Inactive partnership's late QOF certification is treated as timely

Plain-English summary

A limited partnership was formed to be a Qualified Opportunity Fund and received partners' eligible gains, but it had no other activity, income, deductions, or credits during its first year. Its limited partner mistakenly believed no return was required and did not file Form 1065 or Form 8996 by the deadline. After the accounting firm learned the partnership existed and explained the filing requirements, the partnership filed both forms and requested relief. The IRS found that the partnership acted reasonably and in good faith and that relief would not prejudice the government. It treated the filed Form 8996 as timely and recognized the QOF self-certification beginning in the intended month, without deciding whether the partnership otherwise qualifies.

Ruling snapshot

• Question: May the partnership's late Form 8996 be treated as timely for its first intended QOF year?
• Outcome: Approved
• Key authorities: IRC § 1400Z-2; Treas. Reg. §§ 1.1400Z2(d)-1(a), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202548015
Release Date: 11/28/2025
Index Number: 9100.00-00, 1400Z.02-00

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:
---------------------- ID No. -----------------

Telephone Number:

Refer Reply To:
CC:ITA:B08
PLR-101615-25

Date:
July 14, 2025

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

LEGEND

Date 1 = ----------------------
Date 2 = --------------------------
Date 3 = ---------------------
Date 4 = ----------------------
Date 5 = ---------------------------
Date 6 = -----------------------
Month 1 = ----------------------
Year 1 = -------
Year 2 = -------
Year 3 = -------
Accounting Firm = ------------------------------
Advisor Entity = -------------------------------------------------
Entity = ----------------------------
State = ------------------
Limited Partner = --------------------------

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

This letter responds to Taxpayer's request for a letter ruling dated Date 6. Specifically,
Taxpayer requests relief under §§ 301.9100-1 and 301.9100-31 of the Procedure and
Administration Regulations, for an extension of time to file Form 8996, Qualified
Opportunity Fund, to self-certify as a qualified opportunity fund (QOF), as defined in
§ 1400Z-2(d) of the Internal Revenue Code (the code), effective as of Month 1, the first
month in which Taxpayer intended to be a QOF.

1 Unless otherwise specified, all “section” references are to sections of the Internal Revenue Code (Code)
and all “§” references to sections of the Treasury Regulations (26 CFR Part 1) or (26 CFR Part 301).

PLR-101615-25 2

FACTS

According to the information and representations provided, Taxpayer, a domestic limited
partnership classified as a partnership for Federal income tax purposes, was formed on
Date 1 in State to be a QOF. Specifically, Taxpayer was formed to invest in Qualified
Opportunity Zone Property as defined in § 1400-2(d)(2) of the code. On Date 2, partners
invested eligible gains, generated during Year 3, into Taxpayer and elected to defer
such gains. Other than the contribution of eligible gains in exchange for all the limited
partnership interests in Taxpayer on Date 2, Taxpayer had no other activity and neither
received income nor incurred any expenditures treated as deductions or credits for
federal income tax purposes in Year 3.

Advisor Entity was formed in Year 1 to invest and manage opportunity zone businesses.
Advisor Entity is the investment manager and operator of both Taxpayer and Entity and
advised on the formation of Taxpayer. Limited Partner is both a limited partner in
Taxpayer and the senior vice president of Advisor Entity. Beginning in Year 2,
Accounting Firm was engaged to prepare the income tax returns for Entity. Limited
Partner’s responsibilities include working with Accounting Firm to provide information
regarding tax return preparation and financial statement assurances for Taxpayer and
Entity. Limited Partner was the only contact between Taxpayer and Accounting Firm.

Limited Partner did not believe that Taxpayer had any filing requirement for Year 3 and
did not file either Form 1065 or Form 8996 by Date 3, the filing deadline for Year 3. On
Date 4 Accounting Firm learned of Taxpayer’s existence and informed Limited Partner
of the filing requirements to self-certify as a QOF. On Date 5 Taxpayer filed Forms 1065
and 8996 to self-certify as a QOF. On Date 6, Taxpayer filed request for private letter
ruling.

Taxpayer represents that they are not seeking to alter a return position for which an
accuracy-related penalty has been or could be imposed under section 6662 and that
Taxpayer is not using hindsight in requesting relief. Taxpayer further represents that the
tax liabilities of the parties involved will be the same if the relief is granted as if the QOF
self-certification had been timely made. The period of limitations on assessment under §
6501(a) has not yet expired for any parties for the taxable year in which the Form 8996
should have been attached to Taxpayer’s return.

LAW AND ANALYSIS

Section 1400Z-2(e)(4) of the Internal Revenue Code 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) of the Income Tax
Regulations 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 in the Internal Revenue Service forms or
instructions, or in publications or guidance published in the Internal Revenue Bulletin.
The Form 8996 Instructions published pursuant to these regulations specify that to self-

PLR-101615-25 3

certify as a QOF, a taxpayer must file Form 8996 with its tax return for the year to which
the certification applies by the due date of the tax return (including extensions).

Section 301.9100-3(a) of the Procedure and Administration Regulations provides that
requests for extensions of time for regulatory elections (other than automatic extensions
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 the grant of relief will not prejudice the interests of the government.

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.

In addition, § 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;

   (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)
of the regulations provides that the interests of the Government are prejudiced if
granting relief would result in a taxpayer having a lower tax liability in the aggregate for

PLR-101615-25 4

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 on the facts and information submitted and the representations made, we
conclude that Taxpayer has acted reasonably and in good faith, and that the granting of
relief would not prejudice the interests of the government. Accordingly, based solely on
the facts and information submitted, and the representations made in the ruling request,
the Form 8996 attached to Taxpayer’s federal income tax return for Year 3, filed on
Date 5, is considered timely filed, and Taxpayer has thereby made the election under §
1400Z-2 and § 1.1400Z2(d)-1(a)(2)(i) to self-certify as a QOF beginning in Month 1.
Taxpayer should submit a copy of this letter ruling to the Service Center where
Taxpayer files its returns along with a cover letter requesting that the Service associate
this ruling with the Year 3 tax return.

CAVEATS

The granting of an extension of time in this ruling letter is not a determination that
Taxpayer is otherwise eligible to self-certify as a QOF. See § 301.9100-1(a).

This ruling is based upon facts and representations submitted by the Taxpayer and
accompanied by penalty of perjury statements executed by the appropriate parties.

This office has not verified any of the material submitted in support of the request for a
ruling. However, as part of an examination process, the Service may verify the factual
information, representations, and other data submitted.

Except as expressly provided herein, no opinion is either 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 in Taxpayer are qualifying investments as
defined in § 1.1400Z-2(a)-1(b)(34) or whether Taxpayer meets the requirements under
§ 1400Z-2 and the regulations thereunder to be treated as a QOF. In addition, we
also 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 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 Internal
Revenue Code or 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.

A copy of this letter must be attached to any tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling. Taxpayers that have previously filed a return or administrative adjustment

PLR-101615-25 5

requests attaching Form 8996 should submit a copy of this letter ruling to the Service
Center where Taxpayer files its returns along with a cover letter requesting that the
Service associate this ruling with the previous filing(s).

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. Enclosed is a copy of the letter ruling
showing the deletions proposed to be made when it is disclosed under § 6110.

Pursuant to the Form 2848, Power of Attorney and Declaration of Representative, on
file, we are sending a copy of this letter to Taxpayer's authorized representative.

Sincerely,

Erika C. Reigle
Acting Branch Chief, Branch 8
Office of Chief Counsel
(Income Tax & Accounting)

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