Bulletin No. 2026–28

Agency decision

Ask Donna

What actually matters in this document.

Text

HIGHLIGHTS

OF THIS ISSUE

Bulletin No. 2026–28

July 6, 2026

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS

Notice 2026-38, page 30.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment rates

for May 2026 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for June 2026, and the

30-year Treasury rates, as reflected by the application of

§ 430(h)(2)(C)(iv).

INCOME TAX

Notice 2026-40, page 33.

Notice 2026-40 announces that the Department of the

Treasury (Treasury Department) and the Internal Revenue

Service (IRS) intend to issue proposed regulations regard-

Finding Lists begin on page ii.

ing qualified opportunity zones (QOZs) under §§ 1400Z-1

and 1400Z-2 of the Internal Revenue Code (Code), as

amended by § 70421 of Public Law 119-21, 139 Stat. 72

(July 4, 2025), commonly known as the One, Big, Beautiful

Bill Act (OBBBA), including transitional guidance related to

qualifying investments under §§ 1400Z-1 and 1400Z-2, as

in effect prior to amendment by § 70421 of the OBBBA

(forthcoming proposed regulations). The forthcoming proposed regulations are anticipated to include proposed rules

similar to the rules provided in sections 3 through 5 of this

notice.

Rev. Rul. 2026-12, page 27.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes

of sections 382, 1274, 1288, 7872 and other sections of

the Code, tables set forth the rates for July 2026.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

July 6, 2026

Bulletin No. 2026–28

Part II

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7702, 7872.)

Rev. Rul. 2026-12

This revenue ruling provides various prescribed rates for federal income

Annual

AFR

110% AFR

120% AFR

130% AFR

4.00%

4.41%

4.81%

5.22%

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

4.35%

4.79%

5.23%

5.67%

6.55%

7.67%

AFR

110% AFR

120% AFR

130% AFR

4.98%

5.48%

5.99%

6.50%

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2026–28

tax purposes for July 2026 (the current

month). Table 1 contains the short-term,

mid-term, and long-term applicable federal rates (AFR) for the current month for

purposes of section 1274(d) of the Internal

Revenue Code. Table 2 contains the shortterm, mid-term, and long-term adjusted

applicable federal rates (adjusted AFR) for

the current month for purposes of section

1288(b). Table 3 sets forth the adjusted

federal long-term rate and the long-term

tax-exempt rate described in section

382(f). Table 4 contains the appropriate

percentages for determining the low-in-

REV. RUL. 2026-12 TABLE 1

Applicable Federal Rates (AFR) for July 2026

Period for Compounding

Semiannual

Short-term

3.96%

4.36%

4.75%

5.15%

Mid-term

4.30%

4.73%

5.16%

5.59%

6.45%

7.53%

Long-term

4.92%

5.41%

5.90%

6.40%

Annual

3.03%

3.29%

3.77%

REV. RUL. 2026-12 TABLE 2

Adjusted AFR for July 2026

Period for Compounding

Semiannual

3.01%

3.26%

3.74%

come housing credit described in section

42(b)(1) for buildings placed in service

during the current month. However, under

section 42(b)(2), the applicable percentage for non-federally subsidized new

buildings placed in service after July 30,

2008, shall not be less than 9%. Table 5

contains the federal rate for determining

the present value of an annuity, an interest

for life or for a term of years, or a remainder or a reversionary interest for purposes

of section 7520. Finally, Table 6 contains

the blended annual rate for 2026 for purposes of section 7872.

Quarterly

Monthly

3.94%

4.34%

4.72%

5.12%

3.93%

4.32%

4.70%

5.10%

4.28%

4.70%

5.13%

5.55%

6.40%

7.46%

4.26%

4.68%

5.11%

5.53%

6.36%

7.41%

4.89%

5.37%

5.86%

6.35%

4.87%

5.35%

5.83%

6.32%

Quarterly

3.00%

3.25%

3.72%

Monthly

2.99%

3.24%

3.71%

July 6, 2026

REV. RUL. 2026-12 TABLE 3

Rates Under Section 382 for July 2026

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

3.77%

REV. RUL. 2026-12 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for July 2026

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

8.09%

Appropriate percentage for the 30% present value low-income housing credit

3.47%

REV. RUL. 2026-12 TABLE 5

Rate Under Section 7520 for July 2026

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,

or a remainder or reversionary interest

5.20%

REV. RUL. 2026-12 TABLE 6

Blended Annual Rate for 2026

Section 7872(e)(2) blended annual rate for 2026

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of July 2026. See Rev.

Rul. 2026-12, page 27.

July 6, 2026

3.82%

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of July 2026. See Rev. Rul.

2026-12, page 27.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of July 2026. See Rev. Rul.

2026-12, page 27.

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2026. See Rev. Rul. 2026-12, page 27.

Bulletin No. 2026–28

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term, and

long-term rates are set forth for the month of July

2026. See Rev. Rul. 2026-12, page 27.

Bulletin No. 2026–28

July 6, 2026

Part III

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

under § 414(y)) pursuant to § 412. Section

430(h)(2) specifies the interest rates that

must be used to determine a plan’s target

normal cost and funding target. Under

this provision, present value is generally

determined using three 24-month average

interest rates (“segment rates”), each of

which applies to cash flows during specified periods. To the extent provided under

§ 430(h)(2)(C)(iv), these segment rates

are adjusted by the applicable percentage

of the 25-year average segment rates for

the period ending September 30 of the

year preceding the calendar year in which

the plan year begins.1 However, an election may be made under § 430(h)(2)(D)

(ii) to use the monthly yield curve in place

of the segment rates.

