Partnership received extra time to self-certify as a qualified opportunity fund

Plain-English summary

A partnership formed to invest in qualified opportunity zone property missed the deadline to file Form 8996 and self-certify as a qualified opportunity fund. Its manager had hired a firm to prepare returns for several related funds, but miscommunications caused both the extension request and the partnership return with Form 8996 to be filed late. The partnership discovered the mistake before the IRS contacted it and then filed the return, Form 8996, and a request for relief. The IRS found that the partnership acted reasonably and in good faith and that granting relief would not prejudice the government. It treated the late Form 8996 as timely filed and recognized the fund's election as effective on the requested date.

Ruling snapshot

• Question: May the partnership receive an extension to make its QOF self-certification election?
• Outcome: Approved
• Key authorities: IRC § 1400Z-2; Treas. Reg. §§ 1.1400Z2(d)-1 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202526011 Third Party Communication: None
Release Date: 6/27/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 1400Z.02-00
Person To Contact:
------------------, ID No. -----------------
Telephone Number:

                                                            ---------------------

                                                            Refer Reply To:

                                                            CC:ITA:B04

                                                            PLR-122112-24
                                                            Date:

                                                            March 26, 2025

Re: --------------------------------------------

                                                   LEGEND

Taxpayer = --------------------------------------------

State = -------------

Manager = --------------------------

Firm = ------------------------

Date 1 = ----------------------

Date 2 = -------------------------

Month 1 = ---------------

Year 1 = -------

Year 2 = -------

Year 3 = -------
PLR-122112-24 2

Dear ------------:

This letter responds to Taxpayer’s request, dated Date 2, for a letter ruling pursuant to
§§ 301.9100-1 and 301.9100-3.1 Specifically, Taxpayer requests an extension of time to
make a regulatory election to (1) self-certify as a qualified opportunity fund (QOF) as
defined in § 1400Z-2(d); and (2) be treated as a QOF, effective as of Date 1, as
provided under § 1400Z-2 and § 1.1400Z2(d)-1(a)(2).

This letter ruling is being issued electronically in accordance with Rev. Proc. 2024-1,
2024-1 I.R.B. 1. A paper copy will not be mailed to Taxpayer.

                                             FACTS

According to the information and representations provided, late in Year 1, Taxpayer was
formed as a partnership under the laws of State. As set forth in its certificate of
formation and its operating agreement, Taxpayer was organized as a QOF for the
purpose of investing in qualified opportunity zone property.

Taxpayer was managed by Manager in Year 2 and Year 3. Manager provided
investment advice as well as other management and administrative services to
Taxpayer. Manager engaged Firm to prepare income tax returns for Taxpayer and
several related QOFs. As a result of miscommunications between Manager and Firm,
Taxpayer did not timely file a Form 7004, Application for Automatic Extension of Time
To File Certain Business Income Tax, Information, and Other Returns, or Form 1065,
U.S. Return of Partnership Income, attaching Form 8996, Qualified Opportunity Fund, to
self-certify as a QOF, for Year 2.

In Year 3, after the due date for Taxpayer’s Year 2 Form 1065, Taxpayer discovered its
error. Thereafter, in Month 1 of Year 3 Taxpayer filed a Form 1065, together with a
Form 8996, for Year 2, and filed this request for an extension of time to make its
election. Taxpayer states that it has not received any correspondence from the Internal
Revenue Service (Service) regarding the missed election.

                                    LAW AND ANALYSIS

Section 1400Z-2(e)(4) directs the Secretary to prescribe such regulations as may be
necessary to carry out the purposes of § 1400Z-2, including rules for the certification of
QOFs. Section 1.1400Z2(d)-1(a)(2)(i) provides that the self-certification of a QOF must
be timely-filed and effectuated annually in such form and manner as may be prescribed
by the Commissioner of Internal Revenue (Commissioner) in the forms or instructions,
or in publications or guidance of the Service published in the Internal Revenue Bulletin.

1 Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code

of 1986, as amended, Title 26 U.S.C., or the Treasury Regulations, Title 26 C.F.R. pt. 1 (Income Tax), or
Title 26 C.F.R. pt. 301 (Procedure and Administration).
PLR-122112-24 3

To self-certify as a QOF, a taxpayer must file Form 8996 with its tax return for the year
to which the certification applies. The Form 8996 must be filed by the due date of the
tax return (including extensions). The information provided indicates that Taxpayer did
not file its Form 8996 by the due date of its income tax return as a result of
miscommunications between Manager and Firm.

