Can I elect to defer gain if I transfer property other than cash to a QOF

Yes, you can elect to defer gain if you transfer property other than cash to a QOF (qualified opportunity fund). According to the regulations, a taxpayer can make an investment in a QOF by transferring cash or other property to the QOF in exchange for eligible interests in the QOF. This is outlined in Subsection 1.1400Z2(a)-1(c)(5), which states that a taxpayer makes an investment in a QOF by transferring cash or other property to a QOF in exchange for eligible interests in the QOF, regardless of whether the transfer is one in which the transferor would recognize gain or loss on the property transferred.

However, there are specific rules regarding the deferral of gain when transferring property other than cash. Subsection 1.1400Z2(a)-1(c)(6)(ii)(B) addresses nonrecognition transactions, indicating that if a taxpayer makes an investment in a QOF by transferring property other than cash, the taxpayer's basis in the resulting investment in the QOF would be determined, in whole or in part, by reference to the taxpayer's basis in the transferred property.

Additionally, the IRS FAQ clarifies that while you can transfer property other than cash to a QOF, only part of the investment may qualify for the QOZ tax incentives. Specifically, the amount of gain that can be deferred is limited to the basis of the contributed property, even if a greater value of property is transferred.

In summary, you can elect to defer gain by transferring property other than cash to a QOF, but the deferral is limited to the basis of the contributed property.

Sources:
Rev. Rul. 2018-29
§ 1.1400Z2(b)-1. Inclusion of gains that have been deferred under section 1400Z-2(a).
Qualified Opportunity Zones: Hot Tubs and Other Hot Topics
IRS FAQ
§ 1.1400Z2(a)-1. Deferring tax on capital gains by investing in opportunity zones.