Section 1.430(h)(2)-1(d) provides

rules for determining the monthly corporate bond yield curve, and § 1.430(h)

(2)-1(c) provides rules for determining

the 24-month average corporate bond

segment rates used to compute the target

normal cost and the funding target. Consistent with the methodology specified in

§ 1.430(h)(2)-1(d), the monthly corporate

bond yield curve derived from May 2026

Notice 2026-38

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest rate on 30-year Treasury securities

under § 417(e)(3)(A)(ii)(II) as in effect for

plan years beginning before 2008 and the

30-year Treasury weighted average rate

under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to single-employer plans (except for CSEC plans

Applicable Month

June 2026

data is in Table 2026-5 at the end of this

notice. The spot first, second, and third

segment rates for the month of May 2026

are, respectively, 4.42, 5.47, and 6.31.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant to

§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. Those percentages are

95% and 105% for plan years beginning

in 2025 and 2026. For this purpose, any

25-year average segment rate that is less

than 5% is deemed to be 5%. The 25-year

average segment rates for plan years

beginning in 2025 and 2026 were published in Notice 2024-67, 2024-41 I.R.B.

726 and Notice 2025-47, 2025-40 I.R.B.

441, respectively.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for June

2026 without adjustment for the 25-year

average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

Third Segment

4.39

5.26

5.90

The adjusted 24-month average segment rates set forth in the chart below

reflect § 430(h)(2)(C)(iv) of the Code. The

24-month averages applicable for June

2026, adjusted to be within the applicable

minimum and maximum percentages of

the corresponding 25-year average segment rates in accordance with § 430(h)(2)

(C)(iv), are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2025

June 2026

4.75

5.26

5.90

2026

June 2026

4.75

5.25

5.90

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to mul-

tiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum

amount for the full-funding limitation

described in § 431(c)(6)(A), based on the

plan’s current liability. Section 431(c)

(6)(E)(ii)(I) provides that the interest

rate used to calculate current liability for

this purpose must be no more than 5 percent above and no more than 10 percent

below the weighted average of the rates

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

July 6, 2026

Bulletin No. 2026–28

of interest on 30-year Treasury securities during the four-year period ending

on the last day before the beginning of

the plan year. Notice 88-73, 1988-2 C.B.

383, provides guidelines for determining the weighted average interest rate.

The rate of interest on 30-year Treasury

securities for May 2026 is 5.03 percent.

The Service determined this rate as the

average of the daily determinations

of yield on the 30-year Treasury bond

maturing in February 2056 determined

each day through May 12, 2026 and

the yield on the 30-year Treasury bond

maturing in May 2056 determined each

day for the balance of the month. For

plan years beginning in June 2026, the

weighted average of the rates of interest

on 30-year Treasury securities and the

permissible range of rates used to calculate current liability are as follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

June 2026

4.53

4.08 to 4.76

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Section 1.417(e)-1(d)(3) provides guidelines for determining the min-

imum present value segment rates. Pursuant to that section, the minimum present

value segment rates determined for May

2026 are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

May 2026

Minimum Present Value Segment Rates

First Segment

Second Segment

4.42

5.47

DRAFTING INFORMATION

The principal author of this notice

is Tom Morgan of the Office of Associ-

Bulletin No. 2026–28

ate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

Third Segment

6.31

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Tony Montanaro at

626-927-1475 (not toll-free number).

July 6, 2026

Table 2026-5

Monthly Yield Curve for May 2026

Derived from May 2026 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

3.99

4.14

4.28

4.38

4.45

4.50

4.54

4.58

4.62

4.67

4.72

4.78

4.84

4.91

4.97

5.04

5.10

5.16

5.22

5.28

5.34

5.39

5.44

5.49

5.53

5.57

5.61

5.65

5.68

5.72

5.75

5.78

5.80

5.83

5.85

5.88

5.90

5.92

5.94

5.96

July 6, 2026

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.98

5.99

6.01

6.03

6.04

6.06

6.07

6.09

6.10

6.11

6.13

6.14

6.15

6.16

6.17

6.18

6.19

6.20

6.21

6.22

6.23

6.24

6.25

6.26

6.27

6.28

6.29

6.30

6.31

6.32

6.33

6.34

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

6.34

6.35

6.36

6.37

6.38

6.39

6.40

6.41

6.42

6.43

6.44

6.45

6.46

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

6.47

6.48

6.49

6.50

6.51

6.52

6.53

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

6.53

6.54

6.55

6.56

Bulletin No. 2026–28

Transitional Guidance

on Qualified Opportunity

Zones under §§ 1400Z-1

and 1400Z-2

Notice 2026-40

SECTION 1. PURPOSE

This notice announces that the Department of the Treasury (Treasury Department) and the Internal Revenue Service

(IRS) intend to issue proposed regulations

regarding qualified opportunity zones

(QOZs) under §§ 1400Z-1 and 1400Z-2

of the Internal Revenue Code (Code)1,

as amended by § 70421 of Public Law

119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful

Bill Act (OBBBA), including transitional

guidance related to qualifying investments under §§ 1400Z-1 and 1400Z-2, as

in effect prior to amendment by § 70421

of the OBBBA (forthcoming proposed

regulations). The forthcoming proposed

regulations are anticipated to include proposed rules similar to the rules provided in

sections 3 through 5 of this notice.

SECTION 2. BACKGROUND

.01 Sections 1400Z-1 and 1400Z-2

(1) Section 1400Z-1. Section 1400Z-1

provides the procedural rules for the designation of QOZs, the related definitions,

and the applicable period for which such

designations remain in effect.

(2) Section 1400Z-2. Section 1400Z-2

allows the deferral of inclusion in gross

income for certain realized gains to the

extent that corresponding amounts are

timely invested in a corporation or partnership that meets the requirements to be

certified as a qualified opportunity fund

(QOF), as defined in § 1400Z-2(d)(1) and

§ 1.1400Z2(d)-1. If certain qualifications

and holding period requirements are met,

then (i) a portion of such deferred gains

may be excluded from gross income, and

(ii) gain on the taxpayer’s investment of

such amounts in a QOF may be excludable from gross income.

