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Department of the Treasury
Internal Revenue Service
Instructions for Form 8996

(Rev. December 2022)
Qualified Opportunity Fund

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

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

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

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QOZ business). The information II and Part III to determine if the QOF leased assets for purposes of
provided to the QOF regarding whether met the investment standard for this tax determining whether you meet the 90%
the entity satisfies section 1400Z-2(d) year. investment standard for a QOF. The
(3) must be sufficient for the QOF to rely general rules allow the value of your
on that information. If the entity doesn’t Line 4 assets to be determined using one of
satisfy section 1400Z-2(d)(3), the QOF Provide the first month in which you the following two valuation methods
may be subject to penalties. chose to be a QOF. This month cannot consistently during the tax year. Special
be any earlier than the month in which rules may allow you to exclude recently
QOFs That Are Part of a the entity forms. contributed property from both the
Consolidated Group Example 2. A new corporation is numerator and the denominator of the
A consolidated group should include formed on January 5, 2022, for the 90% investment standard test on a
with the group's return a separate Form purpose of operating a QOF, but it particular testing date, or to similarly
8996 for each group member that must doesn’t receive any investment under a exclude inventory property on each
certify its QOF status. deferral election under section testing date, during the tax year.
1400Z-2(a) until May 1, 2022. The Note. If you exclude recently
corporation may choose any month contributed property from both the
Specific Instructions from January through May to use as a numerator and the denominator of the
certification date. If the corporation 90% investment standard on a particular
Name and Employer chooses any month from January testing date, don’t include such property
Identification Number through May 2022 to use as a in the penalty calculation for the months
Enter the same information as shown on certification date, a May 1 investment such property was excluded if a penalty
the QOF’s applicable tax return under can support a deferral election under calculation is applicable.
Who Must File, earlier. section 1400Z-2(a). This example also
applies to pre-existing corporations or Applicable financial statement
Note. Qualified Opportunity Zone partnerships that become a QOF. valuation method. If the applicable
Businesses. Qualified opportunity financial statement method is used,
zone businesses do not file Form 8996. Example 3. The facts are the same
then the value of each item of property
Form 8996 is only filed by entities to as in Example 2, except that the
owned or leased by the QOF is the
self-certify as a QOF or to certify that corporation is formed on July 1, 2022,
value of that asset as reported on the
they have met the 90% investment for the purpose of operating as a QOF.
QOF’s applicable financial statement.
standard. See 90% investment The corporation may only choose a
This method can be used to value a
standard, earlier. month after July 1, 2022, as its first
leased asset only if the applicable
month of certification. Any investments
financial statement is prepared in
made prior to July 1, 2022, will not be
Part I accordance with U.S. GAAP, and the
qualifying investments.
Complete Part I annually and attach it to statement assigns a value to the leased
your applicable tax return listed under Note. A QOF may receive an asset.
Who Must File, earlier. Part I is used to investment relating to an investor’s Alternative valuation method. If
certify that the corporation or deferral election in the first month that the alternative valuation method is used,
partnership was organized to operate as the QOF is certified but not in any earlier then the value of each item of property
a QOF. See Definitions, earlier. month. purchased or constructed by the QOF
Line 2 Line 5 for fair market value is the QOF’s
unadjusted basis of the asset under
If you checked “Yes,” you are If you checked “Yes,” you must attach a section 1012 or 1013. The value of each
self-certifying that you are a QOF and statement to your return that includes item of property owned by the QOF that
you must complete the entire form. If each investor’s name(s), Taxpayer isn’t purchased or constructed for fair
you checked “No,” don’t complete this Identification Number(s), the date of the market value is the item of property’s
form and don’t file it with your return. disposition and the interest that they fair market value, determined on the last
If you answer “Yes” on line 2, disposed of. Also see the Instructions day of the first 6-month period of the
for Form 1099-B for reporting taxable year and on the last day of the
CAUTION QOF year, the organizing
! then by the end of your first information. taxable year.
documents should include a description Line 6 The value of each item of property
of the trade(s) or business(es) that the leased by the QOF under the alternative
QOF expects to engage in, either Do not check this box. Skip this line.
valuation method is the present value,
directly or indirectly, through a first-tier determined as of the date of entering
operating entity (QOZ business). Part II
Complete Part II annually and attach into the lease, of the payments under
Line 3 Form 8996 to your applicable tax return the lease. The required discount rate for
Check “Yes” if you are certifying that this listed under Who Must File, earlier. Part calculating the present value is provided
is the first period in which you are a II determines whether you meet the 90% in Regulations section 1.1400Z2(d)-1(b)
QOF and fill out line 4. investment standard for a QOF. See (4)(iii)(B). Once calculated, the present
Definitions, earlier. value is used as the value for the
If you check “No,” you are indicating property for all testing dates during the
Value determination. Regulations
that you have certified in a prior year term of the lease for purposes of the
section 1.1400Z2(d)-1(b) provides
that you are a QOF. 90% investment standard.
general and special rules for
Regardless of whether you check determining the value of your owned or
“Yes” or “No” on line 3, continue to Part

