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Department of the Treasury
Internal Revenue Service
Instructions for Form 8996

(Rev. December 2023)
Qualified Opportunity Fund

Section references are to the Internal Revenue Code unless Cash not immediately invested. If an investor
otherwise noted. 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
General Instructions cash from the calculation of the 90% investment standard if
the following requirements are met:
Future Developments
• You received the cash in exchange for stock or partnership
For the latest information about developments related to interest in the QOF;
Form 8996 and its instructions, such as legislation enacted • The contribution or exchange occurred not more than 6
after this form and instructions were published, go to IRS.gov/ months before the test from which it is excluded; and
Form8996. • Between the date of the fifth business day after the
contribution or exchange and the date of the semiannual test,
Purpose of Form the amount was held continuously in cash, cash equivalents,
The Tax Cuts and Jobs Act (TCJA), section 13823, added or debt instruments with a term of 18 months or less.
section 1400Z-1 to provide for the designation of certain
census tracts as qualified opportunity zones (QOZs) and QOF reinvestment in QOZ property. If a QOF receives
added section 1400Z-2 to provide certain benefits for proceeds from the return of capital or the sale or disposition
investments in these QOZs through investment in qualified of QOZ property and reinvests such proceeds in QOZ
opportunity funds (QOFs). Taxpayers that invest in QOZ property within 12 months of the distribution, sale, or
property through a QOF can defer the recognition of certain disposition, then the proceeds are treated as QOZ property
gains. See Definitions, later. for purposes of the 90% investment standard, but only to the
extent that until reinvested the proceeds are continuously
A corporation or partnership uses Form 8996 to certify that held in cash, cash equivalents, or debt instruments with a
it is organized to invest in QOZ property. In addition, a term of 18 months or less.
corporation or partnership files Form 8996 annually to report U.S. territory. A U.S. territory is any jurisdiction other than
that the QOF meets the 90% investment standard of section the 50 states and the District of Columbia where there is a
1400Z-2 or to figure the penalty if it fails to meet the designated QOZ, which includes the following U.S. territories:
investment standard. Form 8996 is not filed by QOZ American Samoa, Guam, the Commonwealth of the Northern
businesses. See Definitions, later. Also see IRS.gov/Ozfaqs Mariana Islands, the Commonwealth of Puerto Rico, and the
for more information and guidance. U.S. Virgin Islands.
Definitions Total assets. Total assets includes cash, investments,
furniture, fixtures, equipment, receivables, intangibles, and
Qualified opportunity zone (QOZ). For a complete list of
any items of value owned or leased by the investment
QOZs, see Notice 2018-48 and Notice 2019-42. You can find
vehicle. In determining satisfaction of the 90% investment
Notice 2018-48 at IRS.gov/IRB/2018-28_IRB#NOT-2018-48.
standard, an investment vehicle may choose for some items
Notice 2019-42 can be found at IRS.gov/IRB/
to be excluded from total assets. These optionally excludable
2019-29_IRB#NOT-2019-42.
items are inventory property and certain property that the
Qualified opportunity fund (QOF). A QOF is an corporation or partnership received solely in exchange for
investment vehicle organized as a corporation or a stock in, or a partnership interest in, the investment vehicle.
partnership for the purpose of investing in QOZ property To determine if you meet the requirements for exclusion of
(other than another QOF). To be eligible to be a QOF, such property received for equity in the investment, see Cash not
an investment vehicle must be organized under the laws of immediately invested, earlier.
one of the 50 states, a federally recognized Indian tribe (see
Pub. 4267 for further information), the District of Columbia, or An item excluded from total assets is not included in Part
a U.S. territory. A QOF must hold at least 90% of its total II, lines 8 and 11 (“Total assets” at various times), or in Part II,
assets in QOZ property. See 90% investment standard next. lines 7 and 10 (“Total QOZ property” at those times).
90% investment standard. The 90% investment standard QOZ property. QOZ property means QOZ stock, a QOZ
is determined by the average of the percentage of QOZ partnership interest, and QOZ business property.
property held in the QOF as measured on: QOZ stock is any stock of a domestic corporation that a
QOF acquires after 2017 from the corporation, either directly
1. The last day of the first 6-month period of the tax year or through an underwriter, solely in exchange for cash. The
of the QOF, and corporation must be a QOZ business, defined later in
2. The last day of the tax year of the QOF. Definitions, when the stock is purchased (or, in the case of a
If a corporation or partnership is organized in a U.S. new corporation, the corporation must be organized for the
purpose of being a QOZ business). The corporation must
! territory, it may be a QOF only if it is organized for the qualify as a QOZ business for at least 90% of the time the
CAUTION purpose of investing in QOZ property that relates to a
trade or business operated in the U.S. territory in which the QOF holds the stock.
corporation or partnership is organized.

