1. Opportunity Zone Capital Formation
For New Energy Deployment:

2. I am neither a lawyer nor accountant.
Safe Harbor
The oral discussion and documents presented during this Opportunity Zone Finance Educational Keynote (or directly accessible from) or web pages hosted by presenters may contain forward-looking statements. These statements relate to future events or future financial performance. Any statements that are not statements of historical fact (including without limitation statements to the effect that the presenters or the presenters’ organizations "believe", "expect", "anticipate", "plan" (and similar expressions) should be considered forward looking statements. There are a number of important factors that could cause actual activities and results to differ materially from those indicated by the forward looking statements. The presenters and their representative organizations disclaim any obligation to update any forward looking statement. This presentation nor the oral conversation do not provide financial or legal advice - each party should consult their own professional legal and accounting advisors before entering into any agreements.
I am neither a lawyer nor accountant.

3. Speaker & Support Partners
Jon Bonanno
Speaker
CXO, New Energy Nexus & California Clean Energy Fund
Craig Tighe
Support Partner
General Partner, Energy & Corporate Securities, DLP Piper
Greg Rosen
Support Partner
Principal, High Noon Advisors

4. My OZ Fund: fast, low-cost and easy
empowering clean energy entrepreneurs to use and benefit from OZ finance
Who We Serve: The “Clean Energy Entrepreneur”:
Project developer offering some % of sponsor equity in a specific project
Solar
Energy storage
Wind
Hybrid
EV Charging stations
Bio Digesters
Geothermal heat pumps
Geothermal plants
Lithium extraction facilities
Carbon Avoidance Contracts/Demand Flexibility Purchase Agreements
Light manufacturing facilities: high-tech HVAC assembly, etc.
Clean Energy CEO offering Reg D/Reg A/Reg CF Series Seed – Z equity
Investor looking to use the OZ structure for OZ clean energy assets (projects or companies)

5. How Opportunity Zone Finance Works
Tax payers can get tax deferral (& more)
…make a timely investment in…
Qualified Opportunity Zone Fund (“QOF”)
…which invests in…
Qualified Opportunity Zone Fund Business (“QOZBiz”) or Business Property (“QOZBP”)

6. Up to 15% of Capital Gain Forgiveness
Benefits
Capital Gain Deferral
Up to 15% of Capital Gain Forgiveness
Forgiveness of the additional Capital Gains
Deploy New Energy + Sustainable Assets
Workforce Training + Empowerment
No Risk Of Community Gentrification

7. Basics
The Tax Cuts and Jobs Act of 2017 created “Opportunity Zones” Incentive: The Investment in Opportunity Act
Final Zone Map:
There are 8,761 zones throughout the US, including nearly all of Puerto Rico
These zones are low income zones and the purpose of the Act is to encourage long-term patient capital to vitalize these areas.
Updated and clarifying Treasury rules for the Opportunity Zone tax treatment expected April 2019
There is no capital limit on deal size, investor amount or fund size.
Qualified Opportunity Zones remain in effect for 10 years following designation

8. Deferral of gain recognized on the original sale of up to 8 years AND
Basics: Wow!
Deferral of gain recognized on the original sale of up to 8 years AND
Exclusion of up to 15% of the original gain AND
An exclusion of ALL of the gain eventually recognized upon the disposition of the qualified investment
Clean energy deployment

