Oppertunity zone capital gains credit does TT allow me to defer gains for OZ investments?

[gregput]

Will TT allow me to defer Capital Gains for QZ investments under new rules for 2018?

[Critter · Accepted solution]

If you are talking about 2017 return ?  If so it seems the program has not been updated for that yet probably because the IRS has not yet addressed it ... you will be able to amend the return later.  

Q. How do I elect to defer my gain on the sale of the stock?

A.  You may make an election to defer the gain, in whole or in part, when filing your 2018 Federal Income Tax return in 2019 (that is, you may make the election on the return on which the tax on that gain would be due if you do not defer it). 

Q. I sold some stock on December 15, 2017, and, during the required 180-day period, I invested the amount of the gain in a Qualified Opportunity Fund.  Can I elect to defer tax on that gain?

A. Yes, as long as it was invested in the 180-day period, under § 1400Z-2(a)(1) of the Internal Revenue Code, you may elect to defer the tax on that gain.  A deferral election may be made on your 2017 Federal Income Tax return.  Information about the sale of your stock is required to be included in that return using IRS Form 8949.  Precise instructions on how to use that form to elect deferral of the gain for your 2017 return will be forthcoming shortly. 

https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions

[bbansal.usc]

any update here around "Precise instructions on how to use that form to elect deferral of the gain for your 2017 return will be forthcoming shortly."

[n7079d]

Same question, have capital gain sale in 2018 from K-1 put into QOF

[n7079d]

Same problem - k1 capital gain invested in QOF

[ronsandler]

same problem/question, when and if turbotax will support Adj. code Z for capital gain deferral for QOF

[gregput]

Same question about deferring cap gain used to invest in QOZ project

[Critter]

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4589522-is-irs-form-8996-supported-for-the-2018-tax-year">https://...>

[jpabello]

What?? I hope TurboTax 2018 fixes this quickly!

[Critter]

Sadly some things are used so infrequently that TT does not incorporate it ... all you can do is manually enter it in the FORMS mode and attach the paper copy to the return ... may I suggest you skip it on the original return & amend the return later.

[ronsandler]

What data do you have to back up statement that the NEW adjustment code for QOF cap gains deferral is used infrequently. People who need it can't skip it and amend tax return later as without it it would generate a huge tax liability. Better to request an extension as TurboTax will most likely add it eventually IMHO

[dxf1]

Just talked to TT and it's difficult to do this.  You have to pass the information to form 8949 (see <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i8949.pdf">https://www.irs.gov/pub/irs-pdf/i8949.pdf</a> and <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8949.pdf">https://www.irs.gov/pub/irs-pdf/f8949.pdf</a>).  The code is 'Z' on 8949 and I think you'd subtract the amount of the cap gain.  To do this in TT, you'd go to form 8949, and go to the one for long-term sales.  Click 'override' in the edit menu, then enter 'Z' as the code and then negate the long-term capital gain for each transaction.  This does change the total tax that I would owe, but I *think* that you'd also need to fill out form 8996 and mail it in with your TT return.  I was told that TT will not be including form 8996 for the 2018 tax year (<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8996.pdf">https://www.irs.gov/pub/irs-pdf/f8996.pdf</a>).  If anyone has better information that I do, I'd like to hear it.

[dxf1]

Here's the info that the TT help person emailed me:

David - you called in to TurboTax and wondered how to indicate that you have deferred capital gains under the Qualified Opportunity Zone rules.

I regret to inform you that TurboTax does not support this form yet, nor can I tell you when we will.

I did inform you of the form 1(8996) you would need, and that if you print and mail your return, you could make negative adjustments with an explanation statement).

[jpabello]

Intuit should at least support this in EasyStep for form 8949. This is a big part of the tax law changes for 2018.

[ronsandler]

8996 is used by entities that are creating a QOF. It has nothing to do with individuals who invest in a QOF. The process described to negate the cap gains in individual transactions is not how the form instructions say to enter info for QOF deferral. You do not adjust the cap gains trnx, you enter a new line with adj code Z,  read the form instructions if you plan on commenting on how to do it. Anyway I plan to simply enter a dummy transaction so I can figure correct taxes, than do an extension since I am waiting for final K1's anyway.