Opportunity Zone Funds for Tax Year 2019

[Lao3]

In 2019 I sold a residential rental real estate (1099-S), I need to file Form 8997 to defer the gains held in QOFs. This Form 8997 is missing in current TurboTax.  I am looking forward to TT integrating this form 8997 into current TurboTax.  Please help.

[rjs]

@Lao3  I'm sorry, but we cannot help you. TurboTax does not support deferring gain by investing in Qualified Opportunity Funds, and it is not going to be supported. TurboTax does not support codes Y and Z on Form 8949, nor does it support Form 8997, and they are not going to be supported. If you want to defer capital gain by investing in a Qualified Opportunity Fund, you cannot use TurboTax to file your tax return.

[caliben888]

Were you able to e-file your return successfully with TaxAct?  Thanks.

[NW Jim]

Yes I was able to e-file a tax return using TaxAct and having the forms required for an opportunity fund investment.   TaxAct was not the easiest program to use to report all my stock sales but it did have all the required forms.  IRS accepted my file but not enough time has past to receive the refund - it’s minimal. 

[caliben888]

Thank-you!  This is encouraging.

Could you let me know which version of TaxAct you've used?  Were you able to import TT data into TaxAct? 

[NW Jim]

I did have some issues importing - it would not accept my prior pdf but the below instructions allowed me to trim some pages off my pdf and get it accepted.  

I used the on line self employed but I would expect other on line editions would also work.   You do have to pay to see a facsimile version of the 1040 if you like to see that before you transmit.   Not the easiest software but it worked. 

Dear TaxAct Customer,

If you're experiencing issues importing a PDF copy of your return created with other software (TurboTax, H&R Block) there are a few things you might try:

• The PDF should be "image with text." 
• Check the file size: anything over 500kb could be an "image only" and is not as likely to be read by the TaxAct import process.
• Creating the PDF file is best done using the "Print" function in the PDF-creation software. Choose the PDF writer as your printer.
• Be sure your PDF is not password protected. This could have been set up when the file was created and you'll need to check the PDF writing software. Adobe Acrobat or other PDF writing software can add (and then remove) a password from a document.
• Shorten the filename to something like "2018TaxReturn.pdf" to make it a more manageable name.
• The file may be corrupt. You may need to go back to the PDF-creation software to "print" another PDF file.
• To provide the most effective, up-to-date import capabilities, TaxAct must be able to establish a secure connection to the Internet. You may need to check on your firewall, Windows, Internet options or security software settings. With security software, you may need to grant permission to the TaxAct program.

[x147]

Just to follow up my previous post and echo NW Jim's posts, able to complete the return w/opportunity zone investment using Tax Act.  Just be prepared to do quite a bit more manual entry (less import options).  I did continue to use Turbo Tax up to point of the opportunity zone investment, it gave me the confidence that everything matched up dollar to dollar to Tax Act (prior to entering the OZ fund investment info).  Also, yes the 8997 form and the proper 8949 entries did show up in Tax Act.   I used the "premium" download version of TaxAct, if you get a message in the online order webpage stating "not yet available" or "coming soon",  keep going forward with the purchase, it is actually available.

[caliben888]

Thanks x147.  I also purchased TaxAct download version today.  It's true that it's not as automated as TT so I literally spent a whole day on TaxAct to reproduce what I did on TT.  But the effort is well worth it.  It supports the opportunity zone investment with no issue.  I am ready to e-file tomorrow once I take another look at the return.  Thanks for all of your help in pointing me to the right direction.  (I will also try to get my refund from TT.)

[hshew]

I am having this issue too.  But I think I have a workable solution: I will add in a "dummy" capital loss in TurboTax equal to my QOZ deferral.  For example, if I have a $50k deferral that needs to be reported on form 8949, I will create a dummy capital loss stock in QOZ corporation of $50k within TurboTax, which will show up on form 8949.  That way my TurboTax tax calculations will be correct (a $50k deferral is treated the same as a $50 tax loss).  I will then print out my taxes in the form of a PDF file.  I will then use a PDF editor to remove my dummy capital loss and add in my QOZ deferral on form 8949.  I will also need to generate a form 8997 to report my QOZ deferral.  I will then have to snail mail my return to the IRS and my state.  But I think this method will allow me to generate 99% of my return correctly, aside from the PDF edited/created forms 8997 and 8949.  Snail mailing will be FAR cheaper/quicker than hiring an accountant or reentering all my data into Tax Act.  Anyone see any issues with this strategy?

[Golfdiva]

I am planning to file in paper as well, exactly for the same reason (or hope TurboTax will have 8997 when I file in June...).  I did hear that paper filing increase the risk of an audit.  This is something to keep in mind.  I tried to use TaxAct to file my tax but that program is really not as user friendly as TurboTax.

[Cuz2]

Sounds like I am going to have to try TaxAct in order to properly report my investment in a QOF. I will normally have have 50+ equity trades to report and Turbo Tax does a good job importing the data directly from my Fidelity and TDAmeritrade accounts. Will TaxAct support this direct download process. If so, once I do the download only two or three of these trades will have been used in my QOF investment. How will it work separating these specific trades out onto forms 8949 and 8997 for reporting the QOF Investment?

Thanks 

[caliben888]

First, TaxAct worked out great for me for filing electronically with QOF since I switched from TT. 

TA has limited importing capability.  I forgot if they support Fidelity or TDAmeritrade.  I have Schwab which they don't support.  They do have a method to import Excels exported from my Schwab accounts.  It requires some manual process but it worked.  I have over 200+ trades and TA imported them flawlessly.  I did manually checked each item to make sure nothing was missing.  It took me a whole day to switch from TT (which I was essentially done except the lack of QOF support.) to TA. But I found the effort was well worth it since I was able to file electronically.  My refund came in less than 2 weeks!

BTW:  For those of you who are considering sticking with TT and file by mail, I heard IRS is so backup right now due to the Covid disaster checks that they are not going to process any mail-in tax returns for a few months!  In case if you have a refund coming, you may want to re-consider this strategy.

[caliben888]

Note that for those of you who are considering sticking with TT and file by mail, I heard IRS is so backup right now due to the Covid disaster checks that they are not going to process any mail-in tax returns for a few months!  In case if you have a refund coming, you may want to re-consider this strategy.

I fully agree that TA is not nearly as user-friendly as TT.  It took me a day to convert my return from TT to TA.  Biggest headache were stock transactions and rental properties for me.  But it was well worth the time since I had a big refund coming.  Only took less than 2 weeks to get the refund.

[NW Jim]

Can I ask when you filed with TA.  I filed March 26 and have see. No refund yet.   Lucky in a way it’s quite small but it also has been a month.    Covid work at home might have started before I filed and they are not just slow?   Or..... did I have edits in the irs side?  

[NW Jim]

I believe they download TDAneritrade. Not sure on Fidelity.   To report the opportunity zone investments you report a dollar amount of the gain to be deferred - not each investment.   You do need the tax Id of the opportunity zone investment - mine was a k-1.