Capital gains only, long term or short term.
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What types of gain can be deferred through investment in a QOF?
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“Gains” are limited to gains treated as capital gains for federal income tax purposes. There is no deferral/exclusion benefit for ordinary income. Nearly all capital gains qualify for tax deferral.
The gain must be a short-term gain, long-term capital gain or a net 1231 gain.
Any gain that is either capital gain or treated as capital gain (such as net Section 1231 gain), regardless of whether it is short term or long term.
Capital gains (long and short term) and 1231 gains.
Generally, any long-term and short-term capital gains can be deferred. These can gains realized from an asset sale or allocated on a Form K-1 from an investment partnership. Gains can be deferred in whole or in part, depending on how much an investor wants to defer of the gains realized.
Short- and long-term capital gains and any gain that will be treated as capital gain for tax purposes.
All capital gains qualify if invested within 180 days of sale. This includes both long-term and short-term gains. Gain from depreciation recapture of section 1250 (real estate property) is also included. Not included is gain from recaptured depreciation of personal property. Be careful not to include gain from a prior year installment sale. Keep in mind that each gain stands on its own. Capital gains do not need to be reduced by capital losses from separate transactions. The final point is that the gain from sale of a passive asset does not need to be reduced by freed up passive losses from a prior year.
Any capital gain.
Any gain that: is treated as a capital gain for federal income tax purposes; would be recognized for federal income tax purposes before Jan. 1, 2027, if section 1400Z-2(a)(1) did not apply to defer recognition of the gain; and does not arise from a sale or exchange with a person that, within the meaning of section 1400Z-2(e)(2), is related to the taxpayer that recognizes the gain or that would recognize the gain if section 1400Z-2(a)(1) did not apply to defer recognition of the gain.
Capital long or short.
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