![]() ![]() First, it only applies to that portion of the investment that was a qualifying investment in a QOF partnership or QOF S corporation that the taxpayer held for at least 10 years.This is permitted, however, only if all of the following requirements are satisfied: In addition to the basis increase rules for sales of qualifying QOF interests held for at least 10 years, the holder of a qualifying investment (with respect to that investment) may elect to exclude all gains and losses generated from the sales of assets by that QOF or certain lower-tier partnerships owned by the QOF. A similar rule applies to exclude the QOF investor’s share of gain and loss from sales of QOF assets. See Q&A 26, below.Ī26. As a result of this basis adjustment, the appreciation in the QOF investment is never taxed. Second, if the investor holds the investment in the QOF for at least 10 years, the investor is eligible for an adjustment in the basis of the QOF investment to its fair market value on the date that the QOF investment is sold or exchanged.If held for at least 7 years, the 10% exclusion becomes 15%. If the QOF investment is held for at least 5 years, there is a 10% exclusion of the deferred gain. The deferral lasts until the earlier of the date on which the investment in the QOF is sold or exchanged, or December 31, 2026. First, an investor can defer tax on any prior eligible gain to the extent that a corresponding amount is timely invested in a Qualified Opportunity Fund (QOF). ![]() QOZs are designed to spur economic development by providing tax incentives for investors who invest new capital in businesses operating in one or more QOZs.
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