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Investment Analysis
Investment Analysis
Assumptions and Instructions
State Capital Gains Tax Rates
Qualified Opportunity Zone Fund Investing
QOF AFTER-TAX COMPARATIVE BENEFIT
Assumptions
Capital Gain Proceeds from Sale
LT Cap Gains Rate (Federal + ACA)
23.8%
Investment Duration prior to 12/31/26
Percent of Capital Gains Taxes Stepped Up
Taxpayer's State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Conforming State Legislation?
Traditional Portfolio Return (annual IRR)
QOF Pro-Forma Return (annual IRR)
Traditional
QOZ
Investment
Investment
Investment Year
Capital Gain
Capital Gain Tax Paid in 2020
Gain Available for Reinvestment
End of Deferral Period
2026
Capital Gains Taxes Payable in 2027
$
-
End of 10-Year Investment Period
Future Value of Investment
Taxes due
Net After Tax Sales Proceeds
Summary of QOF Tax Benefit Differential
Initial Capital Gain
Gain on Investment
Taxes Paid
Net After Tax Proceeds
Net After-Tax Cash Benefit of QOF Investment
Relative Increase in Distributable After-Tax Cash
Traditional After-Tax Internal Rate of Return
QOF After-Tax Internal Rate of Return
Net After-Tax IRR Benefit of QOF Investment
This illustration does not represent any particular QOF 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 QOF investment. This information should not be construed as tax advice. Investors should consult their own tax advisors to determine their individual benefits in a QOF investment.
THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. AN OFFERING IS MADE ONLY BY A PRIVATE PLACEMENT MEMORANDUM. A COPY OF A PRIVATE PLACEMENT MEMORANDUM MUST BE MADE AVAILABLE TO YOU IN CONNECTION WITH AN OFFERING.
THIS MATERIAL DOES NOT CONSTITUTE TAX ADVICE TO ANY PERSON. A PERSON MUST CONSULT WITH HIS OR HER OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM OF ACQUIRING AND OWNING ANY QOF INVESTMENT.
THE INFORMATION CONTAINED IN THIS MATERIAL, ARE NOT REPRESENTATIVE OF ANY SPECIFIC PROPERTY OR OPPORTUNITY. THE CALCULATIONS HEREIN REMAIN SUBJECT TO CHANGE AS APPLICABLE BASED UPON SUBSEQUENT REGULATORY GUIDANCE ISSUED UNDER SUBCHAPTER Z OF THE INTERNAL REVENUE CODE AND OTHER REGULATORY OR TAX RELATED CHANGES.
Qualified Opportunity Zone Fund Investing
ASSUMPTIONS & INSTRUCTIONS
Assumptions
1
In addition to the financial assumptions included in the table in the Investment Analysis tab, the model includes other certain basic assumptions intended to isolate the specific tax benefits available through an investment in a Qualified Investment Fund as a result of Subchapter Z of the Internal Revenue Code.
Such assumptions include the following:
2
The pro-forma return objective listed in the Assumptions on the Investment Analysis tab represent a pre-tax annual internal rate of return.
For comparative purposes to specifically isolate the tax benefits, use the same IRR estimate for both a traditional investment and a QOF investment.
In the alternative, insert an IRR estimate for a Traditional Investment you believe is more realistically available in the marketplace.
3
The after-tax internal rate of return differential between a Traditional Investment and a QOF investment assumes the Fund investment is liquidated immediately upon the expiration of the 10-year holding period, which is the minimum holding period for the investor to achieve the 100% fair market value basis step up.
4
The after-tax internal rate of return analysis further assumes there are no intervening distributions over the 10-year holding period.
We anticipate, with respect to the Qualified Opportunity Fund, L.P., there will be distributions made to investors both as a function of debt-financed, tax-deferred distributions once a specific asset is stabilized and recapitalized, as well as distributions from cash flow following recapitalization.
These interim distributions were removed from this analysis to, again, focus on isolating the relative return enhancement as a result of Subchapter Z.
Input Instructions
1
Input the Capital Gain realized and intended to be invested by the investor
2
Input the State in which the investor resides
3
Input the pro-forma annual internal rate of return expectation for a Traditional In
vestment
4
Input the pro-forma annual internal rate of return expectation for a Qualified Opportunity Zone Fund investment
5
Input the year of investment into the Qualified Opportunity Zone Fund investme
nt
State
Tax Rate
Conforming
Alabama
5.00%
Yes
Alaska
0.00%
Yes
Arizona
4.54%
Yes
Arkansas
6.90%
Yes
California
12.30%
No
Colorado
4.63%
Yes
Connecticut
6.99%
Yes
Delaware
6.60%
Yes
Florida
0.00%
Yes
Georgia
5.75%
Yes
Hawaii
8.25%
Yes
Idaho
6.93%
Yes
Illinois
4.95%
Yes
Indiana
3.23%
Yes
Iowa
8.53%
Yes
Kansas
5.70%
Yes
Kentucky
5.00%
Yes
Louisiana
6.00%
Yes
Maine
7.15%
Yes
Maryland
5.75%
Yes
Massachusetts
5.10%
Yes
Michigan
4.25%
Yes
Minnesota
9.85%
Yes
Mississippi
5.00%
No
Missouri
5.90%
Yes
Montana
6.90%
Yes
Nebraska
6.84%
Yes
Nevada
0.00%
Yes
New Hampshire
0.00%
No
New Jersey
8.97%
Yes
New Mexico
4.90%
Yes
New York
8.82%
Yes
North Carolina
5.25%
No
North Dakota
2.90%
Yes
Ohio
5.00%
Yes
Oklahoma
5.00%
Yes
Oregon
9.90%
Yes
Pennsylvania
3.07%
No
Rhode Island
5.99%
Yes
South Carolina
7.00%
Yes
South Dakota
0.00%
Yes
Tennessee
0.00%
Yes
Texas
0.00%
Yes
Utah
5.00%
Yes
Vermont
8.75%
Yes
Virginia
5.75%
Yes
Washington
0.00%
Yes
West Virginia
6.50%
Yes
Wisconsin
7.65%
Yes
Wyoming
0.00%
Yes