Form 8996: the fund's annual check
A Qualified Opportunity Fund certifies itself. It does that by filing Form 8996 with its federal tax return, starting with its first year. Ashley calls it the center of the whole program:
"IRS Form 8996 is where the magic happens for opportunity zone funds. It's the single form that you actually file in order to self-certify as a qualified opportunity fund."
The form also reports the 90% asset test. A fund has to hold at least 90% of its assets in qualified Opportunity Zone property, measured twice a year (IRC §1400Z-2(d)(1)). A fund that falls short can owe a penalty for each month it misses, and Form 8996 is where that shows up. One point people get wrong, in Ashley's words: "The two testing dates get averaged, yes. But if you fail the average, the penalty is not calculated on the average." There's a reasonable cause exception, but you need records to show it.
Your fund manager, or the preparer the fund hires, handles this form. As an investor you won't file it, but it's fair to ask for confirmation that it was filed each year.
Form 8997: the investor's annual statement
If you invest a gain in a fund, you file Form 8997 with your own return every year you hold the investment. It lists the fund interests you held at the start of the year, any you bought or sold during the year, and the deferred gain tied to each one.
Miss it and the IRS may not have a record that your deferral is still in place. It's one of the easiest forms to forget, because it's due even in years when nothing changes.
In the year you sell the original asset, you also make the deferral election on Form 8949.
Keep a copy of each year's Form 8997 with your fund records. When you eventually sell, those filings help show your holding period and support the ten-year benefit.
New reporting under OZ 2.0
The 2025 law added reporting requirements. Funds must report the name and address of each business they invest in, its industry code, the number of residential units, and an approximate count of employees. Those businesses must give the fund the information it needs.
Proposed regulations were published in the Federal Register on September 11, 2026, with comments due October 26, 2026. They also set out the first rules for decertifying a fund. Final rules may change the details, so expect the forms to be updated.
What a clean file looks like
The forms are only as good as the records behind them. For each fund and each business it owns, a solid file includes:
- The fund's formation documents and its first Form 8996
- Asset test results on each testing date, with the balance sheets that support them
- The written working capital plan and proof of spending against it
- Records of each investor's contribution, date, and deferred gain
When the IRS asks a question, that file is your answer. Building it as you go is far easier than rebuilding it years later. Ashley's advice to every fund: "Run your fund like it's going to be looked at, because in all likelihood it probably will be."
Who files, and how to stay ready
Your tax preparer files these forms with the right returns. OZPros doesn't prepare or file tax returns. Our job is the structure and the records behind them: the asset tests, the working capital plan, and the audit trail that shows the numbers are right.
The best time to get records in order is before your preparer asks for them. Our compliance service keeps that file current all year.