Form 8996

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What is form 8996

This is a standard tax form necessary for launching a Qualified Opportunity Fund (QOF). It is a special type of fund that seeks to invest in the so-called qualified Opportunity Zones. They include depressed areas, small towns, etc. You can see their full list here.

Upon filing the form, you will qualify for such bonuses as:

  • Tax deferrals.
  • Capital gains exclusion.
  • The step-up basis for capital gains, etc.

A unique feature of that document is that an investor should specify how every single on of the qualified investments earned the tax benefits.   

What I need form 8996 for?

If you run a company or partnership that operates in a qualified opportunity zone, then filing this form is unavoidable. With it, you can claim certain benefits like a 10% step-up in tax basis after five years and other bonuses.

How to fill out form 8996

The 8996 form consists of four parts. It is believed to be one of the most complex forms issued by IRS, as it lists such specialized concepts as working capital assets, eligible gain, and so forth.
In the first part, you need to select the taxpayer type: partnership or corporation. Plus, in this same part, you should name the first month when your company became a QOF, which is important for the tax calendar.

In Part II you’re supposed to list the assets owned by your company, the qualified opportunity zone property that also belongs to you, and so on.

Part III is based on calculations that involve data from the previous two parts. It’s one of the reasons why experts advise outsourcing filling out this form to a professional.

The concluding part IV also involves some math, such as calculating the ‘underpayment rate’ per month.

Organizations that work with form 8996

This form is a legal documented released by the IRS. You can download form 8996 on PDFLiner and edit it right in your browser for free.

Fillable online Form 8996
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