Any capital gain, or any gain treated as capital gain, is eligible. Capital gain from the disposition of a marijuana-based investment should be eligible for deferral.
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What type of capital gains can be invested into a QOF?
Are any gains excluded? What if I have capital gains from my cannabis investment?
Answers
Theoretically, all capital gains can be rolled over. Cannabis offers other potential problems.
Any capital gains qualify for deferral, including your capital gains from a prior unrelated cannabis business.
If a taxpayer engages in a taxable sale or exchange with an unrelated person before 2027, the taxpayer may defer any gain arising from that sale or exchange by making an equity investment in a QOF. The property sold or exchanged can be any type of property that qualifies as a capital asset such as real estate, stock, art, bitcoin, etc. Only capital gains are eligible for deferral but they can be from any capital asset including the sale or exchange of stock in a cannabis company. The final regulations clarify that deferral of a gain under the Qualified Opportunity Zone tax incentive program is available only for capital gains that would be subject to federal income tax so even eligible capital gains for a tax-exempt organization are subject to the unrelated business income tax are eligible.
Any capital gain that is taxable by a US taxpayer by the IRS is eligible to elect to invest into a QOF. It can be short-term or long-term gains.
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