How can I/do I need to file form 8997?

[gzhuwea]

Hi I just to want to see if this worked for you. I am running into the same issue right now, wonder what to do...

[user322]

I switched to TaxAct, which supports the form.

[gzhuwea]

Thank you! Did you use TaxAct Online? I'm new to the program and have a few questions. How should I enter the acquisition date? I entered the cost basis as zero with a negative proceed—does that sound correct? Also, where can I enter the letter "Z" in column F?

Thank you so much!

[DXS]

No no no no no no no no no.  TaxActOnline is NOT user friendly and is NOT for dummies.  I have an accounting degree and I do my own taxes and I still had to figure it out. 

You enter the actual sale, and the actual cost basis.  In the Capital Gain column, you use the drop down menu and then it lets you code it Z.  Coding it Z sends it straight to the Form 8997.  I think......

I invested mine in 2020 and in the subsequent years it was just "carried forward" so I gotta go back and look for sure how I did it. 

I will look and see what I did.

JJ

[DXS]

Ok, in the screen where you enter your information, you enter the cost basis and the sale amount.  Then there is a question on "other details" and you check "I need to make an adjustment."  The Z code SHOULD appear there.  But it took me forever to get it to show.  Like I said, TaxAct is NOT user friendly. 

JJ

[trex4]

I tried using Tax Act Online.  I had purchased the QOZ in a previous year and only wanted to use form 8997 for the annual reporting but the program only seemed to work for current year deferrals.  I could never find a way around this in Tax Act.

Tubo Tax if you are listening, please include form 8997 or at least allow for the attachment of a non Turbo Tax form.

[DXS]

If this is the first time using TaxAct and you purchased your QOZ in a previous year, I don't think there is a screen to enter the carryover information.  I think you manually enter it on the form within the software.  You go to the specific form and there is a way to manually enter it.  I have a QOZ that is being "bought out."  So, Company A will show on carryover in Part I (cuz I used TaxAct last year) and in Part IV I have to manually overwrite it (I figured out how....) with "Company B formerly Company A."  That is the way TaxAct lets you do it on a fund buyout because if you show an "out and back in" it will create a taxable event.  But if your fund is "bought out" the event is not taxable and you keep your timeline. 

Based on what I have to do on my fund buyout, I think..... the form will allow you to "overwrite" directly on the form online in Part I.  But figuring out how to get to the form is tricky.  As I have mentioned, TaxAct "ain't for dummies."  It's not user friendly for people who do not have Accounting degrees. 

Ok, I just checked my account.  Yes, I am right!  It's called "Quick Entry."  You do a search for Form 8997.  You get a long list.  Scroll down down down down down, until you get Form 8997.  On Part I and Part IV you can do a "quick entry."  If you have no current year additions, just go to the form online and do "Quick entry" for Part I and Part IV.  You won't need Parts II and III. 

[gzhuwea]

Thank you. Do you make two transactions: 1) to sell the stock, and 2) to reverse the stock? I noticed that if you want to do it all in one transaction, you have to select the "F" long-term transaction for which you did not receive a Form 1099-B. If you select the "E" long-term transaction, where the basis was not reported to the IRS, the "Z" option will disappear.

Where do you find the forms? Right now, I can only do step by step.

[DXS]

I am not sure what you are asking.  I will give scenarios.

If you are carrying over a QOF balance with no changes, in TaxAct, you will have to manually enter the information in Part 1 of the Form 8997 using "Quick Entry."  There is a way to access the forms, I can't remember how right now.  Like I have said, TaxAct is NOT for dummies!  You need to know what you are doing.

If you take a cash out of a QOF and reinvest it, then you have a taxable event.  You will show an "out and back in."  But you will lose any 10% or 15% exclusions you may have had.  If you reinvested probably no effect, but you have to show an out (which creates a taxable event) and back in (which will exclude it from tax). 

If your QOF was bought out, DO NOT show an "out" and "back in" as you mentioned above.  That will create a taxable event.  You do a manual entry using Quick Entry on the form in Part IV where you over write and say "Company B formerly Company A."

If you are investing in a QOF for the first time, (and there are no 10% or 15% exclusions when you claim the gain in 2026 (which may be changed to 2028, pending legislation) if you invest this late) you show your capital gain on the form 8949 (well, you enter it where TaxAct wants you to enter it) and then you show a Z code for the gain you are excluding to Form 8997.  It will automatically go to Form 8997 if you enter the Z code. 

And I feel your frustration for not getting the Z code on short term gains.  Short term gains are eligible to be invested in QOF.  But I had trouble getting the Z code to show up in the drop down menu on TaxAct regardless of short or long term. I had to call Tax Act.  They were pretty helpful. But I know the correct terms to use. If you are not an Accountant, it may be difficult for you to communicate the issue and for them to understand what you are needing.  TaxAct ain't for the squeamish....

Tax Slayer also supports Form 8997 but I am not familiar with it. 

And sorry TurboTax, but I will mention TaxAct and TaxSlayer if I want because YOU chose not to support the Form 8997 and YOU lost customers such as me because of it.  I would have preferred to keep buying the TurboTax software and install on my computer, but I had to switch to TaxAct because of YOUR choice to not support the Form 8997.

JJ