Par. 6. Sections 1.6039K-1 and 1.6039L-1 are added to read as follows:
(a) Definitions —(1) 90-percent investment standard. The term 90-percent investment standard has the same meaning as in section 1400Z-2(d)(1) and § 1.1400Z2(a)-1(b)(4).
(2) Applicable qualified opportunity zone business. The term applicable qualified opportunity zone business, or applicable QOZB, means any entity that meets, intends to meet, or was organized for the purposes of meeting, the requirements to be a qualified opportunity zone business as defined in section 1400Z-2(d)(3)(A) and § 1.1400Z2(d)-1(d)(1) that is—
(i) A corporation in which a qualified opportunity fund holds qualified opportunity zone stock; or
(ii) A partnership in which a qualified opportunity fund holds a qualified opportunity zone partnership interest.
(3) Disposition event. The term disposition event means any inclusion event as defined in § 1.1400Z2(b)-1(c).
(4) Full-time equivalent employees —(i) In general. With respect to a calendar month, the number of full-time equivalent employees is the sum of—
(A) The number of employees who are employed on average at least 30 hours per week (full-time employees); plus
(B) The number of other employees, determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
(ii) Alternative calculation method for full-time employees. In determining if an employee is a full-time employee described under paragraph (a)(4)(i)(A) of this section, the QOF may treat the performance of at least 120 total hours of service in a calendar month as the equivalent of an average of at least 30 hours of service per week for that month.
(iii) Rounding convention for determining non-full-time employees. In determining the number of non-full-time employees for each calendar month under paragraph (a)(4)(i)(B) of this section, an employer must round the number of non-full-time employees for each calendar month to the nearest whole number.
(5) Qualified opportunity fund. For purposes of this section, the term qualified opportunity fund, or QOF, means, with respect to an entity's taxable year or portion thereof, any entity that files a self-certification under § 1.1400Z2(d)-1(a)(2)(i) for such taxable year or a portion thereof. For purposes of this section, an entity that files a self-certification under § 1.1400Z2(d)-1(a)(2) for its taxable year is treated as certified as a QOF for the portion of the taxable year beginning on the effective date identified in that self-certification.
(6) Qualified opportunity fund testing dates. The term qualified opportunity fund testing dates, or QOF testing dates, means the QOF's 6-month testing date and year-end testing date used for determining if the 90-percent investment standard has been met.
(i) Qualified opportunity fund 6-month testing date. The term qualified opportunity fund 6-month testing date means the last day of the first 6-month period of the taxable year of the QOF.
(ii) Qualified opportunity fund year-end testing date. The term qualified opportunity fund year-end testing date means the last day of the taxable year of the QOF.
(7) Qualified opportunity zone. The term qualified opportunity zone, or QOZ, has the same meaning as in section 1400Z-1(a).
(8) Qualified opportunity zone business property. The term qualified opportunity zone business property, or QOZ business property, has the same meaning as in section 1400Z-2(d)(2)(D) and § 1.1400Z2(a)-1(b)(30). QOZ business property may be directly owned or leased by a QOF or may be owned or leased by a QOZB.
(9) Qualified opportunity zone partnership interest. The term qualified opportunity zone partnership interest, or QOZ partnership interest, has the same meaning as in section 1400Z-2(d)(2)(C) and § 1.1400Z2(d)-1(c)(3).
(10) Qualified opportunity zone stock. The term qualified opportunity zone stock, or QOZ stock, has the same meaning as in section 1400Z-2(d)(2)(B) and § 1.1400Z2(d)-1(c)(2).
(11) Real property. The term real property means land and improvements thereto, such as buildings or other inherently permanent structures (including items that are structural components of the buildings or structures) that are not tangible personal property.
(12) Reportable investor —(i) In general. The term reportable investor means any person that held stock or a partnership interest in the QOF for which a disposition event with respect to such stock or partnership interest occurred during the QOF's taxable year.
