II, lines 8 and 11 (“Total assets” at various times), or in Part II,
lines 7 and 10 (“Total QOZ property” at those times).
QOZ property. QOZ property means QOZ stock, a QOZ
partnership interest, and QOZ business property.
QOZ stock is any stock of a domestic corporation that a
QOF acquires after 2017 from the corporation, either directly
or through an underwriter, solely in exchange for cash. The
Definitions, when the stock is purchased (or, in the case of a
new corporation, the corporation must be organized for the
purpose of being a QOZ business). The corporation must
qualify as a QOZ business for at least 90% of the time the
QOF holds the stock.
1. The last day of the first 6-month period of the tax year
of the QOF, and
2. The last day of the tax year of the QOF.
If a corporation or partnership is organized in a U.S.
territory, it may be a QOF only if it is organized for the
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CAUTION
trade or business operated in the U.S. territory in which the
corporation or partnership is organized.
Oct 30, 2023
Cat. No. 71709K
A corporation organized in a U.S. territory is a domestic
corporation for this purpose only if the corporation conducts a
QOZ business in the U.S. territory in which the corporation is
corporation must file Form 1120-F.
QOZ partnership interest is any capital or profits interest
in a domestic partnership that a QOF acquires from the
partnership after 2017 in exchange for cash. The partnership
(or, in the case of a new partnership, the partnership must be
organized for the purpose of being a QOZ business). The
partnership must qualify as a QOZ business for at least 90%
of the time the QOF holds the interest.
A partnership organized in a U.S. territory is a domestic
partnership for this purpose only if the partnership conducts a
QOZ business in the U.S. territory in which the partnership is
organized.
QOZ business property is tangible property that a QOF
or QOZ business acquires by purchase or lease after 2017, if
the QOF or QOZ business uses the tangible property in a
trade or business. Additional requirements (described below)
apply depending on whether the property is acquired by
purchase or lease. See Regulations section 1.1400Z2(d)-2
for additional special rules.
Property undergoing substantial improvement.
Purchased tangible property in a QOZ that is undergoing the
substantial improvement process can be treated as QOZ
business property for purposes of the 90% investment
standard. You may treat tangible property undergoing
improvement that is not yet placed in service as QOZ
business property during the 30-month period as long as you
reasonably expect the property will be QOZ business
property after the improvements are completed.
Notice 2021-10 for COVID-19 relief has expired.
However, if the QOZ property was undergoing
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CAUTION
substantial improvement during the period of April 1,
2020, through March 31, 2021, those months are not
included in calculating the 30-month substantial improvement
period. For more details regarding the tolling of the
substantial improvement period, see Notice 2020-39,
and Notice 2021-10, 2021-07 I.R.B. 888, available at
Multiple buildings in a QOZ. If you purchase multiple
buildings in a QOZ or adjoining QOZs, you can treat the
buildings as a single property for purposes of the substantial
improvement requirements if either of the following applies.
All the eligible buildings are located entirely within one
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Real property that straddles a QOZ and a non-QOZ. If
you purchase real property that straddles a QOZ and a
non-QOZ, the real property can still be treated as QOZ
business property if it meets all the following requirements.
parcel of land described in one deed.
All the buildings are located entirely within the geographic
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borders of adjoining parcels of land described in separate
deeds; each building is operated as one or more trades or
businesses that are operated exclusively by you; the
buildings share facilities or significant centralized business
elements and are operated in coordination with each other.
Leased tangible property. Leased tangible property
must satisfy both of the following tests.
You use the portion of the real property that is within the
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QOZ in your trade or business.
You use the portion of the real property that is outside the
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QOZ in your trade or business.
The portion of the real property that is located within the
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QOZ is substantial compared to the portion of the real
property that is outside the QOZ. To determine if it’s
substantial, either the square footage in the QOZ must be
greater than the square footage outside the QOZ, or the
unadjusted cost of the real property located in the QOZ must
be greater than the unadjusted cost basis of the real property
located outside the QOZ.
1. At the time that the lease was entered into, the lease
terms must be market rate (they reflect common, arms-length
market pricing in the locale that includes the QOZ).
2. During substantially all of the QOF’s holding period for
the property, substantially all of the use of the property was in
a QOZ. To meet this requirement, at least 70% of the use of
the property must be in a QOZ during at least 90% of the time
the QOF leased the property.