.02 References to §§ 1400Z-1 and

1400Z-2. All references hereinafter in this

notice to “prior § 1400Z-1” and “prior

§ 1400Z-2” refer to §§ 1400Z-1 and

1400Z-2, as in effect after amendment of

the Code by both § 13823 of Public Law

115-97, 131 Stat. 2054, 2183 (December

22, 2017), commonly known as the Tax

Cuts and Jobs Act (TCJA), and by § 41115

of the Bipartisan Budget Act of 2018

(BBA 2018), Public Law 115-123, 132

Stat. 64, 161 (February 9, 2018), but prior

to amendment by § 70421 of the OBBBA.

All references in this notice to “§ 1400Z1” and “§ 1400Z-2” refer to §§ 1400Z-1

and 1400Z-2 as amended by § 70421 of

the OBBBA.

.03 Definitions

(1) Qualified Opportunity Zones. For

purposes of §§ 1400Z-1 and 1400Z-2,

§ 1400Z-1(a) defines a QOZ as any population census tract that is a low-income

community (LIC), as defined in § 1400Z1(c)(1), that is designated as a QOZ. This

notice refers to a QOZ designated under

prior § 1400Z-1 as a “previously designated QOZ.”

(2) Qualified Opportunity Fund. Section 1400Z-2(d)(1) provides that a QOF

is an investment vehicle that is organized

as a corporation or a partnership for the

purpose of investing in qualified opportunity zone property (QOZP), other than

another QOF, that holds at least 90 percent

of its assets in QOZP as measured on the

dates described in § 1400Z-2(d)(1)(A) and

(B) (90-percent investment standard). See

§ 1.1400Z2(a)-1(b)(4).

(3) Qualified opportunity zone property. Section 1400Z-2(d)(2)(A) defines

QOZP as property that is qualified

opportunity zone stock (QOZ stock),

qualified opportunity zone partnership

interest (QOZ partnership interest), or

qualified opportunity zone business property (QOZBP).

(a) Qualified opportunity zone stock.

Effective for stock acquired on or before

December 31, 2026, prior § 1400Z-2(d)(2)

(B) and the regulations thereunder define

QOZ stock as any stock in a domestic corporation if: (i) the stock was acquired by

a QOF at its original issue from the corporation solely in exchange for cash after

December 31, 2017; (ii) the corporation

was a qualified opportunity zone business

(QOZB) (or newly organized for such purpose) at the time the stock was issued; and

(iii) for 90 percent of the QOF’s holding

period of such stock, the corporation qualified as a QOZB. See prior §§ 1400Z-2(d)

(2)(B) and 1.1400Z2(d)-1(c)(2)(i). Effective for stock acquired after December 31,

2026, § 70421(c)(4)(B) of the OBBBA

modified § 1400Z-2(d)(2)(B)(i)(I) by

replacing “December 31, 2017,” with

“applicable date,” which, as defined in

§ 1400Z-2(d)(2)(E), means, with respect

to any corporation that is a QOZB, the

earliest applicable start date with respect

to the QOZBP held by such QOZB. See

paragraph (5) of this subsection for the

definition of “applicable start date.”

(b) Qualified opportunity zone partnership interest. Effective for partnership

interests acquired on or before December 31, 2026, prior § 1400Z-2(d)(2)(C)

and the regulations thereunder define

QOZ partnership interest as any capital

or profits interest in a domestic partnership where: (i) the interest was acquired

by a QOF from the partnership solely in

exchange for cash after December 31,

2017; (ii) the partnership was a QOZB

(or newly formed for such purpose) at the

time the interest was acquired; and (iii) for

90 percent of the QOF’s holding period of

such interest, the partnership qualified as

a QOZB. See prior § 1400Z-2(d)(2)(C)

and § 1.1400Z2(d)-1(c)(3)(i). Effective

for partnership interests acquired after

December 31, 2026, § 70421(c)(4)(B)

of the OBBBA modified § 1400Z-2(d)

(2)(C)(i) by replacing “December 31,

2017,” with “applicable date” as defined

in § 1400Z-2(d)(2)(E). Under § 1400Z2(d)(2)(E), “applicable date” means,

with respect to any partnership that is a

QOZB, the earliest applicable start date

with respect to the QOZBP held by such

QOZB.

property. Effective for property acquired

on or before December 31, 2026, prior

§ 1400Z-2(d)(2)(D) defines QOZBP as

tangible property used in a trade or business of the QOF if (i) such property was

acquired by the QOF by purchase after

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

Bulletin No. 2026–28

July 6, 2026

December 31, 2017, (ii) the original use

of such property in the QOZ commences

with the QOF or the QOF substantially

improves the property, and (iii) during

substantially all of the QOF’s holding

period for such property, substantially

all of the use of such property was in a

QOZ. Effective for property acquired after

December 31, 2026, § 70421(c)(4)(A)

of the OBBBA amended prior § 1400Z2(d)(2)(D)(i)(I) by striking “December

31, 2017” at the end of the subclause and

inserting “the applicable start date (as

defined in § 1400Z-1(e)(2)) with respect

to the [QOZ] described in” § 1400Z-2(d)

(2)(D)(i)(III).

(4) Qualified opportunity zone business.

(a) In general. Section 1400Z-2(d)(3)

(A) defines a QOZB as a trade or business

in which substantially all of the tangible

property owned or leased in connection

with the trade or business is QOZBP.