Oct 30, 2023 Cat. No. 71709K

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A corporation organized in a U.S. territory is a domestic Property undergoing substantial improvement.
corporation for this purpose only if the corporation conducts a Purchased tangible property in a QOZ that is undergoing the
QOZ business in the U.S. territory in which the corporation is substantial improvement process can be treated as QOZ
organized. See Who Must File regarding when such a business property for purposes of the 90% investment
corporation must file Form 1120-F. standard. You may treat tangible property undergoing
QOZ partnership interest is any capital or profits interest improvement that is not yet placed in service as QOZ
in a domestic partnership that a QOF acquires from the business property during the 30-month period as long as you
partnership after 2017 in exchange for cash. The partnership reasonably expect the property will be QOZ business
must be a QOZ business when the QOF acquires the interest property after the improvements are completed.
(or, in the case of a new partnership, the partnership must be Notice 2021-10 for COVID-19 relief has expired.
organized for the purpose of being a QOZ business). The ! However, if the QOZ property was undergoing
partnership must qualify as a QOZ business for at least 90% CAUTION substantial improvement during the period of April 1,
of the time the QOF holds the interest. 2020, through March 31, 2021, those months are not
A partnership organized in a U.S. territory is a domestic included in calculating the 30-month substantial improvement
partnership for this purpose only if the partnership conducts a period. For more details regarding the tolling of the
QOZ business in the U.S. territory in which the partnership is substantial improvement period, see Notice 2020-39,
organized. 2020-26 I.R.B. 984, available at IRS.gov/irb/2020-26_IRB;
QOZ business property is tangible property that a QOF and Notice 2021-10, 2021-07 I.R.B. 888, available at
or QOZ business acquires by purchase or lease after 2017, if IRS.gov/irb/2021-07_IRB.
the QOF or QOZ business uses the tangible property in a
trade or business. Additional requirements (described below) Multiple buildings in a QOZ. If you purchase multiple
apply depending on whether the property is acquired by buildings in a QOZ or adjoining QOZs, you can treat the
purchase or lease. See Regulations section 1.1400Z2(d)-2 buildings as a single property for purposes of the substantial
for additional special rules. 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 parcel of land described in one deed.
you purchase real property that straddles a QOZ and a All the buildings are located entirely within the geographic
•
non-QOZ, the real property can still be treated as QOZ borders of adjoining parcels of land described in separate
business property if it meets all the following requirements. deeds; each building is operated as one or more trades or
• You use the portion of the real property that is within the businesses that are operated exclusively by you; the
QOZ in your trade or business. buildings share facilities or significant centralized business
• You use the portion of the real property that is outside the elements and are operated in coordination with each other.
QOZ in your trade or business.
• The portion of the real property that is located within the Leased tangible property. Leased tangible property
QOZ is substantial compared to the portion of the real must satisfy both of the following tests.
property that is outside the QOZ. To determine if it’s 1. At the time that the lease was entered into, the lease
substantial, either the square footage in the QOZ must be terms must be market rate (they reflect common, arms-length
greater than the square footage outside the QOZ, or the market pricing in the locale that includes the QOZ).
unadjusted cost of the real property located in the QOZ must 2. During substantially all of the QOF’s holding period for
be greater than the unadjusted cost basis of the real property the property, substantially all of the use of the property was in
located outside the QOZ. a QOZ. To meet this requirement, at least 70% of the use of
• The portion of the real property inside the QOZ must be the property must be in a QOZ during at least 90% of the time
adjoining the portion of the real property outside the QOZ. the QOF leased the property.
Real property will be considered adjoining if they posses
common boundaries and would be adjoining but for the Tangible property leased by a QOZ business is QOZ
intrusion of a road, street, or similar boundary. business property if it complies with rules similar to those
Purchased tangible property. Purchased tangible above.
property must satisfy both of the following tests. There are additional requirements that must be
1. The use of the property in a QOZ originates with the ! satisfied for tangible property leased from a related
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
To satisfy the substantial improvement test in (1) above,
with the lease that exceeds 12 months. In the case of leased
the property must be in a QOZ and, during any 30-month
tangible personal property that was used in the QOZ before
period beginning after the date of the acquisition of such
the beginning of the lease, the lessee must purchase QOZ
property, additions to basis with respect to the property in the
business property with a value at least equal to the value of
hands of the QOF are more than an amount equal to the
the leased tangible personal property before the earlier of the
adjusted basis of the property at the beginning of the
last day of the lease or 30 months after receipt of the tangible
30-month period in the hands of the QOF.
personal property under the lease.
2. During substantially all of the QOF’s holding period for
the property, substantially all of the use of the property was in Leases with governments. Leases between the QOF or
a QOZ. To meet this requirement, at least 70% of the use of QOZ business and state governments, local governments, or
the property must be in a QOZ during at least 90% of the time Indian tribal governments are not subject to the market rate
the QOF held the property. requirement.
Investment value. Investment value is the value of QOZ
Tangible property owned by a QOZ business is QOZ stock or a QOZ partnership interest owned by the QOF, as
business property if it complies with rules similar to those determined according to the rules in Regulations section
above. 1.1400Z2(d)-1(b).

