If you invested in a Qualified Opportunity Fund (QOF) or deferred capital gains by investing in one, you may need to file Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, with your federal tax return.
Form 8997 helps the IRS track your Qualified Opportunity Fund investments, deferred gains, and any changes in your investment holdings throughout the tax year.
Do I Need to File Form 8997?
Generally, you must file Form 8997 if you held a Qualified Opportunity Fund investment at any time during the tax year.
This filing requirement applies to eligible taxpayers who:
- Made a Qualified Opportunity Fund investment and elected to defer a capital gain
- Continued to hold a QOF investment from a prior year
- Disposed of all or part of a QOF investment during the year
- Have other QOF-related reporting obligations
Because the filing requirements can vary based on your situation, be sure to review the IRS instructions for Form 8997 if you're unsure whether the form applies to you.
Which Parts of Form 8997 Do I Need to Complete?
The section(s) of Form 8997 you must complete depend on your specific Qualified Opportunity Fund activity during the tax year.
For detailed guidance on which part of the form applies to your situation, refer to the official IRS instructions for Form 8997.
Entering Form 8997 in TaxSlayer
To report your Qualified Opportunity Fund investments in TaxSlayer:
- Log in to your return.
- Select Federal.
- Select Income or Select My Forms.
- Choose Investments.
- Select Form 8997 - Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments.
Follow the on-screen prompts to enter the information reported for your investment.
How Do I Access the Different Sections of Form 8997?
After opening Form 8997, you'll be asked several introductory questions.
To access the applicable reporting sections of the form, you must answer Yes to the following question:
"Do you hereby irrevocably waive any benefits available under an applicable U.S. income tax convention that would exempt gains that you are deferring by investing in a QOF from being subject to federal income tax at the time of inclusion?"
Once this question is answered as required, the program will display the additional sections needed to complete Form 8997.
Understanding This Question
This question generally applies to taxpayers who may be eligible for benefits under an income tax treaty with the United States. The IRS requires this acknowledgment when a taxpayer elects to defer eligible gains through a Qualified Opportunity Fund investment.
If you're uncertain how to answer this question, review the IRS instructions or consult a qualified tax professional.
Additional Information
For more detailed information about eligibility, reporting requirements, and completing each section of the form, see the official IRS Instructions for Form 8997.
Helpful Tips
- Keep records of your original deferred gain and your Qualified Opportunity Fund investment dates.
- You'll generally need to file Form 8997 each year that you hold a QOF investment.
- Make sure the information reported on Form 8997 is consistent with any related Opportunity Zone forms and supporting documentation included with your return.