The portion of the real property inside the QOZ must be
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adjoining the portion of the real property outside the QOZ.
Real property will be considered adjoining if they posses
common boundaries and would be adjoining but for the
intrusion of a road, street, or similar boundary.
Tangible property leased by a QOZ business is QOZ
business property if it complies with rules similar to those
above.
Purchased tangible property. Purchased tangible
property must satisfy both of the following tests.
There are additional requirements that must be
satisfied for tangible property leased from a related
1. The use of the property in a QOZ originates with the
QOF, or the QOF substantially improves the property.
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CAUTION
person to be QOZ business property. The lessee
must not at any time make any prepayment in connection
with the lease that exceeds 12 months. In the case of leased
tangible personal property that was used in the QOZ before
the beginning of the lease, the lessee must purchase QOZ
business property with a value at least equal to the value of
the leased tangible personal property before the earlier of the
last day of the lease or 30 months after receipt of the tangible
personal property under the lease.
To satisfy the substantial improvement test in (1) above,
the property must be in a QOZ and, during any 30-month
period beginning after the date of the acquisition of such
property, additions to basis with respect to the property in the
hands of the QOF are more than an amount equal to the
adjusted basis of the property at the beginning of the
30-month period in the hands of the QOF.
2. During substantially all of the QOF’s holding period for
the property, substantially all of the use of the property was in
a QOZ. To meet this requirement, at least 70% of the use of
the property must be in a QOZ during at least 90% of the time
the QOF held the property.
Leases with governments. Leases between the QOF or
QOZ business and state governments, local governments, or
Indian tribal governments are not subject to the market rate
requirement.
Investment value. Investment value is the value of QOZ
stock or a QOZ partnership interest owned by the QOF, as
determined according to the rules in Regulations section
1.1400Z2(d)-1(b).
Tangible property owned by a QOZ business is QOZ
business property if it complies with rules similar to those
above.
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Instructions for Form 8996 (Dec. 2023)
QOZ business. A trade or business is a QOZ business if
at least 70% of its owned or leased tangible property is QOZ
business property, defined in Definitions, earlier, and if the
trade or business satisfies all of the following tests.
1. The business generates at least 50% of its total gross
income from the active conduct of a trade or business in a
QOZ.
Example 1. QOF A invested cash in B, a QOZ business.
B intends to use the cash to develop a large mixed-use real
estate development that will consist of commercial and
residential real property. B has a master written plan to
develop the property over a 55-month period. The plan
provides the commercial portion of the property will be
completed over a 30-month period and the residential portion
of the property will be completed over a subsequent
25-month period.
2. The business uses a substantial part of its intangible
property in the active conduct of any such business.
In Example 1, B can take advantage of the safe harbor for
3. Less than 5% of the average of the total unadjusted
basis of the property of the business is from nonqualified
financial property.
4. The business is not a private or commercial golf
course, country club, massage parlor, hot tub facility, suntan
facility, racetrack or other facility used for gambling, or any
store the principal business of which is the sale of alcoholic
beverages for consumption off premises.
working capital even though the completion of the
development is expected to take longer than 31 months.
QOZ businesses must have less than 5% of their assets in
non-qualified financial property (debt, stock, partnership
interests, or other similar property). However, non-qualified
financial property does not include a reasonable amount of
cash, cash equivalents, or debt instruments with a term of 18
months or less. QOZ businesses may utilize a safe harbor for
their working capital so long as there is a written plan
designating the consumption of the working capital and the
working capital is spent according to that plan. Tangible
property may benefit from multiple working capital safe
harbors, for a total of 62 months, in the form of multiple
overlapping or sequential periods, provided each application
satisfies the working capital safe harbor requirements.
Working capital assets during working capital safe
harbor period. During the working capital safe harbor
period, working capital assets are not treated as QOZ
business property for purposes of the 70% tangible property
standard applicable to QOZ businesses. Working capital
assets that have not been expended are not treated as QOZ
undergoing substantial improvement is treated as QOZ
business property during the substantial improvement period
so long as there is a reasonable expectation that the property
will become QOZ business property at the end of the
improvement process.
Non-qualified financial property. Non-qualified financial
property means debt, stock, partnership interests, options,
futures contracts, forward contracts, warrants, notional
principal contracts, annuities, and other similar property. The
definition doesn’t include debt instruments described in
section 1221(a)(4) or reasonable amounts of working capital
held as cash, cash equivalents, or debt instruments with a
term of 18 months or less.