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QOZ business. A trade or business is a QOZ business if Example 1. QOF A invested cash in B, a QOZ business.
at least 70% of its owned or leased tangible property is QOZ B intends to use the cash to develop a large mixed-use real
business property, defined in Definitions, earlier, and if the estate development that will consist of commercial and
trade or business satisfies all of the following tests. residential real property. B has a master written plan to
1. The business generates at least 50% of its total gross develop the property over a 55-month period. The plan
income from the active conduct of a trade or business in a provides the commercial portion of the property will be
QOZ. completed over a 30-month period and the residential portion
of the property will be completed over a subsequent
2. The business uses a substantial part of its intangible 25-month period.
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 working capital even though the completion of the
basis of the property of the business is from nonqualified development is expected to take longer than 31 months.
financial property. QOZ businesses must have less than 5% of their assets in
4. The business is not a private or commercial golf non-qualified financial property (debt, stock, partnership
course, country club, massage parlor, hot tub facility, suntan interests, or other similar property). However, non-qualified
facility, racetrack or other facility used for gambling, or any financial property does not include a reasonable amount of
store the principal business of which is the sale of alcoholic cash, cash equivalents, or debt instruments with a term of 18
beverages for consumption off premises. months or less. QOZ businesses may utilize a safe harbor for
their working capital so long as there is a written plan
Non-qualified financial property. Non-qualified financial designating the consumption of the working capital and the
property means debt, stock, partnership interests, options, working capital is spent according to that plan. Tangible
futures contracts, forward contracts, warrants, notional property may benefit from multiple working capital safe
principal contracts, annuities, and other similar property. The harbors, for a total of 62 months, in the form of multiple
definition doesn’t include debt instruments described in overlapping or sequential periods, provided each application
section 1221(a)(4) or reasonable amounts of working capital satisfies the working capital safe harbor requirements.
held as cash, cash equivalents, or debt instruments with a Working capital assets during working capital safe
term of 18 months or less. harbor period. During the working capital safe harbor
Working capital assets of a QOZ business. A QOZ period, working capital assets are not treated as QOZ
business can exclude reasonable amounts of working capital business property for purposes of the 70% tangible property
from the value of property that is treated as nonqualified standard applicable to QOZ businesses. Working capital
financial property. A reasonable amount of working capital assets that have not been expended are not treated as QOZ
satisfies all of the following tests. business property. As stated earlier, in Definitions, Property
1. The working capital is designated in writing for the undergoing substantial improvement is treated as QOZ
development of a trade or business in a QOZ, including, business property during the substantial improvement period
when appropriate, the acquisition, construction, and/or so long as there is a reasonable expectation that the property
substantial improvement of tangible property in a QOZ. will become QOZ business property at the end of the
improvement process.
2. There is a reasonable written schedule for the
consumption of the working capital to achieve the goal set Who Must File
out in (1) above. A corporation or partnership that is organized and operated
3. The working capital is to be consumed within 31 as a QOF must file Form 8996 annually with one of the
months of the business’s receipt of the assets. Any additional following tax returns, as applicable.
applications of the working capital safe harbor must meet the • Form 1120, U.S. Corporation Income Tax Return.
requirements of Regulations section 1.1400Z2(d)-1(d)(3)(v) • Form 1120-F, U.S. Income Tax Return of a Foreign
and must be for a total period of no more than 62 months. Corporation. A QOF organized in a U.S. territory is eligible to
4. The working capital is actually used in a manner that is attach Form 8996 to its Form 1120-F.
substantially consistent with the requirements in items (1) • Form 1120-REIT, U.S. Income Tax Return for Real Estate
through (3). Investment Trusts.
5. If the consumption of the working capital assets is • Form 1120-RIC, U.S. Income Tax Return for Regulated
delayed by waiting for government action on a completed Investment Companies.
application, the delay doesn’t cause a failure of this safe • Form 1120-S, U.S. Income Tax Return for an S
harbor. Corporation.
• Form 1065, U.S. Return of Partnership Income.
6. If the QOZ business is located in a QOZ that is in a
federally declared disaster area, the QOZ business may QOZ businesses do not file Form 8996. You must file Form
receive up to an additional 24 months to consume its working 8996 by the due date of the tax return (including extensions).
capital assets, provided it meets the requirements of
Regulations section 1.1400Z2(d)-1(d)(3)(v). If a corporation or partnership completes this form,
it’s self-certifying that it’s a QOF. By self-certifying,
Working capital consumed over a period longer than CAUTION! the QOF is attesting that the property used to satisfy
31 months. Generally, a QOF that invests cash into a QOZ the 90% investment standard is QOZ property. This includes
business can use the safe harbor for working capital, even if the requirement that any stock or partnership interests used
the completion of the development is expected to take longer to satisfy the 90% investment standard are in an entity that
than 31 months if the QOZ business has less than 5% of its satisfies section 1400Z-2(d)(3) (that is, that the entity is a
assets in non-qualified financial property (debt, stock, QOZ business). The information provided to the QOF
partnership interests, or other similar property). regarding whether the entity satisfies section 1400Z-2(d)(3)
must be sufficient for the QOF to rely on that information. If

