Opportunity Zones Introduction Benefits of the Opportunity Zones Tax Incentives Qualified Opportunity Zones – Qualification and Status Qualified Opportunity Funds – What are the rules, how do you qualify? Direct and indirect investment in Qualified Opportunity Zone Business Property Qualified Opportunity Zone Business Property MJN www.opportunityzoneresourcecenter.com September 5, 2018

for making timely investments in Taxpayers can get capital gains tax deferral (& more) for making timely investments in Qualified Opportunity Funds (QOFs) which invest in MJN Qualified Opportunity Zone Property www.opportunityzoneresourcecenter.com September 5, 2018

3 Tax Incentive Benefits 1. 2. 3. Gain Deferral Partial forgiveness Forgiveness of additional gains JSS www.opportunityzoneresourcecenter.com September 5, 2018

Jan. 2, 2018 Taxpayer enters into a sale that generates $1M of capital gain June 30, 2018 (Within 180 days), Taxpayer contributes entire $1M of capital gain to a Qualified Opportunity Fund Taxpayer is deemed to have a $0 basis in its QOF investment QOF Invests the $1MM in Qualified Opportunity Zone Property JSS 2018 2019 2020 2021 2022 2023 2024 2026 2027 2028 2029 www.opportunityzoneresourcecenter.com September 5, 2018

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Jan. 1, 2018 Taxpayer enters into a sale that generates $1M of capital gain June 30, 2018 (Within 180 days), Taxpayer contributes entire $1M of capital gain to a Qualified Opportunity Fund Taxpayer is deemed to have a $0 basis in its QOF investment QOF Invests the $1MM in Qualified Opportunity Zone Property June 30, 2023 (After 5 years), Taxpayer’s basis in investment in QOF increases from $0 to $100k June 30, 2025 (After 7 years), Taxpayer’s basis in investment in QOF increases from $100k to $150k Dec. 31, 2026 $850K of the 1MM of deferred capital gains are taxed and the basis in QOF investment increases to $1MM. June 30, 2028 (10 years later), Taxpayer sells investment for $2.0MM. Basis is deemed to be FMV. Thus, no tax on appreciation JSS www.opportunityzoneresourcecenter.com September 5, 2018

Opportunity Zone Incremental Benefit JSS 23.8% Tax Rate 5 Year 7 Year 12/31/2026 10 Year Standard After Tax IRR 6.00% Incremental OZ Benefit 2.08% 1.95% 1.71% 3.08% OZ Investment IRR 8.08% 7.95% 7.71% 9.08% Percentage Increase 35% 32% 29% 51% www.opportunityzoneresourcecenter.com September 5, 2018

JSS www.opportunityzoneresourcecenter.com September 5, 2018

for making timely investments in Taxpayers can get capital gains tax deferral (& more) for making timely investments in Qualified Opportunity Funds (QOFs) MJN www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Fund Statutory Requirements Purpose Certification Assets Test Noncompliance Penalty Certification Process JG www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Fund - Purpose An investment vehicle organized as a corporation or a partnership for the purpose of investing in Qualified Opportunity Zone Property (QOZP). JG www.opportunityzoneresourcecenter.com September 5, 2018

Certification Process IRS announces self-certification process for QOFs Self-certification form to be attached to tax return JG www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Fund – Assets Test Must hold at least 90% of assets in QOZP, determined by the average of the percentage of QOZP held on: The last day of the first six month period of the fund’s taxable year, and The last day of the fund’s taxable year JG June 30th December 31st JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Fund – Noncompliance Penalty Failure to meet 90% investment standard Per month penalty for failing to meet 90% test % shortfall x underpayment rate penalty No penalty if it is shown failure is due to reasonable cause (Federal short-term rate plus 3%) – currently 4% JG www.opportunityzoneresourcecenter.com September 5, 2018

for making timely investments in Taxpayers can get capital gains tax deferral (& more) for making timely investments in Qualified Opportunity Funds (QOFs) which invest in MJN Qualified Opportunity Zone Property www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Zone Property (QOZP) Qualified Opportunity Zone Stock Qualified Opportunity Zone Partnership Interest Qualified Opportunity Zone Business Property JG www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Zone Stock and Partnership Interests The investment must be acquired after December 31, 2017 in exchange for cash; Must be a qualified opportunity zone business, or is being organized for the purpose of being a qualified opportunity zone business; Must remain a qualified opportunity zone business for substantially all of the qualified opportunity fund’s holding period JG www.opportunityzoneresourcecenter.com September 5, 2018

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) and: Neil At least 50% of income derived from Active Conduct Substantial portion of intangible property used in active conduct of business < 5 percent unadjusted basis of property is nonqualified financial property www.opportunityzoneresourcecenter.com September 5, 2018

QOZB: Excluded Businesses Can’t be a “Sin Business” A private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.  NEIL www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Zone Business Property (QOZBP) Tangible property used in a trade or business Acquired by purchase from an unrelated party (20% standard) after December 31, 2017 During substantially all of holding period, substantially all the use is in a QOZ Original use in the QOZ commences with the taxpayer OR Taxpayer substantially improves the property during any 30-month period after acquisition, additions to basis exceed an amount equal to the adjusted basis of such property at the beginning of such period JSS www.opportunityzoneresourcecenter.com September 5, 2018

Qualified Opportunity Zones CDFI Fund Opportunity Zones Mapping Tool: https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx NF www.opportunityzoneresourcecenter.com September 5, 2018

Questions? www.opportunityzoneresourcecenter.com September 5, 2018

Non-Traditional Alternative Financing Sources: Soft Funds, Opportunity Zone Funds Thomas J. Fantin Glenn A. Graff Novogradac & Company LLP Applegate, Thorne Thompson James Peck Roy Williams Wells Fargo Multifamily Capital Tiber Hudson LLC www.opportunityzoneresourcecenter.com September 5, 2018