Working capital assets of a QOZ business. A QOZ
business can exclude reasonable amounts of working capital
from the value of property that is treated as nonqualified
financial property. A reasonable amount of working capital
satisfies all of the following tests.
1. The working capital is designated in writing for the
development of a trade or business in a QOZ, including,
when appropriate, the acquisition, construction, and/or
substantial improvement of tangible property in a QOZ.
2. There is a reasonable written schedule for the
consumption of the working capital to achieve the goal set
out in (1) above.
3. The working capital is to be consumed within 31
months of the business’s receipt of the assets. Any additional
applications of the working capital safe harbor must meet the
requirements of Regulations section 1.1400Z2(d)-1(d)(3)(v)
and must be for a total period of no more than 62 months.
4. The working capital is actually used in a manner that is
substantially consistent with the requirements in items (1)
through (3).
5. If the consumption of the working capital assets is
delayed by waiting for government action on a completed
application, the delay doesn’t cause a failure of this safe
harbor.
6. If the QOZ business is located in a QOZ that is in a
federally declared disaster area, the QOZ business may
receive up to an additional 24 months to consume its working
capital assets, provided it meets the requirements of
Regulations section 1.1400Z2(d)-1(d)(3)(v).
Who Must File
A corporation or partnership that is organized and operated
as a QOF must file Form 8996 annually with one of the
following tax returns, as applicable.
Form 1120, U.S. Corporation Income Tax Return.
Form 1120-F, U.S. Income Tax Return of a Foreign
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attach Form 8996 to its Form 1120-F.
Form 1120-REIT, U.S. Income Tax Return for Real Estate
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Investment Trusts.
Form 1120-RIC, U.S. Income Tax Return for Regulated
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Investment Companies.
Form 1120-S, U.S. Income Tax Return for an S
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Corporation.
Form 1065, U.S. Return of Partnership Income.
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QOZ businesses do not file Form 8996. You must file Form
8996 by the due date of the tax return (including extensions).
If a corporation or partnership completes this form,
it’s self-certifying that it’s a QOF. By self-certifying,
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CAUTION
Working capital consumed over a period longer than
31 months. Generally, a QOF that invests cash into a QOZ
business can use the safe harbor for working capital, even if
the completion of the development is expected to take longer
than 31 months if the QOZ business has less than 5% of its
assets in non-qualified financial property (debt, stock,
partnership interests, or other similar property).
the QOF is attesting that the property used to satisfy
the 90% investment standard is QOZ property. This includes
the requirement that any stock or partnership interests used
to satisfy the 90% investment standard are in an entity that
satisfies section 1400Z-2(d)(3) (that is, that the entity is a
QOZ business). The information provided to the QOF
regarding whether the entity satisfies section 1400Z-2(d)(3)
must be sufficient for the QOF to rely on that information. If
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Instructions for Form 8996 (Dec. 2023)
the entity doesn’t satisfy section 1400Z-2(d)(3), the QOF may
be subject to penalties.
purpose of operating as a QOF. The corporation may only
choose a month after July 1, 2023, as its first month of
certification. Any investments made prior to July 1, 2023, will
not be qualifying investments.
QOFs That Are Part of a Consolidated Group
A consolidated group should include with the group's return a
separate Form 8996 for each group member that must certify
its QOF status.
Note. A QOF may receive an investment relating to an
investor’s deferral election in the first month that the QOF is
certified but not in any earlier month.
Line 5
Specific Instructions
If you checked “Yes,” you must attach a statement to your
return that includes each investor’s name(s), Taxpayer
Identification Number(s), the date of the disposition and the
interest that they disposed of. Also see the Instructions for
Form 1099-B for reporting information.
Name and Employer Identification
Number
Enter the same information as shown on the QOF’s
Line 6
Note. Qualified Opportunity Zone Businesses. Qualified
opportunity zone businesses do not file Form 8996. Form
8996 is only filed by entities to self-certify as a QOF or to
certify that they have met the 90% investment standard. See
90% investment standard, earlier.
Do not check this box. Skip this line.