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Line 7 property held by the partnership on Line 13
Enter the value of QOZ property (see September 30 and reflected on Part VI, Add the numbers on lines 9 and 12.
Definitions, earlier) held by the QOF on line 2, is $89,500. The value of the total
the last day of the first 6-month period of assets held by the partnership on Line 14
the tax year. This is the amount from September 30 is $100,000. The If lines 7 through 9 are blank, then enter
Part VI, line 2. See the discussion under partnership enters “89,500” from Part VI, the result from line 13, otherwise divide
Total assets, earlier, in Definitions, line 2, on line 7 and “100,000” on line 8. line 13 by 2.0. Enter the result on line 14
regarding certain property that may The result when the partnership divides as a decimal to two places.
optionally be excluded from lines 7 and 89,500 by 100,000 is 0.895. The
8. partnership rounds up to 0.90. On line 9, Note. If you answered “Yes” on line 3,
the partnership enters “0.90.” the tax year may be less than 12
Special rule for first year of QOF. If months.
you answered “Yes” on line 3, the If the figure entered on line 9 is less
6-month period starts with the month than 90% (0.90), a penalty may apply. Line 15
you indicated on line 4. Lines 7 through See Part III of the instructions for more If you checked “Yes,” the QOF met the
9 may be blank depending on the tax details. Enter -0- if lines 7 and 8 are 90% investment standard. Attach the
year and the month indicated on line 4. blank. form to your tax return to report you met
See Example 4. Line 10 the investment standard for the tax year.
If you check “Yes” on line 3, but Enter the value of QOZ property (see If you checked “No,” the QOF failed
! don’t list the first month in which Definitions, earlier) held by the QOF on to meet the 90% investment standard.
CAUTION you choose to be a QOF on the last day of the tax year. This is the Go to Part IV to figure the penalty for
line 4, the 6-month period of the QOF amount from Part VI, line 3. See Total each month the QOF didn’t satisfy that
starts on the first day of your tax year, assets, earlier, in Definitions, regarding investment standard. The IRS will send
even if you received no investment certain property that may optionally be you a notice regarding the penalty
relating to an investor’s deferral election excluded from lines 10 and 11. reported on line 15. This notice will
until later in the year. include instructions on the penalty, the
Note. If you answered “Yes” on line 3, reasonable cause relief process, and
Example 3. Partners A, B, C, and D the tax year may be less than 12 payment instructions.
formed a new partnership in January months.
2022 for the purposes of operating as a Regardless of whether you checked
QOF. It chooses April 2022 as its first Line 11
“Yes” or “No” on line 15, complete Parts
month for certification. The first 6-month Enter the value of the Total assets held V, VI, and VII.
period for the QOF asset test ends on by the QOF on the last day of the tax
September 30. January to March are year.
not considered for purposes of the Part IV
6-month period. Note. If you checked “Yes” on line 3, Complete Part IV if you checked “No” on
the tax year may be less than 12 Part III, line 15. Use Part IV to figure the
Example 4. The facts are the same penalty for each month that the QOF
months.
as in Example 3, except the partnership didn’t hold at least 90% of its assets in
chooses July 2022 as the certification Line 12 QOZ property. See Definitions, earlier.
date. The first 6-month period for the Divide the number on line 10 by the Accounting period. Columns (a)
QOF assets ends on December 31. The number on line 11. Enter the result on through (l) in Part IV assume that you
6 months from January through June line 12 as a decimal to two places. were a QOF for the full tax year
are not considered, and lines 7 through Round the number up or down to two (January to December for calendar year
9 will be blank. places if necessary. For third place or 12 consecutive months for fiscal
Line 8 numbers of 5 or more, round up to the year). See Pub. 538, Accounting
next higher second place number. For
Enter the value of Total assets held by Periods and Methods, for more
third place numbers of less than 5,
the QOF on the last day of the first information on accounting periods.
round down to the lower second place
6-month period of the tax year. If you answered “Yes” on Part I,
number. See Example 5. Enter the
Line 9 decimal using the following format: one ! line 3, and you weren’t a QOF
Divide the number on line 7 by the digit, a decimal point, and two digits (for CAUTION for the full tax year, you won’t
number on line 8. Enter the result on example, enter 92% as 0.92 and 100% use all of the columns in Part IV.
line 9 as a decimal to two places. Round as 1.00). Instead, use the month listed on Part I,
line 4, as your Month 1 (see column (a)
the number up or down to two places if If the figure entered on line 12 is less of Part IV of the form), and continue
necessary. For third place numbers of 5 than 90% (0.90), a penalty may apply. using the other columns as needed to
or more, round up to the next higher See Part III of the instructions for more complete the tax year.
second place number. For third place details.
numbers of less than 5, round down to Example 6. The facts are the same
the lower second place number. Enter as in Example 3 under Part II
Part III
the decimal using the following format: instructions, earlier. In that situation, the
one digit, a decimal point, and two digits Complete Part III annually and attach
(for example, enter 92% as 0.92 and Form 8996 to your applicable tax return partnership entered April on Part I,
100% as 1.00). listed under Who Must File, earlier. Part line 4. Assume the answer to Part III,
III determines whether you are subject line 15, is “No.” When filling out Part IV,
Example 5. The facts are the same to a penalty. See Qualified opportunity the partnership enters months only in
as in Example 3. The value of the QOZ fund in Definitions, earlier. columns (a) through (i), because April