(ii) Brokers that are registered/record owners of QOF stock or QOF partnership interests. To the extent a QOF does not know the identity of the reportable investor, as defined in paragraph (a)(12)(i) of this section, due to the holding of the stock or partnership interest in the QOF for which a disposition event occurred by a broker, as defined in § 1.6045-1(a)(1), on behalf of a customer, as defined in § 1.6045-1(a)(2), during the QOF's taxable year, the term reportable investor includes such broker.
(13) Residential unit. The term residential unit means any building or structure for use as a dwelling unit for use as a residence (including a house, apartment, condominium, mobile home or similar property) and for which a certificate of occupancy, or similar document indicating that the unit is available for use, has been received. A dwelling unit has basic living accommodations, such as a sleeping space, a toilet, and cooking facilities. A residential unit does not include property used as a hotel, motel, inn or similar establishment if it is regularly available for occupancy by paying customers on a transient basis.
(14) Tangible personal property. The term tangible personal property has the same meaning as in § 1.48-1(c).
(b) Reporting requirement. Every QOF must file an annual return of information on Form 8996, Qualified Opportunity Fund (or any successor form) to report the information set forth in paragraphs (c) through (f) of this section in the time and manner set forth in paragraph (g) of this section.
(c) Information with respect to the QOF. The return of information described in paragraph (b) of this section must include the information set forth in paragraphs (c)(1) through (10) of this section with respect to the QOF.
(1) The name, address and taxpayer identification number of the QOF;
(2) Whether the QOF is organized as a corporation or a partnership;
(3) Whether the QOF is organized for the purpose of investing in qualified opportunity zone property as defined in section 1400Z-2(d)(2)(A) and § 1.1400Z2(d)-1(c)(1) (other than another QOF);
(4) A calculation of the 90-percent investment standard consisting of the value, determined on the QOF testing dates, of—
(i) The qualified opportunity zone property as defined in section 1400Z-2(d)(2)(A) and § 1.1400Z2(d)-1(c)(1) held by the QOF; and
(ii) All assets held by the QOF;
(5) If applicable, a calculation of the penalty under section 1400Z-2(f)(1) for failure to meet 90-percent investment standard;
(6) The approximate average monthly number of total full-time equivalent employees of the QOF working in all locations for the calendar year in which the QOF's taxable year began;
(7) The population census tract number(s) in which QOZ business property is directly owned or leased by the QOF is used, and for each of these census tracts—
(i) The physical address of the QOF's business activity;
(ii) The North American Industry Classification System (NAICS) code that applies to the QOF's business activity;
(iii) For the QOF testing dates—
(A) The total value of QOZ business property directly owned by the QOF; and
(B) The total value of QOZ business property directly leased by the QOF;
(iv) The total value of QOZ business property directly owned or leased by the QOF that is real property as of December 31 of the calendar year ending with or within the QOF's taxable year;
(v) The total number of residential units (if any) as of December 31 of the calendar year ending with or within the QOF's taxable year;
(vi) The approximate average monthly number of full-time equivalent employees of the QOF whose primary work location is within the population census tract for the calendar year ending with or within the QOF's taxable year;
(vii) The first date that any QOZ business property was acquired by purchase or leased by the QOF; and
(viii) Whether there is any QOZ business property that the QOF is substantially improving, as provided in section 1400Z-2(d)(2)(D)(ii), and the date on which that improvement began;
(8) Whether the QOF used the applicable financial statement valuation method as defined in § 1.1400Z2(d)-1(b)(3) or the alternative valuation method as defined in § 1.1400Z2(d)-1(b)(4) to value the property necessary to provide the information set forth in paragraphs (c)(1) through (10) of this section;
(9) For a QOF that is voluntarily decertifying, as provided in § 1.1400Z2(d)-1(a)(3), for the taxable year for which the return is required—
(i) An indication that the entity is voluntarily decertifying; and
(ii) The last month for which the entity was certified as a QOF; and
(10) Such other information as required by the form or instructions.
(d) Information with respect to each applicable QOZB. To the extent applicable, the return of information described in paragraph (b) of this section must include the information set forth in paragraphs (d)(1) through (8) of this section with respect to each applicable QOZB in which the QOF owns an interest.