Part II
Complete Part II annually and attach Form 8996 to your
II determines whether you meet the 90% investment standard
Part I
Complete Part I annually and attach it to your applicable tax
certify that the corporation or partnership was organized to
Value determination. Regulations section
1.1400Z2(d)-1(b) provides general and special rules for
determining the value of your owned or leased assets for
purposes of determining whether you meet the 90%
investment standard for a QOF. The general rules allow the
value of your assets to be determined using one of the
following two valuation methods consistently during the tax
year. Special rules may allow you to exclude recently
contributed property from both the numerator and the
denominator of the 90% investment standard test on a
particular testing date, or to similarly exclude inventory
property on each testing date, during the tax year.
Note. If you exclude recently contributed property from
both the numerator and the denominator of the 90%
investment standard on a particular testing date, don’t
include such property in the penalty calculation for the
months such property was excluded if a penalty calculation is
applicable.
Line 2
If you checked “Yes,” you are self-certifying that you are a
QOF and you must complete the entire form. If you checked
“No,” don’t complete this form and don’t file it with your return.
If you answer “Yes” on line 2, then by the end of your
first QOF year, the organizing documents should
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CAUTION
include a description of the trade(s) or business(es)
that the QOF expects to engage in, either directly or
indirectly, through a first-tier operating entity (QOZ business).
Line 3
Check “Yes” if you are certifying that this is the first period in
which you are a QOF and fill out line 4.
Applicable financial statement valuation method. If
the applicable financial statement method is used, then the
value of each item of property owned or leased by the QOF is
the value of that asset as reported on the QOF’s applicable
financial statement. This method can be used to value a
leased asset only if the applicable financial statement is
prepared in accordance with U.S. GAAP, and the statement
assigns a value to the leased asset.
Alternative valuation method. If the alternative valuation
method is used, then the value of each item of property
purchased or constructed by the QOF for fair market value is
the QOF’s unadjusted basis of the asset under section 1012
or 1013. The value of each item of property owned by the
QOF that isn’t purchased or constructed for fair market value
is the item of property’s fair market value, determined on the
last day of the first 6-month period of the taxable year and on
the last day of the taxable year.
If you check “No,” you are indicating that you have certified
in a prior year that you are a QOF.
Regardless of whether you check “Yes” or “No” on line 3,
investment standard for this tax year.
Line 4
Provide the first month in which you chose to be a QOF. This
month cannot be any earlier than the month in which the
entity forms.
Example 2. A new corporation is formed on January 5,
2023, for the purpose of operating a QOF, but it doesn’t
receive any investment under a deferral election under
section 1400Z-2(a) until May 1, 2023. The corporation may
choose any month from January through May to use as a
certification date. If the corporation chooses any month from
January through May 2023 to use as a certification date, a
May 1 investment can support a deferral election under
section 1400Z-2(a). This example also applies to pre-existing
corporations or partnerships that become a QOF.
The value of each item of property leased by the QOF
under the alternative valuation method is the present value,
determined as of the date of entering into the lease, of the
payments under the lease. The required discount rate for
calculating the present value is provided in Regulations
section 1.1400Z2(d)-1(b)(4)(iii)(B). Once calculated, the
Example 3. The facts are the same as in Example 2,
except that the corporation is formed on July 1, 2023, for the
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Instructions for Form 8996 (Dec. 2023)
present value is used as the value for the property for all
testing dates during the term of the lease for purposes of the
90% investment standard.
regarding certain property that may optionally be excluded
from lines 10 and 11.
Note. If you answered “Yes” on line 3, the tax year may be
less than 12 months.
Line 7
by the QOF on the last day of the first 6-month period of the
tax year. This is the amount from Part VI, line 2. See the
regarding certain property that may optionally be excluded
from lines 7 and 8.
Special rule for first year of QOF. If you answered “Yes” on
line 3, the 6-month period starts with the month you indicated
on line 4. Lines 7 through 9 may be blank depending on the
tax year and the month indicated on line 4. See Example 4.
Line 11
last day of the tax year.
Note. If you checked “Yes” on line 3, the tax year may be
less than 12 months.
Line 12
Divide the number on line 10 by the number on line 11. Enter
the result on line 12 as a decimal to two places. Round the
number up or down to two places if necessary. For third place
numbers of 5 or more, round up to the next higher second
place number. For third place numbers of less than 5, round
down to the lower second place number. See Example 5.
