The short answer
Form 8997 is the Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, which every eligible taxpayer holding a QOF investment at any point in the tax year attaches to a timely filed return, including extensions. It tracks the deferred gain you held at the start of the year, gain you deferred during the year, previously deferred gain included because of an inclusion event, and what you hold at year end. The fund files a different form, Form 8996, to certify itself and report its 90% investment test.
At a glance
| Who files | Any eligible taxpayer holding a QOF investment at any point during the tax year |
|---|---|
| When | With the timely filed return, including extensions, every year the investment is held and the year it is disposed of |
| Four parts | Holdings at the start of the year, new deferrals, inclusion events, holdings at year end |
| Companion form | Form 8949 carries the deferral election with code Z and later inclusions with code Y |
The form comes from the opportunity zone provisions and reports the investor's side only.
The Form 8997 instructions trace it to section 13823 of the Tax Cuts and Jobs Act, which added sections 1400Z-1 and 1400Z-2. A QOF is a corporation or partnership organized to invest in qualified opportunity zone property that holds at least 90% of its assets in that property. A QOF investment is an equity interest bought with eligible gain, generally within the 180-day period beginning on the date the gain would otherwise be recognized.
The form has four parts, each listing the fund's EIN, the investment date, a description and the short-term or long-term deferred gain:
- Part I: QOF investments held at the beginning of the tax year.
- Part II: gains deferred by investing in a QOF during the current year.
- Part III: inclusion events, where previously deferred gain is now included in income, including basis adjustments for 5-year and 7-year holding periods.
- Part IV: QOF investments held at year end.
A worked example follows a rental sale gain into a fund and onto the form.
Hypothetical: in 2025 you sell a rental, report $500,000 of net section 1231 gain on Form 4797, and invest $500,000 in a QOF within the 180-day window. The Form 8949 instructions have you report a section 1231 deferral on two rows of Part II: one with code O carrying the amount from Form 4797, and one with the fund's EIN, code Z and the deferred gain as a negative number.
On your 2025 Form 8997, Part II shows $500,000 of long-term deferred gain with special gain code B, which marks gain that came from Form 4797, and Part IV shows the same holding at year end. Under section 1400Z-2(b)(1), gain deferred under the original rules is included in the year that contains the earlier of the date you sell the investment or December 31, 2026. Those are round numbers for illustration, not a calculation of your position.
It bites in the quiet years, when nothing new was invested but the form is still due.
The filing duty turns on holding the investment, not on new activity. If you are not otherwise required to file a return, the instructions still require you to attach Form 8997 to an appropriate return showing your name, address and taxpayer identification number. If you dispose of an interest and get no Form 1099-B, a box in Part III must be checked.
Fund-level reporting is a separate track: the Form 8996 instructions cover certification and the 90% test, and the newer fund reports are in OZ fund reporting requirements. For the rules on investments made after 2026, see the rolling five-year deferral; for using exchange proceeds, see moving 1031 funds into an opportunity zone fund and the opportunity zone overview.
Related questions
Do I file Form 8997 in a year I made no new QOF investment?
Yes. Any eligible taxpayer holding a QOF investment at any point in the tax year must file it with a timely return, so Parts I and IV are completed every year you hold the interest.
Is Form 8997 the same as Form 8996?
No. Form 8997 is the investor's statement; Form 8996 is filed by the fund to certify that it is organized to invest in opportunity zone property and to report the 90% investment standard.
What does December 31, 2026 mean for my Form 8997?
For gain deferred under the original rules, section 1400Z-2(b)(1) includes the deferred gain in income in the tax year that contains December 31, 2026 if you have not sold earlier. Ask your preparer how the 2026 forms report that inclusion.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.