The trade or business must also satisfy

the following requirements provided in

§ 1397C(b)(2), (4), and (8): (i) at least 50

percent of the total gross income of the

entity must be derived from the active

conduct of a trade or business in the QOZ;

(ii) a substantial portion of the intangible

property of such entity must be used in the

active conduct of a trade or business in the

QOZ; and (iii) less than five percent of the

average of the aggregate unadjusted bases

of the entity’s property must be attributable to nonqualified financial property.

Finally, a QOZB may not be a trade or

business described in § 144(c)(6)(B). See

also § 1.1400Z2(d)-1(d)(3).

(b) 70-percent tangible property standard. Section 1.1400Z2(d)-1(d)(1)(i)

and (d)(2) clarify the “substantially all”

requirement provided in § 1400Z-2(d)(3)

(A)(i) regarding the amount of tangible

property owned or leased by the taxpayer

that is required to be QOZBP. Under the

regulations, for an entity’s trade or business to satisfy the “substantially all”

requirement, at least 70 percent (by value)

of the tangible property owned or leased

by the trade or business must be QOZBP.

(5) Applicable start date and effective period. Section 70421(b)(2) of the

OBBBA redesignated prior § 1400Z-1(f)

as § 1400Z-1(e), and § 70421(b)(3) of

the OBBBA modified when a QOZ designation period begins and ends for QOZs

designated under § 1400Z-1. A QOZ designation period under § 1400Z-1(e)(1)

begins on the applicable start date and

ends on the day before the date that is 10

years after the applicable start date. Under

§ 1400Z-1(e)(2), the term “applicable start

date” means, with respect to any QOZ

designated under § 1400Z-1, the January

1 following the date on which such QOZ

was certified and designated. These provisions are effective only for areas certified

and designated after the enactment of the

OBBBA.

.04 Designations of QOZs.

(1) In General. Section 1400Z-1(b)

(1) allows the Chief Executive Officer (CEO) of each State, territory of the

United States, and the District of Columbia (State) to nominate LICs within their

jurisdiction to be certified and designated

by the Secretary of the Treasury or Secretary’s delegate (Secretary) as QOZs. As

described in section 3.01(1) of this notice,

§ 1400Z-1(d) limits the number of population census tracts in a State that the Secretary may designate as QOZs with respect

to any designation period. See Rev. Proc.

2026-14, 2026-20 I.R.B. 910, for guidance

for State CEOs regarding nomination of a

population census tract for designation as

a QOZ effective on January 1, 2027.

(2) Designations of previously designated QOZs.

(a) In general. Under prior § 1400Z1(c)(1), a population census tract was eligible for designation as a QOZ if it satisfied the definition of an LIC in § 45D(e).

In addition, prior § 1400Z-1(e) provided

that a population census tract that was not

an LIC could be designated as a QOZ if,

among other requirements, the tract was

contiguous with an LIC that was designated as a QOZ. Rev. Proc. 2018-16,

2018-9 I.R.B. 383, provided guidance on

the nomination, certification, and designation process under prior § 1400Z-1(b)(1)

and (2). After the enactment of the TCJA,

§ 41115 of BBA 2018 created a special rule for Puerto Rico by adding prior

§ 1400Z-1(b)(3), under which all LICs in

Puerto Rico were deemed certified and

designated as QOZs effective on the date

of the enactment of the TCJA (that is,

December 22, 2017).

(b) Notices 2018-48 and 2019-42.

Notice 2018-48, 2018-28 I.R.B. 9, amplified by Notice 2019-42, 2019-29 I.R.B.

352, provides a list of LICs certified and

designated as QOZs by the Secretary

in 2018, as well as LICs in Puerto Rico

deemed certified and designated as QOZs

under prior § 1400Z-1(b)(3), effective

on December 22, 2017. Notice 2019-42,

2019-29 I.R.B. 352, added two additional

census tracts in Puerto Rico that were

deemed certified and designated as QOZs

under prior § 1400Z-1(b)(3) effective on

December 22, 2017.

in effect. Prior § 1400Z-1(f) provided a

10-year “QOZ designation period” for

which a population census tract, once designated as a QOZ, would remain designated, beginning on the date of the designation and ending at the close of the 10th

calendar year beginning on or after such

date of designation. Accordingly, the QOZ

designation period under prior § 1400Z1(f) ends on—

(i) December 31, 2027, for QOZs

deemed certified and designated in Puerto

Rico under prior § 1400Z-1(b)(3), and

(ii) December 31, 2028, for all other

QOZs.

SECTION 3. TRANSITIONAL

GUIDANCE REGARDING SECTION

1400Z-1

.01 QOZ designations under the

OBBBA.

(1) Application of 25-percent limitation. Prior § 1400Z-1(d)(1) provided that,

except as provided in prior § 1400Z-1(d)

(2)2 and (b)(3) (deemed designation rule

for Puerto Rico), the number of designated QOZs may not exceed 25 percent of

the total number of LIC population census

tracts in the State (25-percent limitation).

Section 70421(a) of the OBBBA amended

prior § 1400Z-1 to apply the 25-percent

limitation on the number of QOZ designations made during any period. Specifically, § 70421(a)(4) of the OBBBA

amended prior § 1400Z-1(d)(1) to remove

Prior § 1400Z-1(d)(2) provided that, notwithstanding the 25-percent limitation, if a State contains fewer than 100 LICs, then a total of 25 tracts that are LICs may be designated.

July 6, 2026

Bulletin No. 2026–28

the exception from the 25-percent limitation for Puerto Rico and amended prior

§ 1400Z-1(d)(1) and (2) to add references

to “during any period.” For purposes of

applying the 25-percent limitation on the

number of population census tracts in

a State that may be designated as QOZs

by the Secretary, the phrase “during any

period” refers to the QOZ designation

period under § 1400Z-1(e)(1) beginning

on the applicable start date and ending

on the day before the date that is 10 years

after the applicable start date during which

an LIC is designated as a QOZ. Accordingly, the number of previously designated QOZs in a State will not affect the

number of population census tracts that a

State CEO may nominate to be designated

as QOZs for the QOZ designation period

beginning January 1, 2027.