Instructions for Form 8996 (Dec. 2023) 3

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the entity doesn’t satisfy section 1400Z-2(d)(3), the QOF may purpose of operating as a QOF. The corporation may only
be subject to penalties. choose a month after July 1, 2023, as its first month of
certification. Any investments made prior to July 1, 2023, will
QOFs That Are Part of a Consolidated Group not be qualifying investments.
A consolidated group should include with the group's return a Note. A QOF may receive an investment relating to an
separate Form 8996 for each group member that must certify investor’s deferral election in the first month that the QOF is
its QOF status. certified but not in any earlier month.

Line 5
Specific Instructions
If you checked “Yes,” you must attach a statement to your
Name and Employer Identification return that includes each investor’s name(s), Taxpayer
Identification Number(s), the date of the disposition and the
Number interest that they disposed of. Also see the Instructions for
Enter the same information as shown on the QOF’s Form 1099-B for reporting information.
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 Do not check this box. Skip this line.
8996 is only filed by entities to self-certify as a QOF or to
certify that they have met the 90% investment standard. See Part II
90% investment standard, earlier. Complete Part II annually and attach Form 8996 to your
applicable tax return listed under Who Must File, earlier. Part
Part I II determines whether you meet the 90% investment standard
Complete Part I annually and attach it to your applicable tax for a QOF. See Definitions, earlier.
return listed under Who Must File, earlier. Part I is used to Value determination. Regulations section
certify that the corporation or partnership was organized to 1.1400Z2(d)-1(b) provides general and special rules for
operate as a QOF. See Definitions, earlier. determining the value of your owned or leased assets for
purposes of determining whether you meet the 90%
Line 2 investment standard for a QOF. The general rules allow the
If you checked “Yes,” you are self-certifying that you are a value of your assets to be determined using one of the
QOF and you must complete the entire form. If you checked following two valuation methods consistently during the tax
“No,” don’t complete this form and don’t file it with your return. year. Special rules may allow you to exclude recently
If you answer “Yes” on line 2, then by the end of your contributed property from both the numerator and the
denominator of the 90% investment standard test on a
! first QOF year, the organizing documents should particular testing date, or to similarly exclude inventory
CAUTION include a description of the trade(s) or business(es)
that the QOF expects to engage in, either directly or property on each testing date, during the tax year.
indirectly, through a first-tier operating entity (QOZ business). 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
Line 3 include such property in the penalty calculation for the
Check “Yes” if you are certifying that this is the first period in months such property was excluded if a penalty calculation is
which you are a QOF and fill out line 4. applicable.
If you check “No,” you are indicating that you have certified Applicable financial statement valuation method. If
in a prior year that you are a QOF. the applicable financial statement method is used, then the
value of each item of property owned or leased by the QOF is
Regardless of whether you check “Yes” or “No” on line 3, the value of that asset as reported on the QOF’s applicable
continue to Part II and Part III to determine if the QOF met the financial statement. This method can be used to value a
investment standard for this tax year. leased asset only if the applicable financial statement is
prepared in accordance with U.S. GAAP, and the statement
Line 4 assigns a value to the leased asset.
Provide the first month in which you chose to be a QOF. This Alternative valuation method. If the alternative valuation
month cannot be any earlier than the month in which the method is used, then the value of each item of property
entity forms. purchased or constructed by the QOF for fair market value is
the QOF’s unadjusted basis of the asset under section 1012
Example 2. A new corporation is formed on January 5,
or 1013. The value of each item of property owned by the
2023, for the purpose of operating a QOF, but it doesn’t
QOF that isn’t purchased or constructed for fair market value
receive any investment under a deferral election under
is the item of property’s fair market value, determined on the
section 1400Z-2(a) until May 1, 2023. The corporation may
last day of the first 6-month period of the taxable year and on
choose any month from January through May to use as a
the last day of the taxable year.
certification date. If the corporation chooses any month from
January through May 2023 to use as a certification date, a The value of each item of property leased by the QOF
May 1 investment can support a deferral election under under the alternative valuation method is the present value,
section 1400Z-2(a). This example also applies to pre-existing determined as of the date of entering into the lease, of the
corporations or partnerships that become a QOF. payments under the lease. The required discount rate for
calculating the present value is provided in Regulations
Example 3. The facts are the same as in Example 2, section 1.1400Z2(d)-1(b)(4)(iii)(B). Once calculated, the
except that the corporation is formed on July 1, 2023, for the

