how can we use Turbotax to claim opportunity zone investment in 2021

[mpjph]

Just found out that only certain limited Opportunity Zone funds quality for CA state tax deferral.  @axing , it looks like the approach of adding a captital loss reduces CA state taxes as well, so the approach may not work with CA?

[axing]

I have no idea:-( maybe you can report a separate capital event in your CA return. I have no idea. You can try TaxAct to see how it handles it, then do your hack in Turbotax.

I almost wanted to use TaxAct to do my return, but it calculated more tax due than Turbo. 

[mpjph]

Thanks @axing .  I am thinking I would efile the Federal with the QOF investment per your "hack" (supplemented with separate 8997 form) and then efile the CA tax without it so the CA tax would still be there...

[mpjph]

@axing , I was able to efile with the additional negative entry for QOF.  I tried to do the override to put in code "Z", but efile wouldn't not allow the override, so I reverted to the blank.  For CA tax I ended up just adding an adjustment to counter the negative adjustment of the QOF entry and the tax ended up being the same.  Hope TurboTax fixes this for next year!

[Anonymous_]

I hope they do as well, but I would not count on that, particularly considering there is a sunset provision for QOFs.

[axing]

It is great to hear that you were able to get it thru! I still needd to wait for few K-1s so won't know until July. At least your experience gives me more confidence! Thanks for sharing.

[Yoginbp]

What’d you end up doing? Did it work?

[Anonymous_]

@Yoginbp 

See this thread --> Re: Opportunity zone investment (intuit.com)

[mark kay]

I like this approach, @axing . Other posts have indicated that you don’t have to file amended return to file form 8997, as no tax change occurs, implying that you just don’t file it and “wait” to see if IRS asks for it, though that seems hokey to me.  
I am confused about the last part of your post that says if you file the TurboTax instructions then the tax calculation is wrong. TurboTax  doesn’t have any instructions for 8997 or the “z” on 8949.  Could you explain?

I’m planning to override TurboTax, add the required one line to 8949 and do the override to add the z and clear columns b and d.  Then print the return, manually fill in an 8997 and mail it all in in.  Not happy about the mail-in, as hard to tell that they got it or processed it.
Definitely looking for an update from you on the success of your approach. 

[axing]

@mark key, Sorry for getting back so late, Mark. I have been out of the country. I didn't manually over ride the code D with Code Z in form 8949 and mail in the paper return. I just ended with code Z in the description of the transaction. My return went thru and I got the tax refund in about 2 weeks w/o any problems. I simply mailed form 8997 along with a letter explaining what I did and why. I also included a copy of form 8949, 4797 and 1040 so that IRS can cross reference the transactions. 

I plan to continue this approach in the subsequent years untill all OZ funds are closed. 

I couldn't find my original post and only remember mentioning TAXACT doesn't find as much tax savings as Turbotax, as the reason for me to try to hack Turbo instead of using TAXACT.