The 180-Day Rule

Edited by Barrett Linburg Updated: September 6, 2026

Change note: Corrected day-one counting and pass-through alternatives.

Key Takeaways

  • • The recognition or permitted elected start date is day one. The raw calendar 180th day is 179 days later.
  • • July 6, 2026 is only the raw direct-gain threshold that reaches January 1, 2027. It is not universal timing advice.
  • • Pass-through owners must use actual entity dates. A K-1 receipt is not a start date, and March 15 is not universal.

What Is the OZ 180-Day Rule?

The 180-day period generally begins on the date the eligible gain is recognized for federal income tax purposes. Under Treas. Reg. section 1.1400Z2(a)-1(b)(7)(i), that recognition date is day one. The raw calendar 180th day is therefore 179 days after the start date.

This page reports raw calendar results. It does not assume weekend, federal holiday, disaster, or other relief. Confirm whether relief applies and arrange funding before the last possible day.

Direct gains

For a direct sale recognized by the investor, use the recognition date as day one. Current raw examples are:

Recognition date, day one Raw calendar 180th day
July 5, 2026 December 31, 2026
July 6, 2026 January 1, 2027
August 15, 2026 February 10, 2027

July 6 is only the raw threshold for a direct gain under this calendar count. It is not a universal deadline or recommendation. Gain type, recognition, taxpayer identity, transition guidance, and available relief still matter.

Owners of partnerships and S corporations

A Schedule K-1 receipt date is not the start date. If the entity did not defer the eligible gain, Treas. Reg. section 1.1400Z2(a)-1(c)(8)(iii) generally permits the owner to use the entity tax-year end, or elect the start of the entity's own gain period or the entity's actual unextended return due date. The actual dates depend on the entity, fiscal year, and gain. March 15 is not universal.

For a calendar-year entity, two raw examples sometimes relevant to an owner are:

Selected start basis Start date, day one Raw calendar 180th day
Calendar entity year-end December 31, 2026 June 28, 2027
Actual unextended return due date, if March 15 applies March 15, 2027 September 10, 2027

The entity gain-period start may provide another result. Confirm whether the entity already deferred the gain before applying any owner alternative.

Transition guidance for pre-2027 gain

Notice 2026-40 section 4.02 announces treatment for eligible pre-2027 gain invested timely beginning January 1, 2027. It is announced IRS guidance, not final regulations. Eligibility for that treatment depends on the notice and the taxpayer's valid gain period.

Timing checklist

  1. Identify the taxpayer that recognized the eligible gain.
  2. Identify the federal recognition date.
  3. Determine whether an entity deferred the gain.
  4. For a pass-through owner, document every permitted start basis and the actual dates.
  5. Count the recognition or elected start date as day one.
  6. Confirm relief and operational funding requirements.
  7. Fund early rather than treating a raw date as a recommendation.

Primary sources

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