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What QOF managers and their CPAs should be assembling now, before the instructions arrive. The IRS quietly published an early-release draft of the 2026 Form 8997 on August 4, 2026. The instructions have not been released, and draft forms may not be filed. The structure is worth reading now. Much of what changed is built around the end of the deferral period on December 31, 2026, which reaches every investor who put a gain into a QOF before 2027. Part III now carries the compu

Where a single entity holding both legacy and post-2026 capital runs into the transition rules. We are hearing a version of this question every week. A sponsor holds a 2019 or 2021 QOF that is still deploying, and wants to use that same entity to raise fresh capital once the new zones take effect on January 1, 2027. Nothing in the statute or in Notice 2026-40 requires a new entity. The practical answer is harder. A dual-vintage fund runs two property regimes, two benefit sche

Transitional guidance on Qualified Opportunity Zones under OZ 2.0: what fund managers and investors need to know now. On June 18, 2026, the IRS issued Notice 2026-40. This Notice is transitional guidance ahead of forthcoming proposed regulations. It resolves several timing and compliance questions created by the OBBBA. The positions below are reliable for planning today. They are not yet final regulations, so you should confirm current guidance before acting. The December 3

For most of the Opportunity Zone program's first decade, enforcement was limited. Form 8996 was required annually, but filing it poorly carried no specific statutory penalty. The 90% investment standard failure penalty existed on paper, but IRS scrutiny of QOF compliance was minimal. Fund managers operated in a largely self-certifying environment, and most of them knew it. The One Big Beautiful Bill Act, signed into law on July 4, 2025, ends that environment. OZ 2.0 introduce

A term has been making the rounds among Opportunity Zone practitioners: the "dead zone." It refers to 2026 — a year in which new investments into Qualified Opportunity Funds carry meaningfully weaker tax benefits than investments made either several years ago or starting January 1, 2027. The name is attention-grabbing. The mechanics behind it are real. But for fund managers paying attention, the dead zone is less a threat than a transition — and one that rewards preparation.

The Opportunity Zone program is now permanent law. But the rules that govern a fund depend entirely on when its investors committed capital — and the differences are significant. Fund managers operating across both regimes face a dual compliance reality that will persist for years. A Program Made Permanent When Congress created the Opportunity Zone program in 2017, it built in a sunset. The program was temporary by design, with investment eligible only through December 31, 20

The 90% asset test is the structural backbone of QOF compliance. Failing it triggers financial penalties. Failing it repeatedly creates legal and investor-relations exposure that compound over time. Under OZ 2.0, the stakes are higher — and the data required to document compliance is more detailed than ever. What the 90% Asset Test Requires Every Qualified Opportunity Fund is legally required to hold at least 90% of its total assets in qualified opportunity zone property (QOZ

Every deferred capital gain invested under OZ 1.0 becomes taxable on December 31, 2026 — whether or not investors receive any cash. This is the single most consequential compliance deadline in the history of the Opportunity Zone program, and fund managers are on the front line. The Hard Deadline When Congress created the Opportunity Zone program under the Tax Cuts and Jobs Act of 2017, it offered investors a powerful incentive: defer capital gains taxes by rolling eligible ga