How does one report the transaction of selling securities with capital gains and then investing them in Opportunity Zone Funds thereby postponing the capital gains on the actual tax return–is there a specific schedule or does one attach a statement?
First, after the usual reporting of the gain(s) transaction(s) that are going to be offset, add another transaction on an 8949 Box C or F, depending on whether it is ST or LT gain being deferred. The TIN of the Qualified Opportunity Fund goes here as well, and it’s a Code Z. Your tax software should this for you if you identify it as a QOF transaction. The 8949 C/F will then show an offsetting adjustment.
Second (and I hadn’t realized this originally), you need to fill out Form 8997, reporting the initial purchase and also ownership of the QOF (both parts II and IV need to be completed). Form 8997 will need to be completed each year until the QOF is sold. Lacerte didn’t generate a diagnostic telling me that 8997 was also needed, but did have an input screen for it.