What are my options when it comes to changing that date?
Capital gains from pass-through entities must be invested within 180 days of filing date without extension. For example, an LLC with a tax year ending on Dec. 31, 2019 would have a due date of March 15, 2020. 180 days after that due date would be Sept. 1, 2020.
Owners of pass-through entities have a number of options: the date of the underlying gain transaction; the last day of the underlying entities a taxable year; the due date of the underlying entities tax return, excluding extensions.
The 180-day period (for pass-through owners, not the entity) begins on the due date of the tax return for the pass-through entity. So if it is a calendar year-end partnership, then the individual partners do not start counting until the due date of that partnership return, which is March 15.
Per the final regulations, there are three options for pass-thru gains. You can either start the 180-day timer on the date of recognition; or start the timer on the last day of the taxable year; or start the timer on the due date of the issuing entity's tax return, without regard to extensions. This date is typically March 15 for partnerships and corporations, and April 15 for trusts and estates.
The 180 days defaults to the original filing due date of the tax return for which the K-1 is produced. At the election of the taxpayer, they can use the 180 days that would have applied to the entity from which the K-1 was issued.
Individuals with K-1 capital gains can choose to reinvest them in a Qualified Opportunity Fund within 180 days of either the date of the sale of the asset that generated the gain; the end of the partnership tax year in which the gain was realized; or the partnership's tax filing deadline (without extension).
Pass-through owners in an entity that did not elect to invest the gain, may elect to do so. The 180 days period starts to run on the date to file the tax return of the entity, as provided by the final regulations without extensions.
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