Form 8997 is the annual statement an investor files to tell the IRS which Qualified Opportunity Fund (QOF) investments and deferred gains it held at the start and end of the year, what new gains it deferred, and what it disposed of. As of October 2026, the current form is the 2025 version, filed with the investor's timely return, including extensions, for every year the investment is held.
- Filed by
- The investor
- Current version
- 2025
- How often
- Every year held
- Attach to
- Your federal return
This page uses "OZ 1.0" for investments made through December 31, 2026 and "OZ 2.0" for investments made after that date. The 2025 form was written for OZ 1.0.
Who must file
The 2025 Form 8997 instructions say an eligible taxpayer holding a QOF investment at any point during the tax year must file Form 8997 with its timely filed federal income tax return, including extensions. An eligible taxpayer is a person required to report the recognition of gains during the year under federal income tax accounting principles.
The form attaches to Form 1040, 1040-SR, 1040-NR, 1041, 1065, 1120, 1120-F, 1120-REIT, 1120-RIC, 1120-S or 990-T. Three details from the instructions:
- A holder that is not otherwise required to file a return, other than a grantor trust, still attaches Form 8997 to an appropriate return with its name, address and TIN.
- A consolidated group includes a separate Form 8997 for each member that held a QOF investment.
- Only qualifying investments go on Form 8997. Other, nonqualifying investments in the same fund are not reported on it. When only part of an investment came from deferred gain, the statute treats it as two separate investments, and only the deferred-gain part gets the tax benefits.
The fund files its own, different form, Form 8996.
What each part reports
| Part | Reports | Timing |
|---|---|---|
| Part I | QOF investments and remaining deferred gain held before the year began | For individuals, generally January 1, 2025 on the 2025 form. If it differs from last year's ending holdings, attach an explanation. |
| Part II | Capital gains deferred this year by investing in a QOF | Each new investment, with the fund's EIN, date acquired and description. |
| Part III | Inclusion events and certain other transfers this year | Deferred gain now included in income, split short-term and long-term. |
| Part IV | Total QOF investments due to deferrals at year end | For individuals, generally December 31, 2025 on the 2025 form. |
Every part uses the same columns: (a) the fund's EIN, (b) the date acquired or the date of the event, (c) a description such as "100 shares" or "25% interest," (d) a special gain code if one applies, and (e) and (f) for short-term and long-term deferred gain. The character of the gain carries through the investment.
Page 1 also has a treaty question. A foreign eligible taxpayer may elect deferral only if it irrevocably waives treaty benefits that would exempt the gain when it is later included. The instructions note that this waiver generally does not apply to partnerships.
Part III: inclusion events
The instructions list the common inclusion events: selling or transferring the investment, receiving a distribution, declaring the interest worthless, the fund ceasing to be a QOF, and certain other transactions. The full list and its exceptions are in 26 CFR 1.1400Z2(b)-1(c). Giving the investment away is generally an inclusion event, and a transfer because of the investor's death generally is not. More on the inclusion events page.
- If a transaction falls under an exception, enter "Exception" and the regulation citation in column (c) and leave columns (d) through (f) blank.
- Check the Part III box if you disposed of an investment and did not receive a Form 1099-B from the fund or another third party.
- For a basis increase from holding 5 or 7 years, enter "Adjustment to basis 5-year" or "Adjustment to basis 7-year" in column (c) and code G or H in column (d).
Special gain codes
| Code | Meaning |
|---|---|
| A | Section 1256 gain |
| B | Form 4797 (section 1231) gain |
| C | Straddle(s) |
| D | Collectibles |
| E | Exempt by treaty (but for the election to defer rather than claim exemption) |
| F | Deferred gain relating to a noninclusion transfer |
| G | Adjustment to basis, 5-year |
| H | Adjustment to basis, 7-year |
Code F carries an identification rule. When an investment moves between taxpayers in a transaction that is not, in whole or part, an inclusion event, the receiving taxpayer enters the transferor's name, TIN and transfer date in column (c), and the transferring taxpayer enters the transferee's. If an investment continues an investment in a different fund, for example after a reorganization, enter "Formerly" and the earlier fund's EIN in Part IV.
