The December 31, 2026 Opportunity Zone Inclusion: Measuring Investor Gain and Deciding Whether to Re-Defer

Daniel P. Ryan
Daniel P. Ryan | Sullivan & Worcester

Daniel P. Ryan co-founded the Opportunity Zone practice group at Sullivan & Worcester and has helped structure more than $1 billion in Opportunity Zone projects, including real estate and operating businesses. A partner in the firm’s Boston office, he advises on Opportunity Zone tax structuring, federal tax credits, transactional tax planning, and federal and state tax controversies.

Live Video-Broadcast: December 11, 2026

2 hour CLE

Tuition: $195.00
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Program Summary

 

A low valuation does not mean a low inclusion

December 31, 2026 is the deemed inclusion date for every investor still holding a pre-2027 QOF interest. For partnership and S corporation fund interests, the measurement is not the statutory lesser-of formula alone. Treas. Reg. §1.1400Z2(b)-1(e)(4) applies a debt-inclusive hypothetical-sale number. Notice 2026-40 draws the line between deemed inclusion and inclusion-event gain that can roll into a 2027 fund.

Take debt-financed losses, distributions or liability reallocations, and the (e)(4) number can erase a low valuation. Order an appraisal that will not hold up, and the penalty and disclosure position is exposed. Miss the event date or the day count, and the last safe closing passes. Hold through year-end, and the ten-year exclusion stays. Trigger now, and the exclusion is the price.

Attendees leave with the statutory and (e)(4) numbers run side by side from the Form 8949, Form 8997 and K-1 record. They leave with a documented order-or-skip appraisal call and a 2026 return sequence through character, NIIT, suspended losses and the state add-back reversal. For the hold-or-trigger call, they leave with a decision tree, a 180-day calendar and an anti-abuse risk ladder: judgment work product, not a doctrine walk-through.

Key topics to be discussed:

  • Rebuild the Deferral Record
    How to reconstruct the deferral record and basis increases from the original Form 8949, Form 8997 and K-1 record before any number is run.
  • Two Numbers Side by Side
    How the Treas. Reg. §1.1400Z2(b)-1(e)(4) hypothetical-sale number diverges from the statutory lesser-of number once debt-financed losses, distributions or liability reallocations enter the picture.
  • Order-or-Skip Appraisal Call
    How to run the pre-appraisal screen, scope a defensible fund-interest valuation when the call is to order, and set the penalty and disclosure position on a discounted value.
  • 2026 Return Sequencing
    How to sequence the 2026 return through character, NIIT, suspended losses and estimated tax, and map the state add-back reversal across New York and nonconforming states.
  • Eligibility and Calendar Check
    How the Notice 2026-40 line between deemed inclusion and inclusion-event gain, the event date, the counting convention and the last safe closing decide whether a 2027 rollover is open.
  • Hold-or-Trigger Execution
    How to price hold versus trigger, choose among sale, redemption, excess distribution, gift and §351 transfer, build the anti-abuse risk ladder and business-purpose file, and carry the rollover through taxpayer identity, pass-through start dates and the Form 8997 trail.

This course is co-sponsored with myLawCLE.

Date / Time: December 11, 2026

  • 12:00 pm – 2:10 pm Eastern
  • 11:00 am – 1:10 pm Central
  • 10:00 am – 12:10 pm Mountain
  • 9:00 am – 11:10 am Pacific

Closed-captioning available

Speakers

Daniel P. Ryan, Partner | Sullivan & Worcester

Daniel P. Ryan co-founded the Opportunity Zone practice group at Sullivan & Worcester and has helped structure more than $1 billion in Opportunity Zone projects, including real estate and operating businesses. A partner in the firm’s Boston office, he advises on Opportunity Zone tax structuring, federal tax credits, transactional tax planning, and federal and state tax controversies. Before joining the firm, he was an attorney at the IRS Office of Chief Counsel, where he represented the IRS in U.S. Tax Court and served as a Special Assistant U.S. Attorney for the District of Massachusetts.

  • Education & Credentials

He holds an LL.M. in Taxation from Boston University School of Law, a J.D., magna cum laude, from the Catholic University Columbus School of Law, and a B.A. from Boston College. He is admitted in Massachusetts and New York and before the U.S. District Court for the District of Massachusetts and the U.S. Tax Court.

  • Recognition & Leadership

Opportunity Zone Magazine named him a Top 25 Tax Specialist in 2022. He is recommended by The Legal 500 U.S. (2019, 2022–2026), listed under Tax: US Taxes – Contentious in the 2026 edition, and rated “Highly Regarded” for general corporate tax in International Tax Review’s World Tax Guide (2024–2026).

  • Professional Involvement

He is a member of the Tax Sections of the Boston Bar Association and the American Bar Association. He writes frequently on Opportunity Zones, including client alerts on the July 2025 amendments to IRC §§ 1400Z-1 and 1400Z-2, and has been quoted by Law360, Bloomberg Tax, The Wall Street Journal, The Real Deal and The Boston Globe.

  • Experience

His Opportunity Zone work covers structuring for real estate and operating-business investments. In controversy matters, he has represented clients in IRS and state audits and in domestic and offshore voluntary disclosures, and has negotiated abatement of federal penalties tied to offshore tax issues. He secured a multi-million dollar refund for an insurance company in Dental Service of Massachusetts v. Commissioner before the Massachusetts Supreme Judicial Court, a matter of first impression in Massachusetts.

Agenda

SESSION 1 – Measuring the December 31, 2026 Opportunity Zone Inclusion for Leveraged and Discounted Fund Interests | Daniel P. Ryan | 12:00pm – 1:00pm

This hour is for investor-side tax counsel who already know the lesser-of formula. It works through the debt-inclusive hypothetical-sale measurement under Treas. Reg. §1.1400Z2(b)-1(e)(4) for partnership and S corporation QOF interests. That measurement often erases the benefit of a low valuation once the investor has taken debt-financed losses, distributions or liability reallocations. Attendees leave able to run the statutory and (e)(4) numbers side by side from the original Form 8949, Form 8997 and K-1 record, and to make and document an order-or-skip appraisal call. When the call is to order, they can scope a fund-interest valuation that will hold up. They can also sequence the 2026 return through character, NIIT, suspended losses, estimated tax and the state add-back reversal.

BREAK | 1:00pm – 1:10pm

SESSION 2 – Hold or Trigger: Re-Deferring Opportunity Zone Inclusion-Event Gain Under the 2027 Rules | Daniel P. Ryan | 1:10pm – 2:10pm

This hour covers the year-end decision for an investor still holding a pre-2027 QOF interest. The investor can hold through December 31, 2026, pay tax on the deemed inclusion, and keep the ten-year exclusion. Or the investor can trigger an inclusion event now and roll the recognized gain into a 2027 fund. The session works through the eligibility line Notice 2026-40 draws, the event-date and day-count arithmetic, and the trigger menu (sale, redemption, excess distribution, gift, §351 transfer). It then covers an anti-abuse risk ladder for which no guidance exists, the price of giving up the exclusion, and the taxpayer-identity and Form 8997 trail that carry the rollover. Attendees leave able to document a hold-or-trigger call made on incomplete facts, using a decision tree, a 180-day calendar, and a risk ladder.

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Receive CLE credit in Florida via attorney submission.
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2 General

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2 General

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2 General

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2 Substantive

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2 General

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2 CLE Hour(s)

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2 General

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2 General

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2.4 General

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2 General

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2 General

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2 General

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