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would be Month 1 and December would Mobile tangible property used in the development of a trade or business
be Month 9. multiple QOZs. See Mobile tangible required under the regulations.
Lines 1 and 3 property used in QOZs and non-QOZs, Column (a)
and Examples 9 and 10 in the Part VI
See Value determination, in Part II, instructions, later. QOZs. For each QOZ business in
earlier, for information on what figure to which you own a stock or a partnership
enter on these lines. Special rule for first year as a QOF. interest on either the last day of the first
If you answered “Yes” on Part I, line 3, 6-month period of the tax year or the
Line 5 the 6-month period starts with the month last day of the tax year, enter the
The figure to enter here is the interest you indicated on Part I, line 4. Columns 11-digit QOZ number for each QOZ in
rate for each calendar quarter, which (b) and (c) may be blank depending on which the tangible property of the QOZ
the IRS will determine during the first the tax year and the month indicated on business is located. If you invested in
month in the preceding quarter. These Part I, line 4. See Examples 3 and 4 more than one QOZ business in a
rates are published quarterly in an IRS under Part II, line 7, earlier. particular QOZ, you should repeat a
news release and in a revenue ruling in QOZ as many times as you need to
If you check “Yes” on Part I,
the Internal Revenue Bulletin (IRB). Go capture each stock or partnership
line 3, but don’t list the first
to IRS.gov/IRB for the IRBs. You can CAUTION!
month in which you choose to interest the QOF holds in that QOZ.
subscribe to IRS Newswire to receive
be a QOF on Part I, line 4, the 6-month
news releases of the quarterly interest Non-QOZs. Indicate non-QOZs by
period of the QOF starts on the first day
rates, and IRS GuideWire to receive 99999999999. If the QOZ business
of your tax year, even if the QOF
emails with a link to the revenue rulings holds any tangible property that isn’t
received no investment relating to an
in which the quarterly interest rates are QOZ business property, including
investor’s deferral election until later in
published by going to IRS.gov/uac/E- property located in a non-QOZ, add an
the year.
News-Subscriptions-2. additional line for that EIN with the
Line 7 Columns (d) and (e) identifier “99999999999” instead of an
11-digit QOZ number. A separate
Divide line 6 by 12 even if you answered For QOZ business property held directly 99999999999 line should be used for
“Yes” in Part I, line 3, and you weren’t a on the last day of the tax year, enter the each QOZ business that holds tangible
QOF for the full tax year. This is total value of all owned property in property that isn’t QOZ business
because the underpayment rate used column (d) and the total value of all property.
on line 5 is annualized. leased property in column (e) for the
QOZ indicated in column (a). See Value Example 7. QOZ business X
Part V determination, in Part II, earlier, for operates in QOZs A, B, and C. QOZ
Complete Part V annually and attach information on what amounts to enter on business Y operates in QOZs A and B.
Form 8996 to your applicable tax return these lines. Report QOZs A, B, and C for QOZ
business X on separate lines, followed
listed under Who Must File, earlier. Part Line 1 by QOZs A and B for QOZ business Y
V is for QOZ business property that you
directly owned or leased. See QOZ If you directly owned or leased QOZ on separate lines.
business property in Definitions, earlier. business property located in more than
the QOZs listed in column (a) for Part V, Column (b)
See the IRS.gov/Ozfaqs page then attach a separate statement. The Enter the EIN of the QOZ business. If
TIP on IRS.gov for more information separate statement should be prepared the QOZ business you invested in
and guidance. in the same manner and format as Part operates in more than one QOZ,
V. Enter the totals from the separate complete column (b) for each line
Column (a) statement on line 1, columns (b) through necessary.
Use a separate line to enter the 11-digit (e). Submit the separate statement with Column (c)
QOZ number in which the QOF directly Form 8996 and your tax return.
For each QOZ stock or partnership
owns or leases QOZ business property.
interest held on the last day of the first
These QOZ numbers are listed in Notice Part VI
6-month period of the tax year, enter in
2018-48 and Notice 2019-42. You can Complete Part VI annually and attach column (c) the investment value of that
find Notice 2018-48 at IRS.gov/IRB/ Form 8996 to your applicable tax return interest on that date. See Investment
2018-28_IRB#NOT-2018-48. Notice listed under Who Must File, earlier. Use value in Definitions, earlier. Apportion
2019-42 can be found at IRS.gov/IRB/ Part VI to report investments in QOZ that value according to the share of
2019-29_IRB#NOT-2019-42. stock or partnership interests with tangible property of the QOZ business
values apportioned to QOZs and located in each QOZ. See Examples 8,
Columns (b) and (c) non-QOZs based on where the tangible 9, and 10, later.
For QOZ business property held directly property of the QOZ business is
on the last day of the first 6-month located. See QOZ stock and QOZ Property in multiple zones.
period of the tax year, enter the total partnership interest in Definitions, Example 8 shows how to account for
value of all owned property in column earlier. your interest in a QOZ business when
(b) and the total value of all leased that QOZ business holds tangible
property in column (c), for the QOZ Working capital property. For property in QOZs and non-QOZs. All
indicated in column (a). See Value property that is treated as QOZ tangible property that is not QOZ
determination, in Part II, earlier, for more business property pursuant to the business property is assigned to the
information on what amount to enter on working capital safe harbor rules, non-qualifying line (99999999999) for
these lines. allocate the value to the QOZ that’s that QOZ business, even if the property
specified in the written designation for is located in a QOZ.