Enter the decimal using the following format: one digit, a
decimal point, and two digits (for example, enter 92% as 0.92
and 100% as 1.00).
If you check “Yes” on line 3, but don’t list the first
month in which you choose to be a QOF on line 4,
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CAUTION
the 6-month period of the QOF starts on the first day
of your tax year, even if you received no investment relating to
an investor’s deferral election until later in the year.
Example 3. Partners Virginia, Joe, Laura, and Ishmael
formed a new partnership in January 2023 for the purposes
of operating as a QOF. It chooses April 2023 as its first month
for certification. The first 6-month period for the QOF asset
test ends on September 30. January to March are not
considered for purposes of the 6-month period.
Example 4. The facts are the same as in Example 3,
except the partnership chooses July 2023 as the certification
date. The first 6-month period for the QOF assets ends on
December 31. The 6 months from January through June are
not considered, and lines 7 through 9 will be blank.
If the figure entered on line 12 is less than 90% (0.90), a
details.
Part III
Complete Part III annually and attach Form 8996 to your
III determines whether you are subject to a penalty. See
Line 13
Add the numbers on lines 9 and 12.
Line 8
Line 14
day of the first 6-month period of the tax year.
If lines 7 through 9 are blank, then enter the result from
line 13, otherwise divide line 13 by 2.0. Enter the result on
line 14 as a decimal to two places.
Line 9
Divide the number on line 7 by the number on line 8. Enter
the result on line 9 as a decimal to two places. Round the
number up or down to two places if necessary. For third place
numbers of 5 or more, round up to the next higher second
place number. For third place numbers of less than 5, round
down to the lower second place number. Enter the decimal
using the following format: one digit, a decimal point, and two
digits (for example, enter 92% as 0.92 and 100% as 1.00).
Note. If you answered “Yes” on line 3, the tax year may be
less than 12 months.
Line 15
If you checked “Yes,” the QOF met the 90% investment
standard. Attach the form to your tax return to report you met
the investment standard for the tax year.
Example 5. The facts are the same as in Example 3. The
value of the QOZ property held by the partnership on
September 30 and reflected on Part VI, line 2, is $89,500.
The value of the total assets held by the partnership on
September 30 is $100,000. The partnership enters “89,500”
from Part VI, line 2, on line 7 and “100,000” on line 8. The
result when the partnership divides 89,500 by 100,000 is
0.895. The partnership rounds up to 0.90. On line 9, the
partnership enters “0.90.”
If you checked “No,” the QOF failed to meet the 90%
investment standard. Go to Part IV to figure the penalty for
each month the QOF didn’t satisfy that investment standard.
The IRS will send you a notice regarding the penalty reported
on line 15. This notice will include instructions on the penalty,
the reasonable cause relief process, and payment
instructions.
Regardless of whether you checked “Yes” or “No” on
line 15, complete Parts V, VI, and VII.
If the figure entered on line 9 is less than 90% (0.90), a
details. Enter -0- if lines 7 and 8 are blank.
Part IV
Complete Part IV if you checked “No” on Part III, line 15. Use
Part IV to figure the penalty for each month that the QOF
didn’t hold at least 90% of its assets in QOZ property. See
Definitions, earlier.
Line 10
by the QOF on the last day of the tax year. This is the amount
Accounting period. Columns (a) through (l) in Part IV
assume that you were a QOF for the full tax year (January to
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Instructions for Form 8996 (Dec. 2023)
December for calendar year or 12 consecutive months for
for more information on accounting periods.
Mobile tangible property used in multiple QOZs. See
Examples 9 and 10 in the Part VI instructions, later.
Special rule for first year as a QOF. If you answered “Yes”
on Part I, line 3, the 6-month period starts with the month you
indicated on Part I, line 4. Columns (b) and (c) may be blank
depending on the tax year and the month indicated on Part I,
line 4. See Examples 3 and 4 under Part II, line 7, earlier.
If you answered “Yes” on Part I, line 3, and you
weren’t a QOF for the full tax year, you won’t use all
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CAUTION
of the columns in Part IV. Instead, use the month
listed on Part I, line 4, as your Month 1 (see column (a) of
Part IV of the form), and continue using the other columns as
needed to complete the tax year.
