Qualifying ordinary income added to special rules for investments in opportunity zones

(a) In General Section 1400Z–2 of the Internal Revenue Code of 1986 is amended— (1) in the section heading, by striking capital gains invested and inserting investments, (2) in subsection (a)— (A) in paragraph (1)— (i) in the heading, by inserting qualifying ordinary income and after of, (ii) by inserting qualifying ordinary income and after case of, (iii) by amending subparagraph (A) to read as follows: (A) gross income for the taxable year shall not include— (i) so much of such gain as does not exceed the aggregate amount invested by the taxpayer in a qualified opportunity fund during the 180-day period beginning on the date of such sale or exchange, and (ii) so much of such qualifying ordinary income as does not exceed the aggregate amount invested by the taxpayer in a qualified opportunity fund during such taxable year,, and (iv) in subparagraph (B), by inserting qualifying ordinary income and after amount of, (B) in paragraph (2)— (i) in subparagraph (A), by striking or at the end, (ii) in subparagraph (B), by striking the period at the end and inserting, or, and (iii) by adding at the end the following: (C) with respect to qualified ordinary income received in a taxable year beginning after December 31, 2026., and (C) by adding at the end the following: (3) Qualifying ordinary income defined In this subsection, the term qualifying ordinary income means ordinary income other than income attributable to capital gains., (3) in subsection (b)— (A) in the subsection heading, by inserting qualifying ordinary income and after deferral of, (B) in paragraph (1), by striking Gain and inserting Qualifying ordinary income and gain, and (C) in paragraph (2)— (i) in subparagraph (A)— (I) by inserting qualifying ordinary income and after amount of, and (II) in clause (i), by striking of gain, and (ii) in subparagraph (B)— (I) in the clause (ii) heading, by striking gain and inserting amount, and (II) by striking the amount of gain each place it appears and inserting the amount, and (4) in subsection (e)(1), by inserting qualifying ordinary income and after investments of. (b) Effective Date The amendments made by this section shall apply to amounts invested after the date of the enactment of this Act.