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present value is used as the value for the property for all regarding certain property that may optionally be excluded
testing dates during the term of the lease for purposes of the from lines 10 and 11.
90% investment standard.
Note. If you answered “Yes” on line 3, the tax year may be
Line 7 less than 12 months.
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 Line 11
tax year. This is the amount from Part VI, line 2. See the Enter the value of the Total assets held by the QOF on the
discussion under Total assets, earlier, in Definitions, last day of the tax year.
regarding certain property that may optionally be excluded
from lines 7 and 8. Note. If you checked “Yes” on line 3, the tax year may be
less than 12 months.
Special rule for first year of QOF. If you answered “Yes” on
line 3, the 6-month period starts with the month you indicated Line 12
on line 4. Lines 7 through 9 may be blank depending on the Divide the number on line 10 by the number on line 11. Enter
tax year and the month indicated on line 4. See Example 4. the result on line 12 as a decimal to two places. Round the
If you check “Yes” on line 3, but don’t list the first number up or down to two places if necessary. For third place
numbers of 5 or more, round up to the next higher second
! 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 place number. For third place numbers of less than 5, round
of your tax year, even if you received no investment relating to down to the lower second place number. See Example 5.
an investor’s deferral election until later in the year. Enter the decimal using the following format: one digit, a
decimal point, and two digits (for example, enter 92% as 0.92
Example 3. Partners Virginia, Joe, Laura, and Ishmael and 100% as 1.00).
formed a new partnership in January 2023 for the purposes If the figure entered on line 12 is less than 90% (0.90), a
of operating as a QOF. It chooses April 2023 as its first month penalty may apply. See Part III of the instructions for more
for certification. The first 6-month period for the QOF asset details.
test ends on September 30. January to March are not
considered for purposes of the 6-month period. Part III
Example 4. The facts are the same as in Example 3, Complete Part III annually and attach Form 8996 to your
except the partnership chooses July 2023 as the certification applicable tax return listed under Who Must File, earlier. Part
date. The first 6-month period for the QOF assets ends on III determines whether you are subject to a penalty. See
December 31. The 6 months from January through June are Qualified opportunity fund in Definitions, earlier.
not considered, and lines 7 through 9 will be blank.
Line 13
Line 8 Add the numbers on lines 9 and 12.
Enter the value of Total assets held by the QOF on the last
day of the first 6-month period of the tax year. Line 14
If lines 7 through 9 are blank, then enter the result from
Line 9 line 13, otherwise divide line 13 by 2.0. Enter the result on
Divide the number on line 7 by the number on line 8. Enter line 14 as a decimal to two places.
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 Note. If you answered “Yes” on line 3, the tax year may be
numbers of 5 or more, round up to the next higher second less than 12 months.
place number. For third place numbers of less than 5, round
down to the lower second place number. Enter the decimal Line 15
using the following format: one digit, a decimal point, and two If you checked “Yes,” the QOF met the 90% investment
digits (for example, enter 92% as 0.92 and 100% as 1.00). standard. Attach the form to your tax return to report you met
Example 5. The facts are the same as in Example 3. The the investment standard for the tax year.
value of the QOZ property held by the partnership on If you checked “No,” the QOF failed to meet the 90%
September 30 and reflected on Part VI, line 2, is $89,500. investment standard. Go to Part IV to figure the penalty for
The value of the total assets held by the partnership on each month the QOF didn’t satisfy that investment standard.
September 30 is $100,000. The partnership enters “89,500” The IRS will send you a notice regarding the penalty reported
from Part VI, line 2, on line 7 and “100,000” on line 8. The on line 15. This notice will include instructions on the penalty,
result when the partnership divides 89,500 by 100,000 is the reasonable cause relief process, and payment
0.895. The partnership rounds up to 0.90. On line 9, the instructions.
partnership enters “0.90.” Regardless of whether you checked “Yes” or “No” on
If the figure entered on line 9 is less than 90% (0.90), a line 15, complete Parts V, VI, and VII.
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
Line 10 Part IV to figure the penalty for each month that the QOF
Enter the value of QOZ property (see Definitions, earlier) held didn’t hold at least 90% of its assets in QOZ property. See
by the QOF on the last day of the tax year. This is the amount Definitions, earlier.
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

