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Department of the Treasury
Internal Revenue Service
Instructions for Form 8996

(Rev. December 2021)
Qualified Opportunity Fund

Section references are to the Internal Revenue 2018-48 and Notice 2019-42. You can cash equivalents, or debt instruments
Code unless otherwise noted. find Notice 2018-48 at IRS.gov/IRB/ with a term of 18 months or less.
2018-28_IRB#NOT-2018-48. Notice
QOF reinvestment in QOZ property.
General Instructions 2019-42 can be found at IRS.gov/IRB/
If a QOF receives proceeds from the
2019-29_IRB#NOT-2019-42.
return of capital or the sale or
Future Developments Qualified opportunity fund (QOF). A disposition of QOZ property and
For the latest information about QOF is an investment vehicle organized reinvests such proceeds in QOZ
developments related to Form 8996 and as a corporation or a partnership for the property within 12 months of the
its instructions, such as legislation purpose of investing in QOZ property distribution, sale, or disposition, then the
enacted after this form and instructions (other than another QOF). To be eligible proceeds are treated as QOZ property
were published, go to IRS.gov/ to be a QOF, such an investment for purposes of the 90% investment
Form8996. vehicle must be organized under the standard, but only to the extent that until
laws of one of the 50 states, a federally reinvested the proceeds are
What’s New recognized Indian tribe (see Pub. 4267 continuously held in cash, cash
Penalty relief for qualified opportuni- for further information), the District of equivalents, or debt instruments with a
ty funds. For certain taxpayers who do Columbia, or a U.S. possession. A QOF term of 18 months or less.
not meet the 90% investment standard must hold at least 90% of its total assets
U.S. possession. A U.S. possession is
for qualified opportunity funds, the in QOZ property. See 90% investment
any jurisdiction other than the 50 states
penalty may be waived. See Penalty standard, next.
and the District of Columbia where there
relief, under Part IV, later. 90% investment standard. The 90% is a designated QOZ, which includes
COVID-19 relief. QOFs impacted by investment standard is determined by the following U.S. territories: American
COVID-19 may be eligible for relief, the average of the percentage of QOZ Samoa, Guam, the Commonwealth of
including an extension of time to property held in the QOF as measured the Northern Mariana Islands, the
reinvest proceeds in QOZ property and on: Commonwealth of Puerto Rico, and the
the 30–month substantial improvement 1. The last day of the first 6-month U.S. Virgin Islands.
period. See Notice 2021–10 for period of the tax year of the QOF, and Total assets. Total assets includes
additional information. 2. The last day of the tax year of the cash, investments, furniture, fixtures,
QOF. equipment, receivables, intangibles,
Purpose of Form and any items of value owned or leased
If a corporation or partnership is by the investment vehicle. In
The Tax Cuts and Jobs Act (TCJA), ! organized in a U.S. possession, determining satisfaction of the 90%
section 13823, added section 1400Z-1 CAUTION it may be a QOF only if it is
investment standard, an investment
to provide for the designation of certain organized for the purpose of investing in vehicle may choose for some items to
census tracts as qualified opportunity QOZ property that relates to a trade or be excluded from total assets. These
zones (QOZs) and added section business operated in the U.S. optionally excludable items are
1400Z-2 to provide certain benefits for possession in which the corporation or inventory property and certain property
investments in these QOZs through partnership is organized. that the corporation or partnership
investment in qualified opportunity funds
received solely in exchange for stock in,
(QOFs). Taxpayers that invest in QOZ Cash not immediately invested. If or a partnership interest in, the
property through a QOF can defer the an investor contributes cash to your investment vehicle.
recognition of certain gains. See QOF, but you are unable to immediately
Definitions, later. invest the cash into a QOZ property, To determine if you meet the
A corporation or partnership uses you can still meet the 90% investment requirements for exclusion of property
Form 8996 to certify that it is organized standard. You may exclude the cash received for equity in the investment,
to invest in QOZ property. In addition, a from the calculation of the 90% see Cash not immediately invested,
corporation or partnership files Form investment standard if the following earlier.
8996 annually to report that the QOF requirements are met: An item excluded from total assets is
meets the 90% investment standard of • You received the cash in exchange not included in Part II, lines 8 and 11
section 1400Z-2 or to figure the penalty for stock or partnership interest in the (“Total assets” at various times), or in
if it fails to meet the investment QOF; Part II, lines 7 and 10 (“Total QOZ
standard. See Definitions next. Also see • The contribution or exchange property” at those times).
IRS.gov/Ozfaqs for more information occurred not more than 6 months before QOZ property. QOZ property means
and guidance. the test from which it is excluded; and QOZ stock, a QOZ partnership interest,
• Between the date of the fifth business and QOZ business property.
Definitions day after the contribution or exchange
and the date of the semiannual test, the QOZ stock is any stock of a
Qualified opportunity zone (QOZ). amount was held continuously in cash, domestic corporation that a QOF
For a complete list of QOZs, see Notice acquires after 2017 from the

