What counts as “inclusion events” for an investor to recognize the gain they deferred into an OZ?
In general, inclusion events are any transactions that would shift the responsibility for recognizing the deferred capital gain from the original taxpayer to a different taxpayer, even if that transaction is normally non-taxable from an income tax point of view. For instance, gifts to a family member of a QOF interest are inclusion events.
The regulations list a number of transactions that are considered inclusion events. Basically, if there is a change in control of the investment, it will trigger recognition of the gain.
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