Treasury and the IRS have issued transitional guidance bridging the original Opportunity Zone program to the restructured regime taking effect January 1, 2027, under OBBBA §70421. The guidance confirms a planning point worth flagging now: eligible gain realized on, before, or after December 31, 2026, is not locked into the old deadline. If the client makes a timely qualifying investment in a QOF on or after January 1, 2027, within the standard 180-day window, the gain can be deferred under IRC §1400Z-2(a) and picks up the 10% basis step-up (30% for a qualified rural opportunity fund) under §1400Z-2(b)(2)(B), benefits that apply only to post-2026 investments.

The Notice draws a hard line on the other side. A taxpayer holding a qualifying investment through December 31, 2026, must recognize the remaining deferred gain in that taxable year. That gain, sometimes called deemed included gain, can never become eligible gain for a new deferral election; the original §1400Z-2(a) election stays in effect with respect to it. No amount of it can be rolled into a new fund.