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

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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
Nonqualified financial property. expected to take longer than 30 months file Form 8996 annually with one of the
Nonqualified 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 You must file Form 8996 by the due
1. The working capital is designated even though the completion of the date of the tax return (including
in writing for the development of a trade development is expected to take longer extensions).
or business in a QOZ, including, when than 31 months. QOZ businesses must
appropriate, the acquisition, have less than 5% of their assets in If a corporation or partnership
construction, and/or substantial non-qualified financial property (debt, ! completes this form, it’s
improvement of tangible property in a stock, partnership interests, or other CAUTION self-certifying that it’s a QOF. By
QOZ. similar property). However, self-certifying, the QOF is attesting that
non-qualified financial property does not the property used to satisfy the 90%
2. There is a reasonable written investment standard is QOZ property.
include a reasonable amount of cash,
schedule for the consumption of the This includes the requirement that any
cash equivalents, or debt instruments
working capital to achieve the goal set stock or partnership interests used to
with a term of 18 months or less. QOZ
out in (1) above. satisfy the 90% investment standard are
businesses may utilize a safe harbor for
3. The working capital is to be their working capital so long as there is in an entity that satisfies section
consumed within 31 months of the a written plan designating the 1400Z-2(d)(3) (that is, that the entity is a
business’s receipt of the assets. Any consumption of the working capital and QOZ business). The information
provided to the QOF regarding whether

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the entity satisfies section 1400Z-2(d) Example 2. A new corporation is 90% investment standard test on a
(3) must be sufficient for the QOF to rely formed on January 5, 2021, for the particular testing date, or to similarly
on that information. If the entity doesn’t purpose of operating a QOF, but it exclude inventory property on each
satisfy section 1400Z-2(d)(3), the QOF doesn’t receive any investment under a testing date, during the tax year.
may be subject to penalties. deferral election under section
1400Z-2(a) until May 1, 2021. The Note. If you exclude recently
QOFs That Are Part of a corporation may choose any month contributed property from both the
Consolidated Group 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
A consolidated group should include testing date, don’t include such property
chooses any month from January
with the group's return a separate Form in the penalty calculation for the months
through May 2021 to use as a
8996 for each group member that must such property was excluded if a penalty
certification date, a May 1 investment
certify its QOF status. calculation is applicable.
can support a deferral election under
section 1400Z-2(a). This example also Applicable financial statement
Specific Instructions applies to pre-existing corporations or valuation method. If the applicable
partnerships that become a QOF. financial statement method is used,
Name and Employer Example 3. The facts are the same then the value of each item of property
Identification Number as in Example 2, except that the owned or leased by the QOF is the
Enter the same information as shown on corporation is formed on July 1, 2021, value of that asset as reported on the
the QOF’s applicable tax return under for the purpose of operating as a QOF. QOF’s applicable financial statement.
Who Must File, earlier. The corporation may only choose a This method can be used to value a
month after July 1, 2021, as its first leased asset only if the applicable
Part I month of certification. Any investments financial statement is prepared in
Complete Part I annually and attach it to made prior to July 1, 2021, will not be accordance with U.S. GAAP, and the
your applicable tax return listed under qualifying investments. statement assigns a value to the leased
asset.
Who Must File, earlier. Part I is used to
Note. A QOF may receive an
certify that the corporation or Alternative valuation method. If
investment relating to an investor’s
partnership was organized to operate as the alternative valuation method is used,
deferral election in the first month that
a QOF. See Definitions, earlier. then the value of each item of property
the QOF is certified but not in any earlier
purchased or constructed by the QOF
Line 2 month.
for fair market value is the QOF’s
If you checked “Yes,” you are Line 5 unadjusted basis of the asset under
self-certifying that you are a QOF and section 1012 or 1013. The value of each
If you checked “Yes,” you must attach a
you must complete the entire form. If item of property owned by the QOF that
statement to your return that includes
you checked “No,” don’t complete this isn’t purchased or constructed for fair
each investor’s name(s), Taxpayer
form and don’t file it with your return. market value is the item of property’s
Identification Number(s), the date of the
If you answer “Yes” on line 2, disposition and the interest that they fair market value, determined on the last
! then by the end of your first disposed of. Also see the Instructions day of the first 6-month period of the
CAUTION QOF year, the organizing for Form 1099-B for reporting taxable year and on the last day of the
documents should include a description information. taxable year.
of the trade(s) or business(es) that the The value of each item of property
QOF expects to engage in, either Line 6 leased by the QOF under the alternative
directly or indirectly through a first-tier Do not check this box. Skip this line. valuation method is the present value,
operating entity (QOZ business). determined as of the date of entering
Part II into the lease, of the payments under
Line 3 Complete Part II annually and attach the lease. The required discount rate for
Check “Yes” if you are certifying that this Form 8996 to your applicable tax return calculating the present value is provided
is the first period in which you are a listed under Who Must File, earlier. Part in Regulations section 1.1400Z2(d)-1(b)
QOF and fill out line 4. II determines whether you meet the 90% (4)(iii)(B). Once calculated, the present
investment standard for a QOF. See value is used as the value for the
If you check “No,” you are indicating Definitions, earlier. property for all testing dates during the
that you have certified in a prior year term of the lease for purposes of the
that you are a QOF. Value determination. Regulations 90% investment standard.
section 1.1400Z2(d)-1(b) provides
Regardless of whether you check general and special rules for Line 7
“Yes” or “No” on line 3, continue to Part determining the value of your owned or Enter the value of QOZ property (see
II and Part III to determine if the QOF leased assets for purposes of Definitions, earlier) held by the QOF on
met the investment standard for this tax determining whether you meet the 90% the last day of the first 6-month period of
year. investment standard for a QOF. The the tax year. This is the amount from
Line 4 general rules allow the value of your Part VI, line 2. See discussion under
assets to be determined using one of Total assets, earlier in Definitions,
Provide the first month in which you the following two valuation methods regarding certain property that may
chose to be a QOF. This month cannot consistently during the tax year. Special optionally be excluded from lines 7 and
be any earlier than the month in which rules may allow you to exclude recently 8.
the entity forms. contributed property from both the
numerator and the denominator of the

