Welcome to Opportunity Zone Investing

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.

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The calculator tool displays an investor’s potential after-tax returns under different scenarios making the following assumptions:

• Capital gains are invested prior to December 31, 2019;
• The investment is held for 10 years;
• Total eligible gains of $25,000 to $1,000,000, as selected by the user;
• Annual investment appreciation of of 1% to 12%, as selected by the user; and
• A long-term capital gains tax rate of 23.8% - federal capital gains tax of 20% and net investment income tax of 3.8%, only taking into account tax at a federal level (not state).

Note that the performance assumptions shown are for illustrative purposes only, and are not intended to reflect the actual experience of any individual investor.

The calculations for the standard stock portfolio assume that the original gain amount selected by the user is reduced by the 23.8% tax rate described above. As a result, 76.2% of the gain amount is invested into a standard stock portfolio at the beginning of the investment terms, which then appreciates at a compounding return of 1% to 12%, as selected by the user. At the end of each holding period, the investment in the standard stock portfolio is assumed to be sold and long-term capital gains at a tax rate of 23.8% paid on the capital gains from the investment in the standard stock portfolio.

The five-year hold calculations for the Opportunity Fund are based on rolling over capital gains in an amount selected by the user, at an initially deferred tax rate of 0%, into an Opportunity Fund, with the entirety of the investment amount appreciating at a compounding return of 1% to 12%, as selected by the user, until the fifth year of the hold, at which time the initially deferred tax is reduced by 10% and the net amount is taxed at a rate of 23.8%. In addition, at the end of the holding period, when the investment is assumed to be sold, long-term capital gain at a tax rate of 23.8% is paid on the gains or profits from the investment in the Opportunity Fund itself.

The seven-year hold calculations for the Opportunity Fund are based on rolling over capital gains in an amount selected by the user, at an initially deferred tax rate of 0%, into an Opportunity Fund, with the entirety of the investment appreciating at a compounding return of 1% to 12%, as selected by the user, until the seventh year of the hold, at which time the initially deferred tax is reduced by 10% and the net amount is taxed at a rate of 23.8%. In addition, at the end of the holding period, when the investment is assumed to be sold, long-term capital gain at a tax rate of 23.8% is paid on the gains or profits from the investment in the Opportunity Fund itself.

The ten-year hold calculations for the Opportunity Fund are based on rolling over capital gains in an amount selected by the user, at an initially deferred tax of 0%, into an Opportunity Fund, with the entirety of the investment appreciating at a compounding return of 1% to 12%, as selected by the user, until December 31, 2026, at which time the initially deferred tax is reduced by 10% and the net amount is taxed at a rate of 23.8%, effectively reducing the principal invested in the opportunity fund accordingly. Thereafter, returns continue to compound at the same initial rate selected by the user of 1% to 12%. At the end of the tenth year of the holding period, the investment in the Opportunity Fund is sold and the capital gains on the investment in the Opportunity Fund itself is taxed at a rate of 0%.