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December 9, 2020

IRS announces letters sent to certain taxpayers involved in Qualified Opportunity Funds

The IRS has announced (IR-2020-274) it is sending letters to taxpayers who "may need to take additional actions related to Qualified Opportunity Funds." Specifically, taxpayers who attached, or indicated that they attached, Form 8996 to their tax returns could receive Letter 6250, "Self-certifying as a Qualified Opportunity Fund (QOF)," stating that they might need to take additional action to meet the annual QOF self-certification requirement. Taxpayers could also receive Letter 6251, "Reporting Qualified Opportunity Fund (QOF) Investments," notifying them that they (1) might not have properly followed instructions for Form 8949, Sales and other Dispositions of Capital Assets, or (2) do not appear to have eligible gain to make a valid deferral election for gains invested in a QOF.