9. Basics: Terrible Eye Chart But Full Of Good Data
New restrictions on 1031 Exchanges: only “like-kind” real estate for real estate, not for stocks, collectables or other CG events. Plus the original investment amount is capital gains free in OZ, unlike 1031.
Applicable to all assets that create a capital gains liability for the investor
180 day period from capital gains liquidity (allowed to use the capital during this period without restriction or penalty)
Define Terms:
Qualified Opportunity Fund (QOF), partnership or C corp, self-certify with Form 8996, 2X annual “qualification test”
Qualified Opportunity Zone (QOZ)
Qualified Opportunity Zone Business (QOZB)
Qualified Opportunity Zone Business Property (QOZBP)
Eligible for Capital Gains deferral: individuals, C + S corps, partnerships, trusts, estates, regulated investment companies (RICs), REITs
Capital Gains need to occur after 12/22/2017 and before 1/1/2027, the sooner the capital gains are deployed into a QOZF the better the financial results (before 12/31/2019 enables the 7yr window - +5% additional exclusion).
All capital gains invested in QOZFs need to be elected with the IRS (Form 8949) at the time of investment
FIFO accounting on multiple, time lapsed QOZF investments
The nature of the original capital gains invested in the QOZF is captured and maintained until exercised (options, collectables, short-term, long-term, etc.) Short-Term Capital Gains: 10%-37% and Long-Term Capital Gains: 15%-20%

10. Earlier Sale Period of Deferral December 31, 2026 or...
JSS
Earlier Sale
December 31, 2026 or...
The period of capital gain tax deferral ends upon the earlier of:
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028

11. Partial Forgiveness & Forgiveness of Additional Gains
Year 7 – Basis increased by 5% of the deferred gain
Up to 85% of deferred gain taxed
Additional 5% forgiven
12/31/26 -
Remaining 85% of deferred gain recognized/taxed
Year 5 – Basis increased by 10% of the deferred gain
Up to 90% of deferred gain taxed
10% forgiven
After year 10-
Basis is equal to fair market value
No tax on gains attributable to appreciation of investment
Requires an election by tax payer
JSS
Sale
Investment
HELD FOR 5 YEARS
HELD FOR 7 YEARS
HELD FOR 10 YEARS
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028

12. Real Life Example
Jan. 2, 2018
Taxpayer enters into a sale, generating $1M in capital gains (10%-37%)
-Taxpayer is deemed to have a $0 basis in its QOF investment (deferred gain of $1M)
-QOF invests the $1M in Qualified Opportunity Zone Property
June 30, 2018 
(Within 180 days)
Taxpayer contributes entire $1M in capital gain proceeds to a Qualified Opportunity Fund
2021
2022
2023
2018
2019
2020

13. Real Life Example
June 30, 2023
(After 5 years)
Taxpayer's basis in investment in QOF increases from $0 to $100k 
($100k of deferred gain forgiven)
June 30, 2025 
(After 7 years)
Taxpayer's basis in investment in QOF increases from $100k to $150k
(additional $50k of deferred gain forgiven)
Dec 31, 2026 
(After 7 years)
$850k of the $1M if deferred capital gains is recognized and taxed.
The basis in QOF investment increases to $1M
June 30, 2028
(After 10 years)
Taxpayer's sells its investment for $2M
Basis in the investment is deemed to be FMV
The effect is no tax on appreciation in investment
2026
2027
2028
2023
2024
2025

14. Opportunity Zone Incremental Benefits
JSS

15. Perishability of Incentives
JSS
Incremental IRR
Year of QOF Initial Investment 

16. 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
any store the principal business of which is the sale of alcoholic beverages for consumption off premises. 
NEIL

17. YES: equity in clean energy projects and companies
Readily Identifiable Investment Types for Opportunity Zones
Real Estate in Opportunity Zones
Opening New Businesses in Opportunity Zones
Expansion of Existing Businesses into the Opportunity Zones
Expansion of Existing Businesses already in Opportunity Zones
YES: equity in clean energy projects and companies
Solar: new and repowering of residential bundles, C&I, community and utility
Energy storage
EV charging stations
EV leasing companies
CAPCs/DFPAs (carbon avoidance purchase agreements/demand flexibility purchase agreements)
Wind

18. OK to combine with Other Tax Incentives
Opportunity Zone
LIHTC
NMTC
HTC
RETC
1202
1031
ITC
PTC
JSS

19. Interactive Questions & Responses
Q&A

20. Thank You
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