(1) The name, address, and taxpayer identification number of the applicable QOZB;
(2) The percentage of equity ownership or (if applicable) capital or profits interest in the applicable QOZB by the QOF as of QOF testing dates;
(3) The value, as defined in § 1.1400Z2(d)-1(b), of the QOF's investment in such QOZ stock or QOZ partnership interest as of the QOF testing dates;
(4) Whether the QOF received from the applicable QOZB an attestation that the applicable QOZB meets all the requirements of § 1.1400Z2(d)-1(d)(1) or (if applicable) is utilizing the cure period, as defined in § 1.1400Z2(d)-1(d)(6);
(5) The total value of tangible property of the applicable QOZB (including tangible property that is qualified opportunity zone business property and tangible property that is not qualified opportunity zone business property) held by the applicable QOZB as of the QOF's 6-month and year-end testing dates;
(6) The population census tract number(s) in which the QOZ business property directly owned or leased by the applicable QOZB is used, and for each of these census tracts—
(i) The physical address of the QOZB business activity;
(ii) The NAICS code that applies to the QOZB's business activity;
(iii) For the QOF testing dates—
(A) The total value of tangible QOZ business property directly owned by the applicable QOZB; and
(B) The total value of tangible QOZ business property directly leased by the applicable QOZB;
(iv) The total value of QOZ business property directly owned or leased by the applicable QOZB that is real property as of December 31 of the calendar year ending with or within the applicable QOZB's taxable year;
(v) The number of residential units (if any) as of December 31 of the calendar year ending with or within the applicable QOZB's taxable year;
(vi) The approximate average monthly number of full-time equivalent employees of the applicable QOZB whose primary work location is within the population census tract for the calendar year ending with or within the applicable QOZB's taxable year;
(vii) The first date that any QOZ business property was acquired by purchase or leased by the applicable QOZB;
(viii) Whether there is any QOZ business property that the applicable QOZB is substantially improving, as provided in section 1400Z-2(d)(2)(D)(ii), and (if applicable) the date on which that improvement began; and
(ix) Whether the applicable QOZB is utilizing a working capital safe harbor, as provided in § 1.1400Z2(d)-1(d)(3)(v), and (if applicable) the date that the working capital safe harbor is expected to end;
(7) Whether the applicable QOZB used the applicable financial statement valuation method as defined in § 1.1400Z2(d)-1(b)(3) or the alternative valuation method as defined in § 1.1400Z2(d)-1(b)(4) to value the property necessary to provide the information set forth in paragraphs (d)(1) through (8) of this section; and
(8) Such other information as required by the form or instructions.
(e) [Reserved]
(f) Information with respect to each reportable investor. To the extent applicable, the return of information described in paragraph (b) of this section must also include the information set forth in paragraphs (f)(1) through (7) of this section with respect to each reportable investor that has a disposition event during the calendar year in which the QOF's taxable year began.
(1) The name, address, and taxpayer identification number of the reportable investor;
(2) For each share of stock or partnership interest in the QOF to which the disposition event applies, the date of the disposition event;
(3) For each share of stock or partnership interest in the QOF to which the disposition event applies, the date that such share or interest was acquired by the reportable investor;
(4) The amount of cash plus the fair market value of property received by the QOF in exchange for the shares or partnership interest in the QOF when first acquired by the reportable investor;
(5) The total number of shares of stock or partnership interests in the QOF held immediately before the disposition event and the total number of shares or partnership interests that were disposed;
(6) Whether the disposition event is the result of a voluntary decertification, as defined in § 1.1400Z2(d)-1(a)(3); and
(7) Such other information as required by the forms or instructions.
(g) Time and manner for filing —(1) In general. A QOF required by paragraph (b) of this section to file Form 8996, Qualified Opportunity Fund (or any successor form) must file such form with the IRS in the manner set forth in the instructions to that form by the due date (including extensions) of the QOF's Federal tax return.