Sections 301.9100-1 through 301.9100-3 provide the standards that the Commissioner
will use to determine whether to grant an extension of time to make a regulatory
election. Section 301.9100-3(a) provides that requests for extensions of time for
regulatory elections (other than automatic changes covered in § 301.9100-2) will be
granted when the taxpayer provides evidence (including affidavits) to establish that the
taxpayer acted reasonably and in good faith and granting relief will not prejudice the
interests of the Government.

Section 301.9100-1(b) defines the term “regulatory election” as including any election
whose due date is prescribed by a regulation published in the Federal Register. Section
1.1400Z2(d)-1(a)(2)(i) sets forth the manner and timing for electing to be a QOF and to
self-certify as a QOF. Accordingly, these elections are regulatory elections, as defined
in § 301.9100-1(b).

Section 301.9100-3(b)(1) provides that a taxpayer is deemed to have acted reasonably
and in good faith if the taxpayer—

(i) requests relief before the failure to make the regulatory election is discovered by the
Service;

(ii) failed to make the election because of intervening events beyond the taxpayer's
control;

(iii) failed to make the election because, after exercising reasonable diligence, the
taxpayer was unaware of the necessity for the election;

(iv) reasonably relied on the written advice of the Service; or

(v) reasonably relied on a qualified tax professional, and the professional failed to make,
or advise the taxpayer to make, the election.

Section 301.9100-3(b)(3) provides that a taxpayer is deemed not to have acted
reasonably and in good faith if the taxpayer—

(i) seeks to alter a return position for which an accuracy-related penalty has been or
could be imposed under § 6662 at the time the taxpayer requests relief, and the new
position requires or permits a regulatory election for which relief is requested;
PLR-122112-24 4

(ii) was fully informed in all material respects of the required election and related tax
consequences but chose not to make the election; or

(iii) uses hindsight in requesting relief. If specific facts have changed since the original
deadline that make the election advantageous to a taxpayer, the Service will not
ordinarily grant relief.

Section 301.9100-3(c)(1) provides that the Commissioner will grant a reasonable
extension of time to make the regulatory election only when the interests of the
Government will not be prejudiced by the granting of relief. Section 301.9100-3(c)(1)(i)
provides that the interests of the Government will be prejudiced if granting relief would
result in a taxpayer having a lower tax liability in the aggregate for all taxable years
affected by the election than the taxpayer would have had if the election had been
timely made (taking into account the time value of money).

                                   CONCLUSION

Based solely on the information submitted and the representations made, we conclude
that Taxpayer has acted reasonably and in good faith, and that the granting of relief will
not prejudice the interests of the Government. Taxpayer has satisfied the requirements
of the regulations for the granting of relief, and the Form 8996 filed in Month 1 of Year 3
is considered timely filed. Accordingly, Taxpayer has elected to self-certify as a QOF
under § 1400Z-2 and § 1.1400Z2(d)-1(a)(2)(i) as of Date 1. Taxpayer should submit a
copy of this letter ruling to the IRS Service Center where Taxpayer files its income tax
returns, together with a cover letter requesting that the Service Center associate this
letter ruling with Taxpayer’s Year 2 Form 1065.

                                     CAVEATS

This ruling is based upon the representations made and information submitted by
Taxpayer and accompanied by a penalty of perjury statement executed by an
appropriate party. This office has not verified any of the material submitted in support of
the request for a ruling. As part of an examination process, the Service may verify the
information, representations and other data submitted.

This ruling addresses the granting of relief under § 301.9100-3 as applied to the election
to self-certify Taxpayer as a QOF by filing Form 8996 for Year 2. Except as expressly
provided herein, no opinion is expressed or implied concerning the tax consequences of
any aspect of any transaction or item discussed or referenced in this letter. Specifically,
we have no opinion, either express or implied, concerning whether any investments
made into Taxpayer are qualifying investments as defined in § 1.1400Z2(a)-1(b)(34) or
whether Taxpayer meets the requirements under § 1400Z-2 and the regulations
thereunder to be a QOF. In addition, we express no opinion on whether any interest
owned in any entity by Taxpayer qualifies as qualified opportunity zone property, as
defined in § 1400Z-2(d)(2), or whether such entity would be treated as a qualified
PLR-122112-24 5

opportunity zone business, as defined in § 1400Z-2(d)(3). We express no opinion
regarding the tax treatment of the instant transaction under the provisions of any other
sections of the Code or Treasury Regulations that may be applicable, or regarding the
tax treatment of any conditions existing at the time of, or effects resulting from, the
instant transaction.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with the power of attorney on file with this office, a copy of this letter is
being sent to your authorized representatives.

                                               Sincerely,




                                               Stephen J. Toomey
                                               Senior Counsel, Branch 4
                                               Office of Associate Chief Counsel
                                               (Income Tax & Accounting)

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