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Special rule for first year of QOF. If partnership rounds up to 0.90. On line 9, Note. If you answered “Yes” on line 3,
you answered “Yes” on line 3, the the partnership enters “0.90.” the tax year may be less than 12
6-month period starts with the month months.
you indicated on line 4. Lines 7 through If the figure entered on line 9 is less
9 may be blank depending on the tax than 90% (0.90), a penalty may apply. Line 15
year and the month indicated on line 4. See Part III of the instructions for more If you checked “Yes,” the QOF met the
See Example 4. details. Enter -0- if lines 7 and 8 are 90% investment standard. Attach the
blank. form to your tax return to report you met
If you check “Yes” on line 3, but the investment standard for the tax year.
Line 10
! don’t list the first month in which If you checked “No,” the QOF failed
CAUTION you choose to be a QOF on Enter the value of QOZ property (see
line 4, the 6-month period of the QOF Definitions, earlier) held by the QOF on to meet the 90% investment standard.
starts on the first day of your tax year, the last day of the tax year. This is the Go to Part IV to figure the penalty for
even if you received no investment amount from Part VI, line 3. See Total each month the QOF didn’t satisfy that
relating to an investor’s deferral election assets, earlier in Definitions, regarding investment standard. The IRS will send
until later in the year. certain property that may optionally be you a notice regarding the penalty
excluded from lines 10 and 11. reported on line 15. This notice will
Example 3. Virginia, Joe, Laura, include instructions on the penalty, the
and Ishmael formed a new partnership Note. If you answered “Yes” on line 3, reasonable cause relief process, and
in January 2021 for the purposes of the tax year may be less than 12 payment instructions. To see if you
operating as a QOF. It chooses April months. qualify for the automatic penalty relief,
2021 as its first month for certification. see Penalty relief, under Part IV, later.
The first 6-month period for the QOF Line 11
asset test ends on September 30. Enter the value of the Total assets held Regardless of whether you checked
January to March are not considered for by the QOF on the last day of the tax “Yes” or “No” on line 15, complete Parts
purposes of the 6-month period. year. V, VI, and VII.