(2) Applicable start date and designation period. Under § 1400Z-1(e)(2), the

term “applicable start date” means, with

respect to any QOZ designated under

§ 1400Z-1, the January 1 following the

date on which such QOZ was certified and

designated. Therefore, for every LIC certified and designated by the Secretary as

a QOZ under § 1400Z-1(b) during 2026,

the QOZ designation period begins on

January 1, 2027, and ends on December

31, 2036.

SECTION 4. TRANSITIONAL

GUIDANCE FOR INVESTORS

.01 Gain realized on or before December 31, 2026, and invested in a QOF on or

before December 31, 2026.

(1) In general. Under § 1400Z-2(a)(1)

(A) and § 1.1400Z2(a)-1, in the case of a

taxpayer with one or more eligible gains,

as defined in § 1.1400Z2(a)-1(b)(11), at

the election of the taxpayer, gross income

for the taxable year will not include the

aggregate amount of such gain invested

by the taxpayer in a QOF during the 180day period beginning on the date of the

events that gave rise to that gain. Prior

§ 1400Z-2(b)(1)(B) and § 1.1400Z2(b)1(b) provide that if gain was deferred by

reason of an election under § 1400Z-2(a)

for a timely qualifying investment made

on or before December 31, 2026, then

such gain must be included in the taxpayer’s gross income in the taxable year

that includes the earlier of (i) the date on

Bulletin No. 2026–28

which an inclusion event, as defined in

§ 1.1400Z2(b)-1(c), occurs with respect

to such qualifying investment (or portion

thereof), or (ii) December 31, 2026.

(2) Inability to make a deferral election

for taxpayers holding qualifying investments through December 31, 2026. Taxpayers holding a qualifying investment

(or portion thereof) through December 31,

2026, are required to include in income in

the taxable year that includes that date the

amount of remaining deferred gain from the

qualifying investment as calculated under

prior § 1400Z-2(b)(2) and § 1.1400Z2(b)1(e)(3) (deemed included gain). Taxpayers that recognize deemed included gain

on December 31, 2026, continue to hold a

qualifying investment for which an election under § 1400Z-2(a) remains in effect.

See § 1400Z-2(e)(1)(A), §§ 1.1400Z2(a)1(b)(34) and 1.1400Z2(c)-1(b)(1)(i).

Amounts of deemed included gain may

not be deferred pursuant to either prior or

current § 1400Z‑2(a)(1)(A) because, as

noted above, an election continues to be

in effect under prior and current § 1400Z2(a)(2) with respect to the eligible gain

that gave rise to the deemed included gain

on December 31, 2026. Thus, no amount

of deemed included gain can be eligible

gain with respect to which an election

under either prior or current § 1400Z-2(a)

may be made.

(3) Continued eligibility to make an

election under § 1400Z-2(c). Because the

election under § 1400Z-2(a) with respect

to a qualifying investment continues in

effect when an eligible taxpayer recognizes deemed included gain in the taxable year which includes December 31,

2026, under prior § 1400Z-2(b)(1)(B)

and § 1.1400Z2(b)-1(b)(2), the taxpayer

remains potentially eligible to make an

election under § 1400Z-2(c) on the later

sale or exchange of that qualifying investment. (The election under § 1400Z-2(c)

can be made only if the taxpayer satisfies

the 10-year holding period requirement

and the other requirements of § 1400Z‑2

and the regulations thereunder through the

date on which the investment is disposed

of. See § 1.1400Z2(c)-1(b)(1)(i).)

.02 Gain realized on or before December 31, 2026, and invested in a QOF on or

after January 1, 2027.

(1) In general. Section 70421(c)(1) of

the OBBBA modified prior § 1400Z-2(a)

(2) by allowing a deferral election to be

made after December 31, 2026. In addition, § 70421(c)(2) of the OBBBA modified prior § 1400Z-2(b) in multiple ways,

including by changing the taxable year of

inclusion in prior § 1400Z-2(b)(1)(B) from

that which includes December 31, 2026,

to that which includes the date that is 5

years after the date the qualifying investment was made. Under § 1400Z-2(b)(2)

(B), if a qualifying investment is held for

at least five years, a taxpayer’s basis in

the qualifying investment increases by 10

percent (or 30 percent, in the case of any

investment in a qualified rural opportunity

fund, as defined in § 1400Z-2(b)(2)(C)).

Section 1400Z-2(b)(2)(B) and (C) are

effective for amounts invested in QOFs

after December 31, 2026. See § 70421(c)

(5)(A) of the OBBBA.

(2) Gain eligible for deferral. In the

case of a taxpayer with eligible gain realized on, before, or after December 31,

2026, who timely invests a corresponding amount in a QOF on or after January

1, 2027, the taxpayer may elect to defer

the recognition of that gain provided the

requirements under § 1400Z-2(a) are met.

See § 1.1400Z2(a)-1(b)(7) for guidance on

what is considered a timely investment.

The deferred gain with respect to a qualifying investment made on or after January

1, 2027, must be included in gross income

in the taxable year that includes the earliest of (i) the date on which such qualifying

investment (or portion thereof) is sold or

exchanged, (ii) the date on which an inclusion event other than a sale or exchange

occurs with respect to such qualifying

investment (or portion thereof), or (iii)

five years from the date the qualifying

investment was made. Section 1400Z2(b)(2)(B) provides for the determination

of basis for purposes of determining the

amount of gain included in gross income.

.03 Eligibility of inclusion event gain.