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Example 8. On the last day of the 4. The property isn’t operated Special rule for first-year QOF. If you
first 6-month period of the tax year, QOF outside a QOZ for a period longer than answered “Yes” on Part I, line 3, the
A owns a $1 million interest in QOZ 14 consecutive days. 6-month period starts from the month
business B. QOZ business B holds $4 you indicated on Part I, line 4. Columns
million of tangible property and operates See Example 9 for an illustration of this
in QOZs and non-QOZs. $2 million of rule. (c) through (e) may be blank depending
on the tax year and the month you
QOZ business B’s tangible property is Example 9. QOF A owns a $1 indicated on Part I, line 4. See
located in QOZ X, $1 million is located million interest in QOZ business B. QOZ Examples 3 and under Part II, line 7, 4
in QOZ Y, and $1 million is located in business B owns $4 million of tangible earlier.
multiple non-QOZs. All of the tangible property, $1.2 million of which is
property of QOZ business B located in stationary and located in QOZ X, $1 If you check “Yes” on Part I,
QOZ X and QOZ Y is QOZ business million of which is stationary and located ! line 3, but don’t list the first
property. Of the tangible property of in QOZ Y, and $1 million of which is CAUTION month in which you choose to
QOZ business B, 50% is located in stationary and located in multiple be a QOF on Part I, line 4, the 6-month
QOZ X, 25% is located in QOZ Y, and non-QOZs. The remaining $800,000 is period of the QOF starts on the first day
25% is located in multiple non-QOZs. mobile tangible property. QOZ business of your tax year, even if the QOF
QOF A should report the location of its B has its main headquarters in QOZ X, received no investment relating to an
$1 million interest in QOZ business B and that location is treated as a QOZ investor’s deferral election until later in
according to the share of tangible office. In addition, the mobile tangible the year.
property of QOZ business B that is property is returned from non-QOZs to
located in each QOZ, by treating each QOZs X and Y on a daily basis. Columns (d) and (e)
QOZ separately and treating all Because not more than 20% of QOZ For each QOZ stock or partnership
non-QOZs as one aggregated business B’s tangible property is mobile interest held on the last day of the first
non-QOZ. Therefore, QOF A would tangible property, the entire $800,000 is 6-month period of the tax year, enter the
enter an investment value of $500,000 counted towards the QOZ business B’s gross value of tangible property that is
in QOZ X, $250,000 in QOZ Y, and QOZ business property. The location of owned and leased by the QOZ
$250,000 in the aggregated non-QOZ the mobile tangible property is assigned business, for each QOZ. (Don’t adjust
(99999999999). to the QOZ office located in QOZ X, for for ownership share or leveraged
a total of $2 million in QOZ business
Mobile tangible property used in assets. All QOFs investing in the same
property in QOZ X (50% of the total
QOZs and non-QOZs. If mobile QOZ business should report identical
tangible property). QOF A reports an
tangible property is used in QOZs and values for these columns.)
investment value of $500,000 in QOZ X,
non-QOZs and otherwise qualifies as Example 11. The facts are the same