How Form 8997 ties to Form 8949
Form 8997 is a statement. The election and the inclusion themselves are reported on Form 8949, and the two must agree.
| Event | Form 8949 | Form 8997 |
|---|---|---|
| Deferral election | Own row in Part I (box C or I) or Part II (box F or L); fund EIN in (a), investment date in (b), (c) to (e) blank, code Z in (f), deferred amount as a negative number in (g) | Part II, and the holding in Part IV |
| Deferral of section 1231 gain | Two Part II rows: "QOF INVESTMENT FROM FORM 4797" with code O, then the code Z row | Part II with code B |
| Sale of the QOF interest | Own row with the fund's EIN, columns (b) to (e) completed, code Y in (f), previously deferred gain as a positive number in (g) | Part III |
| Each year held | Nothing | Parts I and IV |
The Form 8949 instructions add three rules. Attach the Form 8949 that shows code Z first. Report each investment in a fund, or each investment date, on a separate row, though same-character gains invested in the same fund on the same date may share a row. And the summary-reporting shortcuts (Exception 2 and the special provision for certain entities) are not available for the deferral election.
The step-by-step version for a full holding period is on how to report an Opportunity Zone investment.
Where the 2025 form is dated
The 2025 form's "What's New" and "Reminders" describe the 2017-law basis increases: 10 percent of deferred gain after 5 years, and another 5 percent after 7 years. Those apply to OZ 1.0 investments. The 2025 Form 8949 instructions also still describe recognition on a sale "or December 31, 2026, whichever is earlier."
OZ 2.0 investments, made after December 31, 2026, follow different rules: deferred gain is included at the earlier of a sale or 5 years after the investment, and holding 5 years raises basis by 10 percent of the deferred gain, or 30 percent in a Qualified Rural Opportunity Fund. The 2025 form has no code for the 30 percent increase, and no revised form had been released as of October 30, 2026. Check the IRS About Form 8997 page for the version that applies to your year. The IRS Opportunity Zones FAQ page still describes only the 2017-law rules and is not a reliable guide to OZ 2.0.
Investor statements under the proposed rules
New section 6039K requires a fund to give a written statement to each investor listed on its return as having disposed of an investment. Proposed regulations REG-116506-25 would set the due date at March 1 of the following year, or January 15 when the holder of record is a broker, and would require brokers to report dispositions of QOF interests on Form 1099-B. These rules are proposed, not final, as of October 30, 2026. Details are on the reporting penalties and decertification page.
Form 8997 is a disclosure, but the numbers on it drive the tax. A tax adviser who has the fund's statements and your prior-year forms can reconcile Part I with last year's Part IV.
Common questions
Who has to file Form 8997?
Any eligible taxpayer that held a Qualified Opportunity Fund investment at any point during the tax year files Form 8997 with its timely filed federal return, including extensions. That includes individuals, trusts, estates, partnerships and corporations. A holder not otherwise required to file a return, other than a grantor trust, attaches Form 8997 to an appropriate return.
Do I file Form 8997 every year?
Yes, for each year you hold the investment and for the year you dispose of it. The Form 8949 instructions say the same thing. Part I shows holdings at the start of the year and Part IV shows holdings at the end, so the form tracks the deferred gain from year to year.
What is the current version of Form 8997?
The 2025 version, created December 23, 2025. Its text still describes the 2017-law basis increases of 10 percent at 5 years and an extra 5 percent at 7 years. A 2026 version had not been posted as of October 30, 2026.
How does Form 8997 relate to Form 8949?
The deferral itself is elected on Form 8949, on its own row with the fund's EIN, the investment date, code Z and the deferred amount as a negative number. Form 8997 Part II reports the same deferral. When deferred gain is later included because of a sale, Form 8949 uses a code Y row and Form 8997 Part III reports the inclusion event.
What is a special gain code on Form 8997?
A letter in column (d) that identifies where a deferred gain came from or a basis adjustment. The 2025 codes are A (section 1256 gain), B (Form 4797, section 1231), C (straddles), D (collectibles), E (exempt by treaty), F (noninclusion transfer), G (5-year basis adjustment) and H (7-year basis adjustment).