If you check “Yes” on Part I, line 3, but don’t list the
first month in which you choose to be a QOF on Part
under Part II instructions, earlier. In that situation, the
partnership entered April on Part I, line 4. Assume the answer
to Part III, line 15, is “No.” When filling out Part IV, the
partnership enters months only in columns (a) through (i),
because April would be Month 1 and December would be
Month 9.
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CAUTION
I, line 4, the 6-month period of the QOF starts on the
first day of your tax year, even if the QOF received no
investment relating to an investor’s deferral election until later
in the year.
Columns (d) and (e)
For QOZ business property held directly on the last day of the
tax year, enter the total value of all owned property in column
(d) and the total value of all leased property in column (e) for
Part II, earlier, for information on what amounts to enter on
these lines.
Lines 1 and 3
what figure to enter on these lines.
Line 5
The figure to enter here is the interest rate for each calendar
quarter, which the IRS will determine during the first month in
the preceding quarter. These rates are published quarterly in
an IRS news release and in a revenue ruling in the Internal
can subscribe to IRS Newswire to receive news releases of
the quarterly interest rates, and IRS GuideWire to receive
emails with a link to the revenue rulings in which the quarterly
interest rates are published by going to IRS.gov/uac/E-News-
Line 1
If you directly owned or leased QOZ business property
located in more than the QOZs listed in column (a) for Part V,
then attach a separate statement. The separate statement
should be prepared in the same manner and format as Part V.
Enter the totals from the separate statement on line 1,
columns (b) through (e). Submit the separate statement with
Form 8996 and your tax return.
Part VI
Line 7
Complete Part VI annually and attach Form 8996 to your
Part VI to report investments in QOZ stock or partnership
interests with values apportioned to QOZs and non-QOZs
based on where the tangible property of the QOZ business is
Definitions, earlier.
Divide line 6 by 12 even if you answered “Yes” in Part I, line 3,
and you weren’t a QOF for the full tax year. This is because
the underpayment rate used on line 5 is annualized.
Part V
Complete Part V annually and attach Form 8996 to your
V is for QOZ business property that you directly owned or
Working capital property. For property that is treated as
QOZ business property pursuant to the working capital safe
harbor rules, allocate the value to the QOZ that’s specified in
the written designation for the development of a trade or
business required under the regulations.
information and guidance.
TIP
Column (a)
Column (a)
QOZs. For each QOZ business in which you own a stock or
a partnership interest on either the last day of the first
6-month period of the tax year or the last day of the tax year,
enter the 11-digit QOZ number for each QOZ in which the
tangible property of the QOZ business is located. If you
invested in more than one QOZ business in a particular QOZ,
you should repeat a QOZ as many times as you need to
capture each stock or partnership interest the QOF holds in
that QOZ.
Use a separate line to enter the 11-digit QOZ number in
which the QOF directly owns or leases QOZ business
property. These QOZ numbers are listed in Notice 2018-48
and Notice 2019-42. You can find Notice 2018-48 at
Columns (b) and (c)
For QOZ business property held directly on the last day of the
first 6-month period of the tax year, enter the total value of all
owned property in column (b) and the total value of all leased
property in column (c), for the QOZ indicated in column (a).
Non-QOZs. Indicate non-QOZs by 99999999999. If the
QOZ business holds any tangible property that isn’t QOZ
business property, including property located in a non-QOZ,
add an additional line for that EIN with the identifier
“99999999999” instead of an 11-digit QOZ number. A
separate 99999999999 line should be used for each QOZ
information on what amount to enter on these lines.
6
Instructions for Form 8996 (Dec. 2023)
business that holds tangible property that isn’t QOZ business
property.
3. The employees are managed directly, actively, and
substantially by employees located in the QOZ office.
4. The property isn’t operated outside a QOZ for a period
Example 7. QOZ business X operates in QOZs A, B, and
C. QOZ business Y operates in QOZs A and B. Report QOZs
A, B, and C for QOZ business X on separate lines, followed
by QOZs A and B for QOZ business Y on separate lines.
longer than 14 consecutive days.
See Example 9 for an illustration of this rule.
