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Reviewed October 20, 2026. California's GO-Biz list is still pending on public trackers. Treasury has certified no 2027 map. Proposed reporting rules (REG-116506-25) are proposed. Comments due October 26. Hearing November 5. Extended state nominations are due October 28.
The statute has been permanent since July 4, 2025. What moved in the last few weeks is the nomination clock, California's 620-tract cap, the December 31, 2026 recognition date for old deferrals, and a proposed reporting package. Read the long form in Two Clocks, One Uncertified Map.
Remaining deferred gain on an original-program Qualified Opportunity Fund interest is still recognized on December 31, 2026. Notice 2026-40 says that deemed inclusion is not re-deferrable into a 2.0 fund. Plan the cash with the CPA now.
A gain realized in 2026 still has a 180-day reinvestment window. If any of those days sit after January 1, 2027, a 2.0 fund on the new map may be in range. Count the days from the gain date. Do not wait for a pretty map.
Agency: GO-Biz. Public comment closed August 28. As of October 19, independent trackers show a small off-list stub and a list still pending. Eligible is not designated. Designated is not certified. Do not underwrite a California address as a 2027 zone until Treasury publishes it.
| Feature | Original program | After December 31, 2026 |
|---|---|---|
| Deferral | Fixed recognition date of December 31, 2026 | Rolling five years from the fund investment |
| Five-year step-up | 10%, if the hold was long enough before 2026 | 10% of the deferred gain |
| Rural five-year step-up | No separate 30% rural fund mechanic | 30% if the fund qualifies as a rural QOF |
| Seven-year / 15% | Part of the original design | Eliminated |
| Ten-year exclusion | Growth on the fund interest can be excluded | Retained |
| Eligible tracts | Low-income plus some contiguous tracts | 70% AMI (was 80%). Contiguous higher-income tracts are out. 25% state cap. |
| Rural substantial improvement | Generally 100% | 50% for qualifying rural QOZB property |
REG-116506-25 (September 11, 2026) would expand Form 8996, require QOZB statements under penalty of perjury, add investor disposition and broker reporting, and reset fund certification and decertification. Proposed late-8996 penalty: $500 per day, capped at $10,000, or $50,000 for a fund with more than $10 million in assets. Comments due October 26. Hearing November 5, 10:00 a.m. ET. Notice 2026-55 comments run around November 23. Do not describe any of this as current law.
No. Notice 2026-40 treats that deemed inclusion as tax coming due on the old deferral. It is not a new eligible gain for a 2.0 fund.
Yes, if the 180-day window still has days after January 1, 2027. Count from the gain date the regulations assign to that type of gain. A January 2026 sale is often already out of time. A late-2026 sale may still have room.
No. Eligible is not designated. Designated is not certified. California's cap is 620 tracts. Public trackers as of October 19 still show the state list pending. Underwrite after Treasury certifies.
No. The 30% five-year step-up applies if the fund qualifies as a rural Qualified Opportunity Fund. California has 346 rural-eligible tracts on Treasury's September file. How many of those make the 620-tract slate is a state decision that has not been certified.
No. REG-116506-25 is proposed. Track the November 5 hearing. Do not tell a client the $500-per-day schedule is current law.
The October Insights article is Two Clocks, One Uncertified Map. The institutional walkthrough is the QOZ 2.0 white paper. The 180-day explainer is The Year-End Tax Window.
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