$250,000 in QOZ Y, and $250,000 in
QOZ business property, assign the full as in Example 8 under Part VI, column
non-QOZs (99999999999).
value of that property to the QOZ where (c) instructions, earlier. In addition, QOZ
it’s primarily used, that is, to the QOZ Example 10. QOF A owns a $2 business B has the following shares of
that receives the highest percentage of million interest in QOZ business B. QOZ owned and leased tangible property.
use. If tangible property is used in one business B owns $4 million of tangible QOZ business B owns 70% of its $2
or more QOZs, determine whether the property, $1.2 million of which is million in tangible property located in
property has been substantially used in stationary and located in QOZ X, $1 QOZ X and leases the other 30%, owns
a QOZ (that’s at least 70% of its use) by million of which is stationary and located 60% of its $1 million in tangible property
aggregating the number of days the in QOZ Y, and $1 million of which is located in QOZ Y and leases the other
tangible property in each QOZ is stationary and located in non-QOZs. 40%, and owns 50% of its $1 million in
utilized. See Example 10, later. The remaining $800,000 is mobile tangible property located in non-QOZs,
Under a safe harbor, a limited tangible property. Unlike in Example 9, and leases the other 50%. QOF A
amount of mobile tangible property may a safe harbor doesn’t apply. The mobile should enter the following values for
be excluded from the general tangible property is used during 50% of QOZ X; $1,400,000 in column (d) and
time-of-use calculation. Specifically, not all days in QOZ X, 25% of all days in $600,000 in column (e). For QOZ Y,
more than 20% of the tangible property QOZ Y, and 25% of all days in enter $600,000 in column (d) and
may be treated as satisfying the 70% non-QOZs. Because at least 70% of the $400,000 in column (e), and for
use test if the tangible property is use of the mobile tangible property is non-QOZs, $500,000 in column (d), and
utilized in activities both inside and located within a QOZ, the entire $500,000 in column (e).
outside of a QOZ and meets the $800,000 is counted towards QOZ
following requirements. business B’s QOZ business property. Column (f)
The full value of the mobile tangible For each QOZ stock or QOZ
1. The trade or business has an property is assigned to QOZ X, as that partnership interest held on the last day
office or fixed location within a QOZ is the QOZ where the property is of the tax year, enter in column (f) the
(QOZ office). primarily used. The total amount of QOZ investment value of that interest on that
2. The tangible property is operated business property located in QOZ X, date. See Investment value in
by employees of the business who stationary plus mobile, is $2 million, Definitions, earlier. Apportion that value
regularly use that QOZ office. which is 50% of QOZ business B’s according to the share of tangible
3. The employees are managed tangible property. Therefore, QOF A property of the QOZ business located in
directly, actively, and substantially by reports an investment value of each QOZ.
employees located in the QOZ office. $1,000,000 in QOZ X, $500,000 in QOZ
See Examples 8, 9, and 10 under the
Y, and $500,000 in non-QOZs
instructions for column (c).
(99999999999).

