Raz, Douglas From: Capt. Bob Peacock Sent: Tuesday, February 27, 2018 9:37 AM To: Mulligan, Brian; Johnson, Deborah Subject: FW: Opportunity Zones Attachments: Renee, The attached sheet will help a little in understanding what this Tax bill can do for Lubec via the Opportunity Zone Designation in the Federal Tax Bill. Incredible opportunity. Respectfully, Bob TRU FRESH Capt Bob Peacock 207-263-6403 mobile 207-733-9714 of?ce .0 Novogradac 2018 New Markets Tax Credit Conference For the most up-to?date information on tax reform visit in Opportunity Act MODERATOR PANELISTS John Sciarretti Joseph Bredehoft ??xaf?jgblovogradac Husch Blackwell ?Li?f?gmpany LLP ff! Jonathan Goldstein .. Advantage Capital .0 Novogradac 2018 Neil Faden Manatt, Phelps Phillips LLP Steve Mount Squire Patton Boggs . New Markets Tax Credit Conference 6: COMPANY u: 2018 IRC Section 14002 Opportunity Zones The Tax Cuts and Jobs Act has established new internal Revenue Code Section 14002 - Opportunity Zones. This section allows any taxpayer to defer paying tax on capital gains from the sale of property if those gains are timely invested in Qualified Opportunity Funds (QOF) which in turn must invest 90% of its assets in [businesses located or property used in a low income community. .Ollovug'adac 2018 . . . . 7 . New Markets Tax Credit Conference OGRADAC COMPANY Individual and Corporate Taxpayers make Timely Investments into Qualified Opportunity Funds which invest in Qualified Opportunity Zone Property :9 Novogradac 2018 . New Markets Tax Credit Conference 9' .0 NOVOGRADAC COMPANY :vls - The period of capital gain tax deferral ends upon the earlier of: - The date the opportunity fund investment is sold or Penod of exchanged, or Deferral - December 31, 2026 :0 Novogradac 2018 . . New Markets Tax Credit Conference '0 .ONOVOGRADAC COMPANY 3.315 - The lesser of: - The amount of gain deferred, or - The fair market value of the investment Amount - Minus: Recognized - The taxpayer?s basis in the Opportunity Fund. - The taxpayer?s basis in the Opportunity Fund is initially deemed to be zero. :0 Novogradac 2018 . New Markets Tax Credit Conference <9 .0 NOVOGRADAC COMPANY 2015 - Investments held at least 5 years: - Basis increased by 10% of the deferred gain Partial - Up to 90% taxed Forgiveness - Investments held at least 7 years: - Basis increased by 15% of the deferred gain - Up to 85% taxed :0 Novogradac 2018 . New Markets Tax Credit Conference 6? :9 NOVOGRADAC 6: COMPANY 2015 Investments held longer than 10 Forgiveness ream Of - Basis is equal to Fair Market Value - Forgiveness of gains on Gains appreciation of investment - Requires a special election :0 Novogradac 2018 . . . New Markets Tax Credit Conference '0 .9 NOVOGRADAC vs: COMPANY 201$ Sample Investment On 6/30/18 (within 180 days), Taxpayer contributes On 1/1/18, Taxpayer enters entire of capital gain to of capital gain a Qualified Opportunity Fund into a sale that generates .0 Novogradac 2018 . . . . New Markets Tax Credit Conference 30km OGRADAL 5: COMPANY :nls Sample Investment - continued Taxpayer is deemed to have QOF Invests the in Qualified Opportunity Zone Property a $0 basis in its QOF investment .ONovcgra-dac 2018 . . New Markets Tax Credit Conference 131? Sample Investment - continued On 6/30/25 (after 7 years), Taxpayer?s basis in On 6/30/ 23 (after 5 years), Taxpayer?s basis in investment in QOF increases from $100k to $150k investment in QOF increases from $0 to $100k .0 Newsgradac 2018 . . New Markets Tax Credit Conference 8: COMPANY I ?l'a Sample Investment - continued On 6/30/28 (after 10 On 12/31/26, of the years) Taxpayer sells its 1MM of deferred capital investment for gains are taxed and the Basis in the investment is basis in QOF investment deemed to be FMV. The effect is no tax on appreciation in investment. increases to .0 Novograjac 2018 . . New Markets Tax Credit Conference COMPAM 21:1; 0 Qualified Opportunity Zones (QOZ) -NMTC low-income community census tracts designated by the chief executive officer of a state as a QOZ within 90 days of enactment (March 21, 2018). - -, -Possible 30 day extension Novcgradac 2018 New Markets Tax Credit Conference States include any possession of the U5. and the District of Columbia 8.: COMPANY 2.. 1?1" Qualified Opportunity Zones - continued May not exceed 25% of the number of the low-income Exception: If total low- income census tracts in a community census tracts in i . state are less than 100, a State may designate 25 tracts :0 Novogradac 2018 . . New Markets Tax Credit Conference 2015 Qualified Opportunity Zones -con?nued Conti uous tracts: Up to 5% of designated may be contiguous tracts where the -Must be certified by Secretary within 30 days of MFI does not exceed 125% designation 0f the MFI 0? the contiguous -Possible 30 day extension low income community .QNovc-gradac 2018 . . New Markets Tax Credit Conference . A0 omAIMc comAM .. -51 .9 Novogradac 2018 . New Markets Tax Credit Conference Qualified Opportunity Zones -con?nued QOZs remain in effect for 10 years following designation. 8: COMPANY -u Qualified Opportunity Fund Any investment vehicle organized as a corporation or a partnership for the purpose of investing in Qualified \Opportunity Zone Property (other than another QOF). ,f ., . 4 I ONovo Aradac2018 . .. . . . . Nengarkels Tax Credit Conference COMPANY Qualified Opportunity Fund - Determined by the average of the Must hOId at percentage of QOZP held on: [east 90% Of - The last day of the first six month . period of the fund?s taxable year, assets In and - The last day of the fund?s taxable year .9 Novogradac 2018 4 . New Markets Tax Credit Conference w.?30\ OGRADAC 8: COMPAM 4'15 Qualified Opportunity Zone Partnership interest l'f' - - ua I re 0332mm Zone Business one Stock Property Qualified . Opportunity Zone Property (QOZP) .9 rrac2018 . . ngxwogl?grkeis Tax Credit Conference - 15 Qualified Opportunity Fund - The fund must pay a penalty for each Failure to month it fails to meet the 90% meet 90% requirement equal to the shortfall multiplied by the underpayment rate Investment (Federal short-term rate plus standard - No penalty if it is shown failure is due to reasonable cause :0 Novcgradac 2018 . . New Markets Tax Credit Conference .9NOVOGRADAC s: COMPAM 2m Qualified Opportunity Zone Businesses (QOZB) A trade or business in which substantially all of the tangible property owned or leased by the taxpayer is \qualified opportunity zone business property (QOZBP) I 1/ . :0 Novogradac 2018 . New Markets Tax Credit Conference '9 COMPANY 2015 Qualified Opportunity Zone Businesses (QOZB), cont. .. 5 percent unadjusted basis of Substantial portion At least 50% of of intangible property is nonquaH?ed financial property property used in active conduct of business income derived from Active Conduct .0 Novogredac 2018 . . New Markets Tax Credit Conference :9 NOVOGRADAC .5: COMPANY 2015 Qualified Opportunity Zone Businesses (QOZB), 9? - A private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or Can be a other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. ?Sin Business? :Ollovcgrajac 2018 New Markets Tax Credit Conference . OGRADAC COMPANY -015