(1) In general. Under § 1.1400Z2(a)1(b)(11)(iv)(A), gain with respect to a

qualifying investment (or portion thereof)

that is otherwise required to be included in

gross income due to the occurrence of an

inclusion event (inclusion event gain) may

be eligible for deferral under § 1400Z-2(a)

(1), provided that all of the requirements to

elect to defer eligible gain under § 1400Z2(a)(1)(A) are met. For purposes of determining whether inclusion event gain is

July 6, 2026

eligible gain under § 1400Z-2(a)(1)(A),

such inclusion event gain is treated as if it

were realized upon the occurrence of the

inclusion event rather than on the sale or

exchange that gave rise to the eligible gain

to which the inclusion event relates. See

§ 1.1400Z2(a)-1(b)(11)(iv).

(2) Requirements to defer inclusion

event gain under § 1400Z-2(a). Inclusion event gain may be deferred by making a qualifying investment within 180

days of the inclusion event date. See

§ 1.1400Z2(a)-1(b)(11)(iv)(B). To the

extent a taxpayer has an inclusion event

with respect to any portion of a qualifying investment, that portion is no longer

a qualifying investment and the taxpayer

is not eligible to make an election pursuant to § 1400Z-2(c) with respect to that

portion of the qualifying investment. For

guidance on the treatment of the portion

of a qualifying investment to which an

inclusion event relates and the inability to

make an election under § 1400Z-2(c) with

respect to that portion of the investment,

see § 1.1400Z2(c)-1(b)(1)(i).

SECTION 5. TRANSITIONAL

GUIDANCE FOR QOFS AND QOZBS

.01 Tangible property acquired after

December 31, 2026.

(1) In general. In order for tangible

property to meet the “acquired by purchase” requirement under § 1400Z-2(d)

(2)(D)(i)(I), such property must be purchased, as defined in § 179(d)(2), after

the applicable start date, as defined in

§ 1400Z-1(e)(2), with respect to the QOZ

(that is, January 1 following the date on

which such QOZ was certified and designated as a QOZ). The amendment to the

language in prior § 1400Z-2(d)(2)(D)(i)

(I) by § 70421(c)(4)(A) of the OBBBA,

from property acquired by purchase after

“December 31, 2017” to property acquired

by purchase after the “applicable start

date,” applies to any property acquired

after December 31, 2026. See § 70421(c)

(5)(B) of the OBBBA. Thus, § 1400Z-1(e)

(2)’s definition of “applicable start date” is

effective only for a QOZ designated after

the date of enactment of the OBBBA. See

§ 70421(b)(4) of the OBBBA. A previously designated QOZ does not have an

“applicable start date” under § 1400Z1(e)(2) because its designation took place

July 6, 2026

before the date of enactment of OBBBA.

Therefore, property acquired by a QOF

or QOZB after December 31, 2026, cannot be QOZBP unless (i) the property is

acquired for use in a QOZ that is designated after July 4, 2025, or (ii) one of the

exceptions in section 5.01(2) and (3) of

this notice applies.

(2) Property acquired pursuant to a

working capital safe harbor plan after

December 31, 2026.

(a) In general. Section 1400Z-2(d)

(3)(A)(ii) incorporates § 1397C(b)(8),

which requires that less than 5 percent

of the average of the aggregate unadjusted bases of the property of the relevant entity be attributable to nonqualified

financial property in each taxable year. In

general, under § 1397C(e), “nonqualified

financial property” means debt, stock,

partnership interests, options, futures

contracts, forward contracts, warrants,

notional principal contracts, annuities,

and other similar property specified in

regulations. However, under § 1397C(e)

(1), this term does not include reasonable

amounts of working capital held in cash,

cash equivalents, or debt instruments with

a term of 18 months or less. For purposes

of applying § 1397C(e)(1) to a QOZB

under § 1400Z-2(d)(3), § 1.1400Z2(d)1(d)(3)(v) provides a safe harbor under

which working capital assets are treated

as reasonable in amount if the following

requirements, provided in § 1.1400Z2(d)1(d)(3)(v)(A) through (C), are satisfied.

First, the working capital assets must be

designated in writing for the development

of a trade or business in a QOZ, including when appropriate the acquisition, construction, and/or substantial improvement

of tangible property in the QOZ. Second,

there must be a written schedule consistent with the ordinary start-up of a trade

or business for expenditure of those working capital assets. Under the schedule,

the working capital assets must be spent

within 31 months of the receipt by the

business of the assets. Third, the working

capital assets must be used in a manner

that is substantially consistent with the

writing and the written schedule. A single

business may benefit from more than a

single application of the working capital

safe harbor, provided that each application

independently satisfies all of the requirements of § 1.1400Z2(d)-1(d)(3)(v)(A)

through (C). See § 1.1400Z2(d)-1(d)(3)(v)

(E). Additionally, pursuant to a working

capital safe harbor for start-up businesses

that are not yet operating as a trade or

business, these entities may treat certain

amounts as satisfying the requirements for

QOZB qualification under § 1400Z-2(d)

(3)(i) for the duration of the working capital safe harbor. See § 1.1400Z2(d)-1(d)(3)

(vi).

(b) Transition guidance regarding

QOZBP. If an entity acquires property

after December 31, 2026, for use in a previously designated QOZ and pursuant to

a written plan meeting the requirements

of the § 1.1400Z2(d)-1(d)(3)(v) and (vi)

working capital safe harbors, then that

property may satisfy the acquisition

requirement of § 1400Z-2(d)(2)(D)(i)(I) if

(i) the working capital plan was adopted

on or before December 31, 2026, (ii) the

relevant property acquisitions are made in

a manner substantially consistent with that

plan, (iii) the QOZB has received at least

ten percent of the total estimated working

capital assets designated in writing pursuant to the plan by December 31, 2026, and

(iv) the QOZB expends at least five percent of the total estimated working capital

assets by December 31, 2026. Amounts

required to be expended by a QOZB pursuant to a binding agreement entered into

prior to January 1, 2027, will be considered to be expended for purposes of the

requirement to expend five percent of the

total estimated working capital assets by

December 31, 2026.