Instructions for Form 8996 (Dec. 2022) -7-

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Columns (g) and (h) tax year, add Part V, columns (d) and the United States. You are required to
For each QOZ business held on the last (e), and Part VI, column (f). Enter the give us the information. We need it to
day of the tax year, enter the gross total here and on Part II, line 10. ensure that you are complying with
these laws and to allow us to figure and
value of tangible property that is owned Line 4 collect the right amount of tax.
and leased by the QOZ business, for Depending on which type of accounting
each QOZ. (Don’t adjust for ownership method you are using to determine the You are not required to provide the
share or leveraged assets. All QOFs value of the property listed on this form, information requested on a form that is
investing in the same QOZ business check either the “Applicable financial subject to the Paperwork Reduction Act
should report identical values for these statement valuation method” box or the unless the form displays a valid OMB
columns.) “Alternative valuation method” box. See control number. Books or records
See Example 11 under the Value determination in Part II, earlier. relating to a form or its instructions must
instructions for Columns (d) and (e), be retained as long as their contents
earlier. Part VII may become material in the
administration of any Internal Revenue
Line 1 Complete Part VII only if you need
law. Generally, tax returns and return
Enter the amounts reported on Part VII, additional lines to report your
information are confidential, as required
line 2, columns (c) and (f), on Part VI, investments in QOZ business(es) that
by Code section 6103.
line 1, columns (c) and (f), respectively. have locations in more than the QOZs
If you complete more than one Part VII, listed in Part VI. For information on how The average time and expense
add up all of the amounts from Part VII, to complete columns (a) through (h), required to complete and file this form
lines 2, column (c) and enter on Part VI, refer to the instructions under Part VI for will vary depending on individual
line 1, column (c). Similarly, if you columns (a) through (h), earlier. circumstances. For the estimated
averages, see the instructions for your
complete more than one Part VII, add Line 1 income tax return.
up all the amounts from Part VII, line 2, Total columns (c) and (f) respectively. If
column (f), and enter on Part VI, line 1, you complete more than one Part VII, If you have suggestions for making
column (f). add up all of the amounts from Part VII, this form simpler, we would be happy to
Line 2 columns (c) and (f), respectively, and hear from you. See the instructions for
To figure the value of QOZ property enter on line 1. your income tax return.

held by the QOF on the last day of the Line 2
first 6-month period of the tax year, add Add columns (c) and (f). Enter the total
Part V, columns (b) and (c), and Part VI, here and on Part VI, line 1, columns (c)
column (c). Enter the total here and on and (f), respectively.
Part II, line 7.
Line 3 Paperwork Reduction Act Notice.
We ask for the information on this form
To figure the value of QOZ property
to carry out the Internal Revenue laws of
held by the QOF on the last day of the

-8- Instructions for Form 8996 (Dec. 2022)

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