Example 9. QOF A owns a $1 million interest in QOZ
business B. QOZ business B owns $4 million of tangible
property, $1.2 million of which is stationary and located in
QOZ X, $1 million of which is stationary and located in QOZ
Y, and $1 million of which is stationary and located in multiple
non-QOZs. The remaining $800,000 is mobile tangible
property. QOZ business B has its main headquarters in QOZ
X, and that location is treated as a QOZ office. In addition,
the mobile tangible property is returned from non-QOZs to
QOZs X and Y on a daily basis. Because not more than 20%
of QOZ business B’s tangible property is mobile tangible
property, the entire $800,000 is counted towards the QOZ
business B’s QOZ business property. The location of the
mobile tangible property is assigned to the QOZ office
located in QOZ X, for a total of $2 million in QOZ business
property in QOZ X (50% of the total tangible property). QOF
A reports an investment value of $500,000 in QOZ X,
$250,000 in QOZ Y, and $250,000 in non-QOZs
Column (b)
Enter the EIN of the QOZ business. If the QOZ business you
invested in operates in more than one QOZ, complete
column (b) for each line necessary.
Column (c)
For each QOZ stock or partnership interest held on the last
day of the first 6-month period of the tax year, enter in column
(c) the investment value of that interest on that date. See
according to the share of tangible property of the QOZ
business located in each QOZ. See Examples 8, 9, and 10,
later.
Property in multiple zones. Example 8 shows how to
account for your interest in a QOZ business when that QOZ
business holds tangible property in QOZs and non-QOZs. All
tangible property that is not QOZ business property is
assigned to the non-qualifying line (99999999999) for that
QOZ business, even if the property is located in a QOZ.
(99999999999).
Example 10. QOF A owns a $2 million interest in QOZ
business B. QOZ business B owns $4 million of tangible
property, $1.2 million of which is stationary and located in
QOZ X, $1 million of which is stationary and located in QOZ
Y, and $1 million of which is stationary and located in
non-QOZs. The remaining $800,000 is mobile tangible
property. Unlike in Example 9, a safe harbor doesn’t apply.
The mobile tangible property is used during 50% of all days
in QOZ X, 25% of all days in QOZ Y, and 25% of all days in
non-QOZs. Because at least 70% of the use of the mobile
tangible property is located within a QOZ, the entire
$800,000 is counted towards QOZ business B’s QOZ
business property. The full value of the mobile tangible
property is assigned to QOZ X, as that is the QOZ where the
property is primarily used. The total amount of QOZ business
property located in QOZ X, stationary plus mobile, is $2
million, which is 50% of QOZ business B’s tangible property.
Therefore, QOF A reports an investment value of $1,000,000
in QOZ X, $500,000 in QOZ Y, and $500,000 in non-QOZs
(99999999999).
Example 8. On the last day of the first 6-month period of
the tax year, QOF A owns a $1 million interest in QOZ
business B. QOZ business B holds $4 million of tangible
property and operates in QOZs and non-QOZs. $2 million of
QOZ business B’s tangible property is located in QOZ X, $1
million is located in QOZ Y, and $1 million is located in
multiple non-QOZs. All of the tangible property of QOZ
business B located in QOZ X and QOZ Y is QOZ business
property. Of the tangible property of QOZ business B, 50% is
located in QOZ X, 25% is located in QOZ Y, and 25% is
located in multiple non-QOZs. QOF A should report the
location of its $1 million interest in QOZ business B according
to the share of tangible property of QOZ business B that is
located in each QOZ, by treating each QOZ separately and
treating all non-QOZs as one aggregated non-QOZ.
Therefore, QOF A would enter an investment value of
$500,000 in QOZ X, $250,000 in QOZ Y, and $250,000 in the
aggregated non-QOZ (99999999999).
Mobile tangible property used in QOZs and non-QOZs.
If mobile tangible property is used in QOZs and non-QOZs
and otherwise qualifies as QOZ business property, assign the
full value of that property to the QOZ where it’s primarily
used, that is, to the QOZ that receives the highest percentage
of use. If tangible property is used in one or more QOZs,
determine whether the property has been substantially used
in a QOZ (that’s at least 70% of its use) by aggregating the
number of days the tangible property in each QOZ is utilized.
See Example 10, later.
Under a safe harbor, a limited amount of mobile tangible
property may be excluded from the general time-of-use
calculation. Specifically, not more than 20% of the tangible
property may be treated as satisfying the 70% use test if the
tangible property is utilized in activities both inside and
outside of a QOZ and meets the following requirements.