(2) Late or corrected Forms 8996. A QOF that has not filed Form 8996 in the manner set forth in paragraph (g)(1) of this section, or that has filed that Form but without including all the correct information required to be shown on that Form, may file the original Form 8996 (or a corrected Form 8996) in the manner set forth in the instructions to Form 8996 for a late or corrected filing. See § 301.6726-1 of this chapter for penalties that apply to the failure to file timely a correct information return under this section.
(h) Furnishing requirement for investor statement —(1) General requirement and content of the investor statement. Every QOF required to make a return of information under this section that includes information set forth in paragraph (f) of this section must furnish to the reportable investor whose identifying number is (or is required to be) shown on the return a written statement (investor statement) for each calendar year showing—
(i) The information required by paragraphs (f)(1) through (7) of this section with respect to the reportable investor;
(ii) The name, address, and phone number of a point of contact at the QOF in a position to address questions by the reportable investor regarding the furnished statement;
(iii) A legend stating that the information included on the statement is being reported to the Internal Revenue Service; and
(iv) If applicable, a statement that the reportable investor's election under section 1400Z-2(c) is no longer available because the certification of the entity as a QOF has terminated.
(2) Time for furnishing investor statements —(i) In general. A QOF must furnish the investor statement required under paragraph (h)(1) of this section on or before March 1 of the calendar year following the calendar year during which the disposition event occurred.
(ii) Special rule for reportable investors that are brokers. A QOF that does not know the identity of the reportable investor described in paragraph (a)(14)(i) of this section due to the holding of the stock or partnership interest in the QOF for which a disposition event occurred by a broker, as defined in § 1.6045-1(a)(1), on behalf of a customer, as defined in § 1.6045-1(a)(2), must furnish the investor statement required under paragraph (h)(1) of this section to any broker that is the registered/record owner of the stock or partnership interest in the QOF for which a disposition event occurred and that holds such stock or partnership interest on behalf of a customer on or before January 15 of the calendar year following the calendar year of the disposition event.
(3) Manner of furnishing investment statements to reportable investors —(i) In general. An investor statement is considered to be furnished to a reportable investor if it is mailed to the last known address of the reportable investor known to the QOF and is considered to be furnished on the date that it is so mailed.
(ii) Electronic furnishing of investor statements —(A) In general. A QOF may furnish the investor statement required by paragraph (h)(1) of this section in an electronic format in lieu of a paper format by following the procedures set forth in the applicable revenue procedures relating to electronic delivery of payee statements. A QOF that electronically furnishes an investor statement by transmitting it directly to a reportable investor is treated as furnishing the investor statement on the date that the QOF electronically transmits the investor statement. A QOF that electronically furnishes an investor statement to a reportable investor by posting it to an electronically accessible online platform and thereafter sends notice to the reportable investor that the investor statement has been so posted, is treated as furnishing the investor statement on the date that the QOF sends this notice to the reportable investor.
(B) Special rule for reportable investors that are brokers. A QOF may furnish the investor statement required by paragraph (h)(1) of this section to a broker described in paragraph (h)(2)(ii) of this section in an electronic format in lieu of a paper format if the broker agrees to such manner of furnishing. A QOF that electronically furnishes an investor statement by transmitting it directly to a broker pursuant to such written agreement is treated as furnishing the investor statement on the date that the QOF electronically transmits the investor statement. A QOF that electronically furnishes an investor statement to a broker pursuant to such written agreement by positing it to an electronically accessible online platform and thereafter sends notice to the broker that the investor statement has been so posted, is treated as furnishing the investor statement on the date that the QOF sends this notice to the broker.
(i) Cross reference to penalties —(1) Information return. For provisions for failure to file timely a correct information return under this section, see § 301.6726-1 of this chapter. See § 301.6724-1 of this chapter for the waiver of a penalty if the failure is due to reasonable cause and is not due to willful neglect.
(2) Investor statements. For provisions for failure to furnish timely a correct payee statement, see § 301.6722 of this chapter. See § 301.6724-1 of this chapter for the waiver of a penalty if the failure is due to reasonable cause and is not due to willful neglect.
(j) Applicability date. This section applies to information returns and investor statements originally due (without extensions) on or after [date of publication of final regulations in the Federal Register ].