Zvoľ jazyk

Formulár 8996 Inštrukcie

Pokyny pre formulár 8996, Qalified Opportunity Fund

Rev. December 2023

Súvisiace formuláre

Podrobnosti
Formát súboru PDF
Veľkosť 192.5 KB
Stiahnuť ▼
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  
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  
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  
gains. See Definitions, later.  
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  
businesses. See Definitions, later. Also see IRS.gov/Ozfaqs  
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  
assets in QOZ property. See 90% investment standard next.  
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  
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  
corporation must be a QOZ business, defined later in  
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  
!
CAUTION  
purpose of investing in QOZ property that relates to a  
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  
organized. See Who Must File regarding when such a  
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  
must be a QOZ business when the QOF acquires the interest  
(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  
!
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,  
2020-26 I.R.B. 984, available at IRS.gov/irb/2020-26_IRB;  
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  
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  
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  
QOZ in your trade or business.  
You use the portion of the real property that is outside the  
QOZ in your trade or business.  
The portion of the real property that is located within the  
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  
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.  
!
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.  
2
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  
business property. As stated earlier, in Definitions, Property  
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  
Corporation. A QOF organized in a U.S. territory is eligible to  
attach Form 8996 to its Form 1120-F.  
Form 1120-REIT, U.S. Income Tax Return for Real Estate  
Investment Trusts.  
Form 1120-RIC, U.S. Income Tax Return for Regulated  
Investment Companies.  
Form 1120-S, U.S. Income Tax Return for an S  
Corporation.  
Form 1065, U.S. Return of Partnership Income.  
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,  
!
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  
3
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  
applicable tax return under Who Must File, earlier.  
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  
Do not check this box. Skip this line.  
Part II  
Complete Part II annually and attach Form 8996 to your  
applicable tax return listed under Who Must File, earlier. Part  
II determines whether you meet the 90% investment standard  
for a QOF. See Definitions, earlier.  
Part I  
Complete Part I annually and attach it to your applicable tax  
return listed under Who Must File, earlier. Part I is used to  
certify that the corporation or partnership was organized to  
operate as a QOF. See Definitions, earlier.  
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  
!
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,  
continue to Part II and Part III to determine if the QOF met the  
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  
4
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  
Enter the value of QOZ property (see Definitions, earlier) held  
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  
discussion under Total assets, earlier, in Definitions,  
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  
Enter the value of the Total assets held by the QOF on the  
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,  
!
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  
penalty may apply. See Part III of the instructions for more  
details.  
Part III  
Complete Part III annually and attach Form 8996 to your  
applicable tax return listed under Who Must File, earlier. Part  
III determines whether you are subject to a penalty. See  
Qualified opportunity fund in Definitions, earlier.  
Line 13  
Add the numbers on lines 9 and 12.  
Line 8  
Enter the value of Total assets held by the QOF on the last  
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  
penalty may apply. See Part III of the instructions for more  
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  
Enter the value of QOZ property (see Definitions, earlier) held  
by the QOF on the last day of the tax year. This is the amount  
from Part VI, line 3. See Total assets, earlier, in Definitions,  
Accounting period. Columns (a) through (l) in Part IV  
assume that you were a QOF for the full tax year (January to  
5
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  
!
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  
Example 6. The facts are the same as in Example 3  
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.  
!
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  
the QOZ indicated in column (a). See Value determination, in  
Part II, earlier, for information on what amounts to enter on  
these lines.  
Lines 1 and 3  
See Value determination, in Part II, earlier, for information on  
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  
Revenue Bulletin (IRB). Go to IRS.gov/IRB for the IRBs. You  
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  
applicable tax return listed under Who Must File, earlier. Use  
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  
applicable tax return listed under Who Must File, earlier. Part  
V is for QOZ business property that you directly owned or  
leased. See QOZ business property in Definitions, earlier.  
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.  
See the IRS.gov/Ozfaqs page on IRS.gov for more  
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).  
See Value determination, in Part II, earlier, for more  
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  
Investment value in Definitions, earlier. Apportion that value  
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”  
box. See Value determination in Part II, earlier.  
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  
value of that interest on that date. See Investment value in  
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)