Example 4. The facts are the same Note. If you checked “Yes” on line 3, Part IV
as in Example 3, except the partnership the tax year may be less than 12 Complete Part IV if you checked “No” on
chooses July 2021 as the certification months. Part III, line 15. Use Part IV to figure the
date. The first 6-month period for the penalty for each month that the QOF
QOF assets ends on December 31. The Line 12 didn’t hold at least 90% of its assets in
6 months from January through June Divide the number on line 10 by the QOZ property. See Definitions, earlier.
are not considered, and lines 7 through number on line 11. Enter the result on
9 will be blank. line 12 as a decimal to two places. Penalty relief. Penalty relief has been
Round the number up or down to two provided for QOFs impacted by the
Line 8 Coronavirus disease. The failure to
places if necessary. For third place
Enter the value of Total assets held by numbers of 5 or more, round up to the satisfy the 90% investment standard is
the QOF on the last day of the first next higher second place number. For due to reasonable cause for any QOF
6-month period of the tax year. third place numbers of less than 5, whose last day of the first 6-month
Line 9 round down to the lower second place period of the tax year or the last day of
number. See Example 5. Enter the the tax year falls between April 1, 2020
Divide the number on line 7 by the decimal using the following format: one through June 30, 2021. To obtain this
number on line 8. Enter the result on digit, a decimal point, and two digits (for relief, you must complete all lines on the
line 9 as a decimal to two places. Round example, enter 92% as 0.92 and 100% Form 8996 and enter -0- on Part IV,
the number up or down to two places if as 1.00). line 8. You must also file Form 8996 with
necessary. For third place numbers of 5 your timely filed federal income tax
or more, round up to the next higher If the figure entered on line 12 is less return (including extensions).
second place number. For third place than 90% (0.90), a penalty may apply. Accounting period. Columns (a)
numbers of less than 5, round down to See Part III of the instructions for more through (l) in Part IV assume that you
the lower second place number. Enter details. were a QOF for the full tax year
the decimal using the following format:
(January to December for calendar year
one digit, a decimal point, and two digits Part III or 12 consecutive months for fiscal
(for example, enter 92% as 0.92 and
Complete Part III annually and attach year). See Pub. 538, Accounting
100% as 1.00).
Form 8996 to your applicable tax return Periods and Methods, for more
Example 5. The facts are the same listed under Who Must File, earlier. Part information on accounting periods.
as in Example 3. The value of the QOZ III determines whether you are subject
If you answered “Yes” on Part I,
property held by the partnership on to a penalty. See Qualified opportunity
line 3, and you weren’t a QOF
September 30 and reflected on Part VI, fund in Definitions, earlier. CAUTION!
line 2, is $89,500. The value of the total for the full tax year, you won’t
assets held by the partnership on Line 13 use all of the columns in Part IV.
September 30 is $100,000. The Add the numbers on lines 9 and 12. Instead, use the month listed on Part I,
partnership enters “89,500” from Part VI, line 4, as your Month 1 (see column (a)
line 2, on line 7 and “100,000” on line 8. Line 14 of Part IV of the form), and continue
The result when the partnership divides If lines 7 though 9 are blank, then enter using the other columns as needed to
89,500 by 100,000 is 0.895. The the result from line 13, otherwise divide complete the tax year.
line 13 by 2.0. Enter the result on line 14
as a decimal to two places.