QOZP. Stock or partnership interests

acquired after December 31, 2026, pursuant to a written plan described in this

section 5.01(2), are treated as acquired

after the “applicable date” for purposes

of § 1400Z-2(d)(2)(B)(i)(I) and § 1400Z2(d)(2)(C)(i).

(3) Tangible property acquired in the

ordinary course of business after December 31, 2026, for use in a previously designated QOZ. Tangible property acquired

after December 31, 2026, by a QOF or

QOZB for use in the ordinary course of its

trade or business in a previously designated

QOZ to replace existing tangible business

property may be treated as QOZBP if the

requirements of § 1400Z-2(d)(2)(D) are

otherwise met. Replacements in the ordinary course of a trade or business include

Bulletin No. 2026–28

the replacement or modernization of property necessary to continue the operations

of the trade or business. Replacements in

the ordinary course of a trade or business

do not include tangible property acquired

pursuant to the expansion of a trade or

business or the transition of a trade or

business into a new trade or business.

(4) Examples. The following examples illustrate the application of the provisions in section 5.01(1) through (3) of

this notice.

(i) Example 1—Tangible property acquired pursuant to the expansion of a trade or business. QOZB

A owns and operates an industrial manufacturing

facility in Tract A, which was designated as a QOZ

in 2018 under prior § 1400Z-1. On June 15, 2028,

QOZB A purchases a new warehouse on an adjacent

plot of land from an unrelated third party to expand

the facility’s capacity to produce a new product.

The new warehouse acquired by QOZB A on that

date is not located in a tract that was designated as

a QOZ effective January 1, 2027. Because the new

warehouse was not acquired after the applicable start

date of a tract designated as a QOZ on January 1,

2027, it is not QOZBP under the general rule in section 5.01(1) of this notice. Because the new warehouse was not developed pursuant to a written plan

within the scope of section 5.01(2) of this notice and

was acquired pursuant to the expansion of QOZB

A’s trade or business within the meaning of section

5.01(3) of this notice, it cannot qualify as QOZBP.

(ii) Example 2—Replacement of existing tangible

business property in the ordinary course of the trade

or business. QOZB A owns and operates an apartment building that is QOZBP in Tract B, which was

designated as a QOZ in 2018 under prior § 1400Z-1.

The apartment building is not located in a tract that

was designated as a QOZ effective January 1, 2027.

In 2028 and in 2029, the apartment building requires

window replacements and the purchase of replacement appliances, fixtures, cabinetry, flooring, and

similar tangible property pursuant to the renovation

of apartment units when tenants vacate the premises.

These acquisitions are necessary for the continued

operation of the apartment building and are replacements in the ordinary course of business that qualify

as QOZBP under § 1400Z-2(d)(2)(D). See section

5.01(3) of this notice.

(iii) Example 3—Modernization of property

necessary to continue the operations of the trade or

business. QOZB C operates a trade or business as

a restaurant in Tract D, which was designated as a

QOZ in 2018 under prior § 1400Z-1. The restaurant

is not located in a tract that was designated as a QOZ

effective January 1, 2027. In 2028, in order to maintain operations and embrace industry advancements,

the restaurant renovates and modernizes its kitchen,

including adding a new ventilation system to its

kitchen to improve energy efficiency and replacing

its point-of-sale system for a system with tools tailored specifically for the restaurant. The renovation

and modernization of the kitchen are necessary for

the continued operation of the restaurant in an efficient manner and are replacements in the ordinary

course of business that qualify as QOZBP under

Bulletin No. 2026–28

§ 1400Z-2(d)(2)(D). See section 5.01(3) of this

notice.

(iv) Example 4–Property acquired pursuant to

a working capital safe harbor plan adopted prior

to December 31, 2026. QOF A forms domestic C

corporation B (QOZB B) to develop a large mixeduse real estate development that will consist of

commercial and residential real property. QOZB B

has a master written plan for the completion of the

commercial and residential developments over a

55-month period that is estimated to cost $50 million

with $30 million allocated to the initial commercial

development phase and $20 million allocated to

the subsequent residential development phase. The

plan provides that the commercial development will

be completed over a 30-month schedule, ending on

November 30, 2026, and subsequently, the residential development will be completed over a 25-month

schedule, estimated to be completed by December

31, 2028. The plan further provides that a portion of

the commercial development is unable to be used in

a trade or business after the completion of the commercial development since that portion of the commercial development will be unusable during the residential construction phase. On May 1, 2024, QOF A

acquires stock of QOZB B in exchange for cash of

$30 million. QOZB B expends the full $30 million in

completing the commercial development by December 2026. Pursuant to QOZB B’s original master

plan for the completion of the real estate development, QOF A acquires additional stock in QOZB B

for cash in December 2026, and QOZB B begins to

use the cash for the residential development phase in

early 2027. The development is located in Tract D,

which was designated as a QOZ in 2018 under prior

§ 1400Z-1. The development is not located in a tract

that was designated as a QOZ effective January 1,

2027. The mixed-use development satisfies the safe

harbor in section 5.01(2) and acquisitions of tangible

property made pursuant to the plan may qualify as

QOZBP if they are made in a manner substantially

consistent with the plan.

