QUALIFIED OPPORTUNITY ZONE

POTENTIAL TAX BENEFITS

AVAILABLE TO A QOZ INVESTOR

Qualified Opportunity Zone legislation offers QOZ investors a powerful potential combination of tax incentives, including deferral of capital gains taxes, a step-up in basis and tax-free growth. Prior to December 31, 2026 (the "Investment Cutoff Date"), if an investor sells any asset (not limited to a real estate asset) that generates a capital gain and invests an amount equal to that gain (or a lesser amount} in a QOZ within 180 days thereof, the taxpayer could receive the following benefits:

DEFERRAL

of the taxes owed on the initial capital gain.

REDUCTION

of that initial capital gain by 10 percent if the QOZ investment is held for five years.

ELIMINATION

of capital gain taxes from realized appreciation in the QOZ, provided the investor's holding period is 10 years or more.

QOZ INVESTMENT TIMELINE

THREE ELEMENTS OF TAX BENEFITS:

HELD FOR 5 YEARS

2021

-Investment in QOZ

-Asset sale - generating capital gain

2022

2023

-Deferred zero basis capital gain stepped up 10%

2024

2025

-Deferred zero basis capital gain stepped up 10%

HELD FOR 10 YEARS

2026

-Capital gains taxes due on the portion of the deferred capital gain not previously stepped up

2027

2028

2029

-Basis in QOZ investment stepped up to fair market value

-Forgiveness of capital gains taxes from QOZ asset appreciation

2030

2031

TAX BENEFITS COMPARISON CHART:

ASSUMPTIONS:

$1,000,000

• Capital Gain Proceeds from Sale

• Long-Term Capital Gains Tax Rate (Federal+ ACA)

23.8%

• State Tax

4.0%

• Traditional Portfolio (simple annual return)

9.0%

• QOZ (simple annual return)

9.0%

TRADITIONAL INVESTMENT VS. QOZ INVESTMENT

Capital Gain

2019 Taxes Owed on Gain

Capital for Reinvestment

TRADITIONAL TAXABLE INVESTMENT

2018

$1,000,000

$(278,000)

$722,000

QOZ INVESTMENT

2018

$1,000,000

$0

$1,000,000

Taxes Deferred

2026

Investment Worth

Pay Taxes on Deferred Gain x 0.85

Taxes Due

$1,438,630

$0

$1,992,563

$850,000

$(236,300)

Deferred gain after 15% step-up

2029

Investment Worth

Sell Investment

Sale Proceeds

Taxes Due

$1,863,068

$(317,217)

2029

$2,580,426

$0

$1,545,851

$2,580,426

Total Taxes Paid

Ending Value Net of Taxes

$(595,217),

$1,545,851

$(236,300)

$2,344,126

DIFFERENCE WITH QOF $798,275

*This illustration does not represent any particular QOZ investment. It is merely a hypothetical illustration based on the assumptions listed to show the potential tax benefits of investing in a QOF investment. The tax rates and returns used in the assumptions of this example may vary greatly and should not be construed as any results you would achieve in a QOZ investment. This information should not be construed as tax advice. Investors should consult their own tax advisors to determine their individual benefits in a QOZ investment. Potential cash flows/returns are not guaranteed and could be lower than anticipated.