What Is a Form 8997
IRS form 8997 is designated for individual taxpayers, partnerships, corporations, trusts, and estates to report investment information in Qualified Opportunity Funds during the tax year. Taxpayers who invest in these funds can benefit from temporary deferral, reduction, or potential elimination of certain capital gains taxes.
How To Fill Out IRS Form 8997
To fill out IRS form 8997, follow these steps:
Part I – Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments:
Report QOF investments held at the beginning of the tax year. Enter QOF EIN, acquisition date, description of the investment, special gain code, and amounts of short-term and long-term deferred gains.
Part II – Current Tax Year Capital Gains Deferred by Investing in QOF:
Report capital gains deferred by investing in a QOF during the current tax year. Include details about the QOF, investment description, and deferred gains.
Part III – Inclusion Events and Certain Other Transfers During the Current Tax Year:
Report any inclusion events (like sales or transfers) affecting your QOF interests. Provide details of the QOF, the event's date, the event's description, and amounts of deferred gains now included in taxable income.
Part IV – Total QOF Investments Due to Deferrals at Year End:
Report all QOF investments held at year-end due to deferrals. Include information about each investment, similar to previous parts.
How To File IRS Form 8997
Once completed, IRS form 8997 should be attached to your federal tax return - form 1040 for individuals or the appropriate form for partnerships, trusts, or corporations. Ensure that all the details are accurate and well-documented. Failure to report an investment or a disposition accurately may result in penalties.
Deadline For Form 8997
The deadline for filing IRS form 8997 aligns with your timely filed federal tax return, including any extensions. The deadline can vary depending on your tax filing status and whether you have requested an extension. Generally, for individual taxpayers, the deadline would be April 15th or the next business day if April 15th falls on a weekend or holiday. If you have filed for an extension
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