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December for calendar year or 12 consecutive months for Mobile tangible property used in multiple QOZs. See
fiscal year). See Pub. 538, Accounting Periods and Methods, Mobile tangible property used in QOZs and non-QOZs, and
for more information on accounting periods. Examples 9 and 10 in the Part VI instructions, later.
If you answered “Yes” on Part I, line 3, and you Special rule for first year as a QOF. If you answered “Yes”
! weren’t a QOF for the full tax year, you won’t use all on Part I, line 3, the 6-month period starts with the month you
CAUTION of the columns in Part IV. Instead, use the month
indicated on Part I, line 4. Columns (b) and (c) may be blank
listed on Part I, line 4, as your Month 1 (see column (a) of depending on the tax year and the month indicated on Part I,
Part IV of the form), and continue using the other columns as line 4. See Examples 3 and under Part II, line 7, earlier.4
needed to complete the tax year.
If you check “Yes” on Part I, line 3, but don’t list the
Example 6. The facts are the same as in Example 3 ! first month in which you choose to be a QOF on Part
under Part II instructions, earlier. In that situation, the CAUTION I, line 4, the 6-month period of the QOF starts on the
partnership entered April on Part I, line 4. Assume the answer first day of your tax year, even if the QOF received no
to Part III, line 15, is “No.” When filling out Part IV, the investment relating to an investor’s deferral election until later
partnership enters months only in columns (a) through (i), in the year.
because April would be Month 1 and December would be
Month 9. Columns (d) and (e)
Lines 1 and 3 For QOZ business property held directly on the last day of the
tax year, enter the total value of all owned property in column
See Value determination, in Part II, earlier, for information on (d) and the total value of all leased property in column (e) for
what figure to enter on these lines. the QOZ indicated in column (a). See Value determination, in
Part II, earlier, for information on what amounts to enter on
Line 5 these lines.
The figure to enter here is the interest rate for each calendar
quarter, which the IRS will determine during the first month in Line 1
the preceding quarter. These rates are published quarterly in If you directly owned or leased QOZ business property
an IRS news release and in a revenue ruling in the Internal located in more than the QOZs listed in column (a) for Part V,
Revenue Bulletin (IRB). Go to IRS.gov/IRB for the IRBs. You then attach a separate statement. The separate statement
can subscribe to IRS Newswire to receive news releases of should be prepared in the same manner and format as Part V.
the quarterly interest rates, and IRS GuideWire to receive Enter the totals from the separate statement on line 1,
emails with a link to the revenue rulings in which the quarterly columns (b) through (e). Submit the separate statement with
interest rates are published by going to IRS.gov/uac/E-News- Form 8996 and your tax return.
Subscriptions-2.
Part VI
Line 7
Complete Part VI annually and attach Form 8996 to your
Divide line 6 by 12 even if you answered “Yes” in Part I, line 3, applicable tax return listed under Who Must File, earlier. Use
and you weren’t a QOF for the full tax year. This is because Part VI to report investments in QOZ stock or partnership
the underpayment rate used on line 5 is annualized. interests with values apportioned to QOZs and non-QOZs
based on where the tangible property of the QOZ business is
Part V located. See QOZ stock and QOZ partnership interest in
Complete Part V annually and attach Form 8996 to your Definitions, earlier.
applicable tax return listed under Who Must File, earlier. Part
V is for QOZ business property that you directly owned or Working capital property. For property that is treated as
leased. See QOZ business property in Definitions, earlier. QOZ business property pursuant to the working capital safe
harbor rules, allocate the value to the QOZ that’s specified in
See the IRS.gov/Ozfaqs page on IRS.gov for more the written designation for the development of a trade or
TIP information and guidance. business required under the regulations.

Column (a)
Column (a)
QOZs. For each QOZ business in which you own a stock or
Use a separate line to enter the 11-digit QOZ number in a partnership interest on either the last day of the first
which the QOF directly owns or leases QOZ business 6-month period of the tax year or the last day of the tax year,
property. These QOZ numbers are listed in Notice 2018-48 enter the 11-digit QOZ number for each QOZ in which the
and Notice 2019-42. You can find Notice 2018-48 at tangible property of the QOZ business is located. If you
IRS.gov/IRB/2018-28_IRB#NOT-2018-48. Notice 2019-42 invested in more than one QOZ business in a particular QOZ,
can be found at IRS.gov/IRB/2019-29_IRB#NOT-2019-42. you should repeat a QOZ as many times as you need to
capture each stock or partnership interest the QOF holds in
Columns (b) and (c)
that QOZ.
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 Non-QOZs. Indicate non-QOZs by 99999999999. If the
owned property in column (b) and the total value of all leased QOZ business holds any tangible property that isn’t QOZ
property in column (c), for the QOZ indicated in column (a). business property, including property located in a non-QOZ,
See Value determination, in Part II, earlier, for more add an additional line for that EIN with the identifier
information on what amount to enter on these lines. “99999999999” instead of an 11-digit QOZ number. A
separate 99999999999 line should be used for each QOZ

