Fillable Form 8996

What is Form 8996?

Form 8996, Qualified Opportunity Fund, is used by corporations or partnerships to certify that it is organized to invest in qualified opportunity zone (QOZ) property. In addition to this, corporations or partnerships are also required to file the 8996 Form annually to report that their qualified opportunity fund (QOF) meets the 90% investment standard of Section 1400Z-2, Special Rules for Capital Gains Invested in Opportunity Zones, or to figure the penalty if it fails to meet the investment standard.

If a QOF receives proceeds from the return of capital or the sale or disposition of QOZ property and reinvests such proceeds in QOZ property within 12 months of the distribution, sale, or disposition, then the proceeds are treated as QOZ property for purposes of the 90% investment standard, but only to the extent that until reinvested the proceeds are continuously held in cash, cash equivalents, or debt instruments with a term of 18 months or less.

How to fill out Form 8996?

Taxpayers from the United States can download and print a PDF copy of IRS Form 8996 from the Internal Revenue Service (IRS) website that they can manually complete. They can also fill out IRS Form 8996 electronically on PDFRun.

To fill out the IRS 8996 Form, you must provide the following information:

Name

Enter your full legal name.

Employer identification number (EIN)

Enter your employer identification number (EIN).

Part I. General Information and Certification

Line 1

Mark the appropriate box that corresponds to the type of taxpayer you are. You may select:

• Corporation
• Partnership

Line 2

Mark YES if your corporation or partnership is organized for the purpose of investing in qualified opportunity zone (QOZ) property other than another qualified opportunity fund (QOF); otherwise, mark NO.

If you have marked YES, you may proceed to line 3. If you have marked NO, stop here and do not file this Form 8996 IRS with your tax return.

Line 3

Mark YES if this is your corporation or partnership’s first qualified opportunity fund (QOF) period or year; otherwise, mark NO.

If you have marked YES, you are certifying that by the end of your corporation or partnership’s first qualified opportunity fund (QOF) period or year, your organizing documents include a statement of the entity’s purpose of investing in the qualified opportunity zone (QOZ) property and a description of the trade or businesses that the QOF is engaged in either directly or through a QOZ business.

Line 4

If you have marked YES on line 3, enter the first month in which the fund has chosen to be a qualified opportunity fund (QOF).

Line 5

Mark YES if any of your investors have disposed of their equity interest in the fund in part or in whole; otherwise, mark NO.

If you have marked YES, you are required to attach a statement with each investor’s name, the date of disposal, and the interest that they transferred during the tax year of the qualified opportunity fund (QOF).

Line 6

Do not mark this box. This will be reserved for future use.

Part II. Investment Standard Calculation

Line 7

Enter the amount from Part VI, line 2, for the total QOZ property held by your corporation or partnership on the last day of the first 6-month period of your tax year.

Line 8

Enter the total amount of assets held by your corporation or partnership on the last day of the first 6-month period of your tax year.

Line 9

Divide the amount in line 7 from the amount in line 8 and enter the total amount.

Line 10

Enter the amount from Part VI, line 3, for the total QOZ property held by your corporation or partnership on the last day of your tax year.

Line 11

Enter the total amount of assets held by your corporation or partnership on the last day of your tax year.

Line 12

Divide the amount in line 10 from the amount in line 11 and enter the total amount.

Part III. Qualified Opportunity Fund Average and Penalty

Line 13

Add the amount in line 9 and the amount in line 12 and enter the total amount.

Line 14

Divide the amount in line 13 by 2.0 and enter the total amount.

Line 15

Mark YES if the total amount in line 14 is equal to or more than 0.90; otherwise, mark NO.

If you have marked YES, enter “-0-” in the line and file this form with your tax return. If you have marked NO, your fund has failed to maintain the investment standard. You are now required to complete Part IV of this form to calculate your penalty. Then, you must enter the penalty from line 8 of Part IV on this line.

Part IV. Line 15 Penalty

Line 1

Enter the total amount of your assets on the last day of the month in columns (a) through (l).

Line 2

Multiply the amount in line 1 by 0.90 and enter the total amount in columns (a) through (l).

Line 3

Enter the total amount of your qualified opportunity zone (QOZ) property on the last day of the month in columns (a) through (l).

Line 4

Subtract the amount in line 3 from the amount in line 2 and enter the total amount in columns (a) through (l). If the amount is less than zero, enter “-0-.”

Line 5

Enter the total amount of your underpayment rate in columns (a) through (l).

Line 6

Multiply the amount in line 4 by the amount in line 5 and enter the total amount in columns (a) through (l).

Line 7

Divide the amount in line 6 by 12.0 and enter the total amount in columns (a) through (l) after rounding in up to two decimal places.

Part V. QOZ Business Property - Directly Owned or Leased by Taxpayer

The instructions stated below will apply to all of the columns in this section.

Column a. Qualified opportunity zone (QOZ) Number

Enter all of your qualified opportunity zone (QOZ) numbers for the QOZ business properties you directly own or lease.

Column b. Owned property value

Enter the owned property value of all the qualified opportunity zone (QOZ) business properties you directly own on the last day of the first 6-month period of the tax year.

Column c. Lease property value

Enter the lease property value of all the qualified opportunity zone (QOZ) business properties you have directly leased on the last day of the first 6-month period of the tax year.

Column d. Owned property value

Enter the owned property value of all the qualified opportunity zone (QOZ) business properties you have directly held on the last day of the tax year.

Column e. Lease property value

Enter the lease property value of all the qualified opportunity zone (QOZ) business properties you have directly held on the last day of the tax year.

Line 1

Enter the total value of your QOZ business properties from the separate statement if you have directly owned or leased the QOZ business properties that have been used in one or more QOZs.

Part VI. QOZ Stock or Partnership Interests

The instructions stated below will apply to all of the columns in this section.

Column a. Qualified opportunity zone (QOZ) Number

Enter your qualified opportunity zone (QOZ) number.

Column b. Employer identification number (EIN) of QOZ Business

Enter the employer identification number (EIN) of your QOZ business.

Column c. Investment value

Enter the investment value of your QOZ stock or partnership interest held on the last day of the first 6-month period of the tax year.

Column d. Owned property value

Enter the owned property value of the tangible property held by your (QOZ) business on the last day of the first 6-month period of the tax year.

Column e. Lease property value

Enter the lease property value of the tangible property held by your (QOZ) business on the last day of the first 6-month period of the tax year.

Column f. Investment value

Enter the investment value of your QOZ stock or partnership interest held on the last day of the tax year apportioned to each of your QOZs.

Column g. Owned property value

Enter the owned property value of the tangible property held by your (QOZ) business on the last day of the tax year.

Column h. Lease property value

Enter the lease property value of the tangible property held by your (QOZ) business on the last day of the tax year.

Line 1

Enter the total amount of your QOZ business value.

Line 2

Enter the total amount of your 6-month test QOZ property.

Line 3

Enter the total amount of your year-end test QOZ property.

Line 4

Mark the appropriate box which corresponds to the type of account method you have used to calculate the value of the properties listed on this form. You may select:

• Applicable financial statement valuation method
• Alternative valuation method

Part VII. QOZ Stock or Partnership Interests (continued)

Line 1

Enter the total amount of your QOZ business value if you have invested in QOZ businesses.

Line 2

Add all of the amounts from columns c and f and enter the total amount.