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Example 6. The facts are the same value of all owned property in column Working capital property. For
as in Example 3 under Part II (b) and the total value of all leased property that is treated as QOZ
instructions, earlier. In that situation, the property in column (c), for the QOZ business property pursuant to the
partnership entered April on Part I, indicated in column (a). See Value working capital safe harbor rules,
line 4. Assume the answer to Part III, determination, in Part II earlier, for more allocate the value to the QOZ that’s
line 15, is “No.” When filling out Part IV, information on what amount to enter on specified in the written designation for
the partnership enters months only in these lines. the development of a trade or business
columns (a) through (i), because April required under the regulations.
Mobile tangible property used in
would be Month 1 and December would
multiple QOZs. See Mobile tangible
be Month 9. Column (a)
property used in QOZs and non-QOZs,
Lines 1 and 3 and Examples 9 and 10 in Part VI QOZs. For each QOZ business in
See Value determination, in Part II instructions, later. which you own a stock or a partnership
interest on either the last day of the first
earlier, for information on what figure to Special rule for first year as a QOF.
6-month period of the tax year or the
enter on these lines. If you answered “Yes” on Part I, line 3,
last day of the tax year, enter the
the 6-month period starts with the month
Line 5 11-digit QOZ number for each QOZ in
you indicated on Part I, line 4. Columns
which the tangible property of the QOZ
The figure to enter here is the interest (b) and (c) may be blank depending on
business is located. If you invested in
rate for each calendar quarter, which the tax year and the month indicated on
more than one QOZ business in a
the IRS will determine during the first Part I, line 4. See Examples 3 and 4
particular QOZ, you should repeat a
month in the preceding quarter. These under Part II, line 7, earlier.
rates are published quarterly in an IRS QOZ as many times as you need to
news release and in a revenue ruling in If you check “Yes” on Part I, capture each stock or partnership
the Internal Revenue Bulletin (IRB). Go ! line 3, but don’t list the first interest the QOF holds in that QOZ.
to IRS.gov/IRB for the IRBs. You can CAUTION month in which you choose to
subscribe to IRS Newswire to receive be a QOF on Part I, line 4, the 6-month Non-QOZs. Indicate non-QOZs by
news releases of the quarterly interest period of the QOF starts on the first day 99999999999. If the QOZ business
rates, and IRS GuideWire to receive of your tax year, even if the QOF holds any tangible property that isn’t
emails with a link to the revenue rulings received no investment relating to an QOZ business property, including
in which the quarterly interest rates are investor’s deferral election until later in property located in a non-QOZ, add an
published by going to IRS.gov/uac/E- the year. additional line for that EIN with the
News-Subscriptions-2. identifier “99999999999” instead of an
Columns (d) and (e) 11-digit QOZ number. A separate
Line 7 For QOZ business property held directly 99999999999 line should be used for
Divide line 6 by 12 even if you answered on the last day of the tax year, enter the each QOZ business that holds tangible
“Yes” in Part I, line 3, and you weren’t a total value of all owned property in property that isn’t QOZ business
QOF for the full tax year. This is column (d) and the total value of all property.
because the underpayment rate used leased property in column (e) for the Example 7. QOZ business X
on line 5 is annualized. QOZ indicated in column (a). See Value operates in QOZs A, B, and C. QOZ
determination, in Part II earlier, for business Y operates in QOZs A and B.
Part V information on what amounts to enter on Report QOZs A, B, and C for QOZ
Complete Part V annually and attach these lines. business X on separate lines, followed
Form 8996 to your applicable tax return by QOZs A and B for QOZ business Y
Line 1
listed under Who Must File, earlier. Part on separate lines.
V is for QOZ business property that you If you directly owned or leased QOZ
directly owned or leased. See QOZ business property located in more than Column (b)
business property in Definitions, earlier. the QOZs listed in column (a) for Part V, Enter the EIN of the QOZ business. If
then attach a separate statement. The the QOZ business you invested in
See IRS.gov/Ozfaqs page on separate statement should be prepared operates in more than one QOZ,
TIP IRS.gov for more information in the same manner and format as Part complete column (b) for each line
and guidance. V. Enter the totals from the separate necessary.
statement on line 1, columns (b) through
Column (a) (e). Submit the separate statement with Column (c)
Use a separate line to enter the 11-digit Form 8996 and your tax return. For each QOZ stock or partnership
QOZ number in which the QOF directly interest held on the last day of the first
owns or leases QOZ business property. Part VI 6-month period of the tax year, enter in
column (c) the investment value of that
These QOZ numbers are listed in Notice Complete Part VI annually and attach
interest on that date. See Investment
2018-48 and Notice 2019-42. You can Form 8996 to your applicable tax return
value in Definitions, earlier. Apportion
find Notice 2018-48 at IRS.gov/IRB/ listed under Who Must File, earlier. Use
that value according to the share of
2018-28_IRB#NOT-2018-48. Notice Part VI to report investments in QOZ
tangible property of the QOZ business
2019-42 can be found at IRS.gov/IRB/ stock or partnership interests with
located in each QOZ. See Examples 8,
2019-29_IRB#NOT-2019-42. values apportioned to QOZs and
9, and 10 later.
Columns (b) and (c) non-QOZs based on where the tangible
property of the QOZ business is Property in multiple zones.
For QOZ business property held directly located. See QOZ stock and QOZ Example 8 shows how to account for
on the last day of the first 6-month partnership interest in Definitions, your interest in a QOZ business when
period of the tax year, enter the total earlier. that QOZ business holds tangible

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

Instructions for Form 8996 (Dec. 2021) -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 column (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. 2021)

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