6 Instructions for Form 8996 (Dec. 2023)

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business that holds tangible property that isn’t QOZ business 3. The employees are managed directly, actively, and
property. substantially by employees located in the QOZ office.
Example 7. QOZ business X operates in QOZs A, B, and 4. The property isn’t operated outside a QOZ for a period
C. QOZ business Y operates in QOZs A and B. Report QOZs longer than 14 consecutive days.
A, B, and C for QOZ business X on separate lines, followed
See Example 9 for an illustration of this rule.
by QOZs A and B for QOZ business Y on separate lines.
Example 9. QOF A owns a $1 million interest in QOZ
Column (b) business B. QOZ business B owns $4 million of tangible
Enter the EIN of the QOZ business. If the QOZ business you property, $1.2 million of which is stationary and located in
invested in operates in more than one QOZ, complete QOZ X, $1 million of which is stationary and located in QOZ
column (b) for each line necessary. Y, and $1 million of which is stationary and located in multiple
non-QOZs. The remaining $800,000 is mobile tangible
Column (c) property. QOZ business B has its main headquarters in QOZ
For each QOZ stock or partnership interest held on the last X, and that location is treated as a QOZ office. In addition,
day of the first 6-month period of the tax year, enter in column the mobile tangible property is returned from non-QOZs to
(c) the investment value of that interest on that date. See QOZs X and Y on a daily basis. Because not more than 20%
Investment value in Definitions, earlier. Apportion that value of QOZ business B’s tangible property is mobile tangible
according to the share of tangible property of the QOZ property, the entire $800,000 is counted towards the QOZ
business located in each QOZ. See Examples 8, 9, and 10, business B’s QOZ business property. The location of the
later. mobile tangible property is assigned to the QOZ office
located in QOZ X, for a total of $2 million in QOZ business
Property in multiple zones. Example 8 shows how to property in QOZ X (50% of the total tangible property). QOF
account for your interest in a QOZ business when that QOZ A reports an investment value of $500,000 in QOZ X,
business holds tangible property in QOZs and non-QOZs. All $250,000 in QOZ Y, and $250,000 in non-QOZs
tangible property that is not QOZ business property is (99999999999).
assigned to the non-qualifying line (99999999999) for that Example 10. QOF A owns a $2 million interest in QOZ
QOZ business, even if the property is located in a QOZ. business B. QOZ business B owns $4 million of tangible
Example 8. On the last day of the first 6-month period of property, $1.2 million of which is stationary and located in
the tax year, QOF A owns a $1 million interest in QOZ QOZ X, $1 million of which is stationary and located in QOZ
business B. QOZ business B holds $4 million of tangible Y, and $1 million of which is stationary and located in
property and operates in QOZs and non-QOZs. $2 million of non-QOZs. The remaining $800,000 is mobile tangible
QOZ business B’s tangible property is located in QOZ X, $1 property. Unlike in Example 9, a safe harbor doesn’t apply.
million is located in QOZ Y, and $1 million is located in The mobile tangible property is used during 50% of all days
multiple non-QOZs. All of the tangible property of QOZ in QOZ X, 25% of all days in QOZ Y, and 25% of all days in
business B located in QOZ X and QOZ Y is QOZ business non-QOZs. Because at least 70% of the use of the mobile
property. Of the tangible property of QOZ business B, 50% is tangible property is located within a QOZ, the entire
located in QOZ X, 25% is located in QOZ Y, and 25% is $800,000 is counted towards QOZ business B’s QOZ
located in multiple non-QOZs. QOF A should report the business property. The full value of the mobile tangible
location of its $1 million interest in QOZ business B according property is assigned to QOZ X, as that is the QOZ where the
to the share of tangible property of QOZ business B that is property is primarily used. The total amount of QOZ business
located in each QOZ, by treating each QOZ separately and property located in QOZ X, stationary plus mobile, is $2
treating all non-QOZs as one aggregated non-QOZ. million, which is 50% of QOZ business B’s tangible property.
Therefore, QOF A would enter an investment value of Therefore, QOF A reports an investment value of $1,000,000
$500,000 in QOZ X, $250,000 in QOZ Y, and $250,000 in the in QOZ X, $500,000 in QOZ Y, and $500,000 in non-QOZs
aggregated non-QOZ (99999999999). (99999999999).
Mobile tangible property used in QOZs and non-QOZs. Special rule for first-year QOF. If you answered “Yes” on
If mobile tangible property is used in QOZs and non-QOZs Part I, line 3, the 6-month period starts from the month you
and otherwise qualifies as QOZ business property, assign the indicated on Part I, line 4. Columns (c) through (e) may be
full value of that property to the QOZ where it’s primarily blank depending on the tax year and the month you indicated
used, that is, to the QOZ that receives the highest percentage on Part I, line 4. See Examples 3 and under Part II, line 7, 4
of use. If tangible property is used in one or more QOZs, earlier.
determine whether the property has been substantially used
in a QOZ (that’s at least 70% of its use) by aggregating the If you check “Yes” on Part I, line 3, but don’t list the
number of days the tangible property in each QOZ is utilized. ! first month in which you choose to be a QOF on Part
See Example 10, later. 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
Under a safe harbor, a limited amount of mobile tangible investment relating to an investor’s deferral election until later
property may be excluded from the general time-of-use in the year.
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 Columns (d) and (e)
outside of a QOZ and meets the following requirements. For each QOZ stock or partnership interest held on the last
1. The trade or business has an office or fixed location day of the first 6-month period of the tax year, enter the gross
within a QOZ (QOZ office). value of tangible property that is owned and leased by the
QOZ business, for each QOZ. (Don’t adjust for ownership
2. The tangible property is operated by employees of the share or leveraged assets. All QOFs investing in the same
business who regularly use that QOZ office.

