Formation, then the record
There is no application and no approval letter. You form an entity, you elect on Form 8996, and from that day the fund lives or dies on its records. Five steps to set up your own opportunity zone fund, and the two formation templates are free below.
Only capital gains and qualified section 1231 gains can fund a qualifying investment, and you have 180 days from recognition to move the gain into the fund. Ordinary income never qualifies, and neither does a sale to a related party. Pull the closing statement or the 1099 first, because the gain sets the deadline and the deadline drives every other date on this page.
A QOF is a corporation or a partnership organized under state, district, possession, or tribal law. Most captive funds, the closely held funds an individual or family sets up for their own gains, are Delaware LLCs taxed as partnerships. One trap catches founders every year. A single member LLC is disregarded and cannot elect QOF status on its own, so a captive fund needs a second member or a corporate election. The operating agreement below is drafted for exactly this structure.
The fund elects QOF status by filing Form 8996 with its first federal return and every return after. Nobody at the IRS blesses the election in advance, and the first person to check your work may be an examiner years later. The same first filing picks your first month as a QOF, which sets the test calendar in step four, and a late month can turn two test dates into one.
Twice a year the fund must hold at least 90 percent of its assets in qualified opportunity zone property, and the two results are averaged. Before you buy anything, run the address through the opportunity zone lookup, and let the deadline and penalty calculator turn your entity type and first QOF month into the actual dates.
Calendar year 2026 is the first reportable year under the new OZ 2.0 rules, the first filings land in the spring 2027 season, and the information reporting carries penalty exposure under section 6726. Formation is one afternoon. The record that survives an exam is the other 364 days, and that is the part OZfile runs. The fifty chapter handbook covers every test and form in plain words.
Free downloads
Two Delaware documents drafted for the captive fund structure, execution ready, with the statutory citations pinned throughout.
These templates are starting points for review with your own counsel. They are general information, not legal advice, and no attorney client relationship is created by downloading them.
Formation is the easy afternoon. The record is the product.
Book a demoOr keep reading, the fifty chapter handbook and the zone lookup are free.