Special rule for first-year QOF. If you answered “Yes” on
Part I, line 3, the 6-month period starts from the month you
indicated on Part I, line 4. Columns (c) through (e) may be
blank depending on the tax year and the month you indicated
on Part I, line 4. See Examples 3 and 4 under Part II, line 7,
earlier.
If you check “Yes” on Part I, line 3, but don’t list the
first month in which you choose to be a QOF on Part
!
CAUTION
I, line 4, the 6-month period of the QOF starts on the
first day of your tax year, even if the QOF received no
investment relating to an investor’s deferral election until later
in the year.
Columns (d) and (e)
For each QOZ stock or partnership interest held on the last
day of the first 6-month period of the tax year, enter the gross
value of tangible property that is owned and leased by the
QOZ business, for each QOZ. (Don’t adjust for ownership
share or leveraged assets. All QOFs investing in the same
1. The trade or business has an office or fixed location
within a QOZ (QOZ office).
2. The tangible property is operated by employees of the
business who regularly use that QOZ office.
7
Instructions for Form 8996 (Dec. 2023)
QOZ business should report identical values for these
columns.)
Line 3
To figure the value of QOZ property held by the QOF on the
last day of the tax year, add Part V, columns (d) and (e), and
Part VI, column (f). Enter the total here and on Part II, line 10.
Example 11. The facts are the same as in Example 8
under Part VI, column (c) instructions, earlier. In addition,
QOZ business B has the following shares of owned and
leased tangible property. QOZ business B owns 70% of its $2
million in tangible property located in QOZ X and leases the
other 30%, owns 60% of its $1 million in tangible property
located in QOZ Y and leases the other 40%, and owns 50%
of its $1 million in tangible property located in non-QOZs, and
leases the other 50%. QOF A should enter the following
values for QOZ X; $1,400,000 in column (d) and $600,000 in
column (e). For QOZ Y, enter $600,000 in column (d) and
$400,000 in column (e), and for non-QOZs, $500,000 in
column (d), and $500,000 in column (e).
Line 4
Depending on which type of accounting method you are
using to determine the value of the property listed on this
form, check either the “Applicable financial statement
valuation method” box or the “Alternative valuation method”
Part VII
Complete Part VII only if you need additional lines to report
your investments in QOZ business(es) that have locations in
more than the QOZs listed in Part VI. For information on how
to complete columns (a) through (h), refer to the instructions
under Part VI for columns (a) through (h), earlier.
Column (f)
For each QOZ stock or QOZ partnership interest held on the
last day of the tax year, enter in column (f) the investment
Definitions, earlier. Apportion that value according to the
share of tangible property of the QOZ business located in
each QOZ.
Line 1
Total columns (c) and (f) respectively. If you complete more
than one Part VII, add up all of the amounts from Part VII,
columns (c) and (f), respectively, and enter on line 1.
See Examples 8, 9, and 10 under the instructions for
Line 2
column (c).
Add columns (c) and (f). Enter the total here and on Part VI,
line 1, columns (c) and (f), respectively.
Columns (g) and (h)
For each QOZ business held on the last day of the tax year,
enter the gross value of tangible property that is owned and
leased by the QOZ business, for each QOZ. (Don’t adjust for
ownership share or leveraged assets. All QOFs investing in
the same QOZ business should report identical values for
these columns.)
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying with
these laws and to allow us to figure and collect the right
amount of tax.
See Example 11 under the instructions for Columns (d)
and (e), earlier.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
Code section 6103.
Line 1
Enter the amounts reported on Part VII, line 2, columns (c)
and (f), on Part VI, line 1, columns (c) and (f), respectively. If
you complete more than one Part VII, add up all of the
amounts from Part VII, lines 2, column (c) and enter on Part
VI, line 1, column (c). Similarly, if you complete more than
one Part VII, add up all the amounts from Part VII, line 2,
column (f), and enter on Part VI, line 1, column (f).
The average time and expense required to complete and
file this form will vary depending on individual circumstances.
For the estimated averages, see the instructions for your
income tax return.
Line 2
If you have suggestions for making this form simpler, we
would be happy to hear from you. See the instructions for
your income tax return.
To figure the value of QOZ property held by the QOF on the
last day of the first 6-month period of the tax year, add Part V,
columns (b) and (c), and Part VI, column (c). Enter the total
here and on Part II, line 7.
8
Instructions for Form 8996 (Dec. 2023)