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QOZ business should report identical values for these              Line 3
columns.)                                                          To figure the value of QOZ property held by the QOF on the 
  Example 11.     The facts are the same as in Example 8           last day of the tax year, add Part V, columns (d) and (e), and 
under Part VI, column (c) instructions, earlier. In addition,      Part VI, column (f). Enter the total here and on Part II, line 10.
QOZ business B has the following shares of owned and 
leased tangible property. QOZ business B owns 70% of its $2        Line 4
million in tangible property located in QOZ X and leases the       Depending on which type of accounting method you are 
other 30%, owns 60% of its $1 million in tangible property         using to determine the value of the property listed on this 
located in QOZ Y and leases the other 40%, and owns 50%            form, check either the “Applicable financial statement 
of its $1 million in tangible property located in non-QOZs, and    valuation method” box or the “Alternative valuation method” 
leases the other 50%. QOF A should enter the following             box. See Value determination in Part II, earlier.
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            Part VII
$400,000 in column (e), and for non-QOZs, $500,000 in              Complete Part VII only if you need additional lines to report 
column (d), and $500,000 in column (e).                            your investments in QOZ business(es) that have locations in 
                                                                   more than the QOZs listed in Part VI. For information on how 
Column (f)                                                         to complete columns (a) through (h), refer to the instructions 
For each QOZ stock or QOZ partnership interest held on the         under Part VI for columns (a) through (h), earlier.
last day of the tax year, enter in column (f) the investment 
value of that interest on that date. See Investment value in       Line 1
Definitions, earlier. Apportion that value according to the        Total columns (c) and (f) respectively. If you complete more 
share of tangible property of the QOZ business located in          than one Part VII, add up all of the amounts from Part VII, 
each QOZ.                                                          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, 
Columns (g) and (h)                                                line 1, columns (c) and (f), respectively.

For each QOZ business held on the last day of the tax year,        Paperwork Reduction Act Notice. We ask for the 
enter the gross value of tangible property that is owned and       information on this form to carry out the Internal Revenue 
leased by the QOZ business, for each QOZ. (Don’t adjust for        laws of the United States. You are required to give us the 
ownership share or leveraged assets. All QOFs investing in         information. We need it to ensure that you are complying with 
the same QOZ business should report identical values for           these laws and to allow us to figure and collect the right 
these columns.)                                                    amount of tax.
  See Example 11 under the instructions for Columns (d)            You are not required to provide the information requested 
and (e), earlier.                                                  on a form that is subject to the Paperwork Reduction Act 
                                                                   unless the form displays a valid OMB control number. Books 
Line 1                                                             or records relating to a form or its instructions must be 
Enter the amounts reported on Part VII, line 2, columns (c)        retained as long as their contents may become material in the 
and (f), on Part VI, line 1, columns (c) and (f), respectively. If administration of any Internal Revenue law. Generally, tax 
you complete more than one Part VII, add up all of the             returns and return information are confidential, as required by 
amounts from Part VII, lines 2, column (c) and enter on Part       Code section 6103.
VI, line 1, column (c). Similarly, if you complete more than       The average time and expense required to complete and 
one Part VII, add up all the amounts from Part VII, line 2,        file this form will vary depending on individual circumstances. 
column (f), and enter on Part VI, line 1, column (f).              For the estimated averages, see the instructions for your 
Line 2                                                             income tax return.
To figure the value of QOZ property held by the QOF on the         If you have suggestions for making this form simpler, we 
last day of the first 6-month period of the tax year, add Part V,  would be happy to hear from you. See the instructions for 
columns (b) and (c), and Part VI, column (c). Enter the total      your income tax return.
here and on Part II, line 7.

8                                                                                    Instructions for Form 8996 (Dec. 2023)

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