The IRS has issued Notice 2026-40 providing transitional guidance for Qualified Opportunity Zones (QOZs) following recent law changes. The notice clarifies that gains deferred by making qualified investments on or before Dec. 31, 2026, generally must be recognized in the tax year that includes Dec. 31, 2026. Investments made in 2027 or later will follow a new five-year rule for gain inclusion and may qualify for a 10% basis increase. The guidance also provides important exceptions for certain property acquisitions and confirms safe harbors that allow businesses to continue satisfying certain QOZ requirements through 2047, even after QOZ designations expire. Have questions? We’re here to help.
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