1. Defer the payment of your capital gains until Dec 31, 2026

Section 1400Z-2(b)(1) of the Tax Code states that capital gains rolled into an opportunity fund within 180 days of being realized shall be included in taxable income for the year ended December 31, 2026.

2. Reduce the tax you owe by up to 10% after seven years

Section 1400Z-2(b)(2)(B) of the Tax Code states that an investor's basis in the capital gain rolled into an opportunity fund will have a step-up in basis of 10% if held for at least five years, and a step-up in basis of an additional 5% if held for at least seven years. Note, however, that as the deferred capital gain will be taxed on December 31, 2026, we expect that these holding periods would need to be satisfied prior to that date in order to receive the benefits described herein.

3. Pay zero tax on gains earned on the Opportunity Fund

The TCJA provides that, for investors who have rolled capital gains into an opportunity fund and hold that investment in the opportunity fund for a period of ten years or more, that any additional gain realized by such investor from liquidating such investment will not incur additional federal capital gains taxes. However, please note that, given the uncertainty regarding future Treasury Department guidance, each prospective investor should consult with their personal tax advisors before making any investment into an opportunity fund.