(v) Example 5— Property acquired pursuant to

a working capital safe harbor plan adopted prior

to December 31, 2026. The facts are the same as

example 4, except that in November 2027 it becomes

apparent that the residential development is over

budget, delayed by three months, and will require

additional capital to complete a portion of the residential development that includes a swimming pool

for use by apartment residents. In December 2027,

QOF A acquires additional stock of QOZB B solely

in exchange for cash. The cash received by QOZB B

in December 2027 is expended in accordance with

the initial master plan established in 2024 to complete the residential apartment complex, including

the completion of the swimming pool. The residential development is completed and placed into service

by March 2029. The swimming pool was an integral

part of the initial master plan established by QOZB B

in May 2024. See § 1.1400Z2(d)-1(d)(3)(vi)(A). The

commercial and residential real property may qualify as QOZBP assuming the other requirements of

§ 1400Z-2(d)(2)(D) are met. Because the stock was

acquired in exchange for cash needed to complete

development of the project, it may be treated as having been acquired after the applicable date pursuant

to section 5.01(2)(c) of this notice.

.02 Compliance tests after a QOZ designation period ends.

(1) In general. Section 70421(c)(3) of

the OBBBA amended prior § 1400Z-2(c)

by providing that, in the case of any qualifying investment held by the taxpayer for

at least 10 years and with respect to which

the taxpayer makes an election under that

subsection, the basis of such qualifying

investment equals its fair market value on

the earlier of (i) the date such qualifying

investment is sold or exchanged, or (ii) the

date that is 30 years after the date of that

qualifying investment. Section 1400Z-2(c)

is effective for amounts invested in QOFs

after December 31, 2026. See § 70421(c)

(5)(A) of the OBBBA. Prior § 1400Z-2(c)

allowed a taxpayer holding a qualifying

investment for at least 10 years to make an

election under prior § 1400Z-2(c) to adjust

the basis of the property equal to the fair

market value of that qualifying investment

on the date that qualifying investment was

sold or exchanged (without regard to the

number of years that have passed since the

date of the qualifying investment). Section

1.1400Z2(c)-1(c) provides that, for dispositions occurring before January 1, 2048,

the ability to make an election under prior

§ 1400Z-2(c) for qualifying investments

held for at least 10 years is not impaired

solely because, under § 1400Z-1(f), the

designation of one or more QOZs ceases to

be in effect. See also § 1.1400Z2(c)-1(d),

Example 1. Section 1400Z-2(d) contains

multiple requirements the satisfaction of

which are dependent on whether property

owned by a QOF or QOZB, or a trade or

business engaged in by a QOF or QOZB,

is located in a QOZ. Given that § 1400Z2(c) and § 1.1400Z2(c)-1(c) contemplate

the ability to continue a qualifying investment made in a QOZ after its designation as a QOZ ceases to be in effect, the

Treasury Department and the IRS expect

that the forthcoming proposed regulations

will include the following safe harbors for

QOFs and QOZBs to continue to satisfy

these requirements after the expiration of

a QOZ’s designation period.

(2) Substantial use element of the definition of QOZBP. For tangible property

to qualify as QOZBP, substantially all of

the use of that property must be in a QOZ

for substantially all of the entity’s holding

period for such property. See § 1400Z2(d)(2)(D)(i)(III); see also § 1.1400Z2(a)-

July 6, 2026

1(b)(3). If property otherwise qualifies as

QOZBP, a QOF or QOZB that acquires

that property on or before the expiration

of its QOZ designation period (December

31, 2027, or December 31, 2028, as applicable), or pursuant to sections 5.01(2) or

5.01(3) of this notice, may continue to

treat a previously designated QOZ the

designation of which has expired as a

QOZ solely for purposes of § 1400Z-2(d)

(2)(D)(i)(III) through December 31, 2047.

(3) QOZB Compliance Tests. For

an entity to qualify as a QOZB, at least

50 percent of its gross income must be

derived from the active conduct of a trade

or business in a QOZ, and a substantial

portion of its intangible property must be

used in the active conduct of a trade or

business in a QOZ. See § 1400Z-2(d)(3)

(A)(ii); see also § 1.1400Z2(d)-1(d)(3)(i)

July 6, 2026

and (ii). A QOZB that has begun to engage

in the active conduct of a trade or business

within a previously designated QOZ on

or before the expiration of its QOZ designation period (December 31, 2027, or

December 31, 2028, as applicable), or that

reasonably anticipates to begin doing so in

accordance with a written plan that meets

the requirements of section 5.01(2) of this

notice, may continue to treat a previously

designated QOZ the designation of which

has expired as a QOZ solely for the purposes of § 1400Z-2(d)(3)(A)(ii) through

December 31, 2047.

SECTION 6. APPLICABILITY DATE

ulations, once published in the Federal

ending after the date this notice is issued

to the public. See § 7805(b)(1)(C).

SECTION 7. DRAFTING AND

CONTACT INFORMATION

The principal author of this notice

is Maria Castillo Valle of the Office of

Associate Chief Counsel (Income Tax

& Accounting). For further information

regarding this notice, contact Ms. Castillo

Valle at (202) 317-7006 (not a toll-free

number).

The Treasury Department and the IRS

anticipate that the forthcoming proposed

regulations will propose that the final reg-

Bulletin No. 2026–28

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2026–28

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

July 6, 2026

Numerical Finding List1

Bulletin 2026–28

Notices:

2026-39, 2026-27 I.R.B. 1

2026-38, 2026-28 I.R.B. 30

2026-40, 2026-28 I.R.B. 33

Revenue Rulings:

2026-12, 2026-28 I.R.B. 27

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2026–27 through 2026–52 is in Internal Revenue Bulletin

2025–52, dated December 21, 2025.

July 6, 2026

Bulletin No. 2026–28

Finding List of Current Actions on

Previously Published Items1

Bulletin 2026–28

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2026–27 through 2026–52 is in Internal Revenue Bulletin

2025–52, dated December 21, 2025.

Bulletin No. 2026–28

iii

July 6, 2026

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,

we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page

www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.

NW, IR-6230 Washington, DC 20224.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.