Colorado Opportunity Zones - What are they, why are they important, where are they, and how you can potentially utilize them as a business owner and / or an investor.

1. Colorado Opportunity Zones

2. Colorado Opportunity Zones
Presentation By:
Carter Johnson, CVA
(720) 330 - 3542
carter@singletonvaluations.com
www.SingletonValuations.com
This presentation is for information purposes only. Be sure to consult your personal professional
advisors before making any decisions.

3. Highlights
History of Opportunity Zones
Benefits of Opportunity Zones
Rules & Qualifications
For Business Owners IN Opportunity Zones

4. Highlights
History of Opportunity Zones
Benefits of Opportunity Zones
Rules & Qualifications
For Business Owners With Property IN Opportunity Zones
Colorado Locations
For Investors
How Singleton Valuations Can Help
Resources

5. History of Opportunity Zones

6. History of Opportunity Zones
Timeline of Development
Drafted in 2016
Strong
Bipartisan
Support
Pat Tiberi (R)
Tim Scott (R) Ron Kind (D)
Cory Booker (D)
Bill
Introduced
Feb 2017
Dec 22 2017 Q4 2018 / Q1 2019
Governors given
90 days to
designate census
tracts for
approval.
Designations will
remain in place
for 10 years.
Implementation
expected to begin Q4
2018 / Q1 2019
Part of Tax Cut &
Jobs Act of 2017

7. History of Opportunity Zones
Goal
“Encourage private capital investment in
economic communities that need it most.”

8. History of Opportunity Zones
Why Opportunity Zones Are Important
• 1 in 6 Americans live in economically
distressed communities (52 million).
• 400,000 Coloradans live in
economically distressed zip codes.
Prosperous Distressed
Source: EIG’s “Distressed Communities Index”

9. History of Opportunity Zones
Opportunity Zones Are Unique In That They Are Designed To…
• Concentrate capital rather than diffuse it
(greater impact to areas of need).
• Reward patient capital. The longer the
investment the higher the incentive.
• No upfront subsidy. Doesn’t just “pick
winners.”
• Ties investor success to community.

10. Benefits of Opportunity Zones

11. Benefits of Opportunity Zones
3 Major Tax Incentive Benefits
1. Temporary Deferral of Capital Gain - Applies to any capital gain
from the sale or exchange of any property to an unrelated person.
Potential of $6 trillion in eligible capital.
2. Partial Reduction of Deferred Gain - Income tax paid on large
portion of capital gain, but reduction improves as holding period in
opportunity zone increases.
3. Forgiveness of Additional Gain - Applicable to the appreciation of
the investment in the opportunity zone.

12. Benefits of Opportunity Zones
As It Compares To A Sandard Portfolio Investment…

13. Benefits of Opportunity Zones
• Assumptions for simplicity assume no state
income tax and long term federal capital gains rate
of 23.8% with both standard portfolio investment
and opportunity zone appreciating 7% annually.
As It Compares To A Sandard Portfolio Investment…

14. Benefits of Opportunity Zones
Timeline
Jan 31st 2018
Jun 1st 2018
Jun 1st 2023
Jun 1st 2025
Jun 2nd 2028
Sale generates $1
million in capital
gain.
Within 180 days of
sale, entire $1 mill
of capital gains is
invested in qualified
opportunity fund.
After 5 years in
opportunity fund,
10% ($100k of $1m)
in step-up basis
generated.
Dec 31st 2026
After 10 years,
opportunity zone is
sold for $2m. Basis
in the investment is
deemed FMV and
there is $0 tax on
appreciation in
investment.
After 7 years in
opportunity fund,
step-up basis
generated increases
to 15%
($150k of $1m)
$850k of $1m is
taxed, step-up basis
in opportunity zone
set to $1m.

15. Benefits of Opportunity Zones
As It Compares To A Sandard Portfolio Investment…

16. Rules & Qualifications

17. Rules & Qualifications
As It Relates To Tax Incentive Benefits
• Applies to any individual, entity or trust.
• Sale or exchange of property to unrelated
person.
• On or before Dec 31, 2026.
• Deferred Gain: The aggregate amount
invested that does not exceed the amount
of the gain generated.
• Within 180 days of sale / exchange
• Deferred Gain is includable in taxable
income on the earlier of investor’s sale of
its interest in the Opportunity fund or
December 31, 2026.
• The amount of the deferred gain subject
to income tax is based on the lesser of the
amount of the deferred gain or the FMV
of the investment in the opportunity zone
LESS the taxpayers basis in the
opportunity fund.
Temporary Deferral of
Capital Gain
Partial Reduction of
Deferred Gain
Forgiveness of
Additional Gain
• Taxpayer has initial basis in the
opportunity fund of zero.
• If held for 5 years, the investor’s tax basis
in the opportunity fund is increased by
10% of the amount of the deferred gain.
• If held for 7 years, the investor’s tax basis
in the opportunity fund is increased by an
additional 5% of the amount of the
deferred gain.
• If investor holds interest in the
opportunity fund for over 10 years (10
year and 1 day) then tax basis step-up to
FMV of investors interest in the
opportunity fund on the date of the sale
or exchange.
• End result is no taxable capital gain on
appreciation above original investment in
opportunity zone fund.

18. Rules & Qualifications
Qualified Opportunities
1) Qualified Opportunity
Zone Businesses
2) Qualified Opportunity
Zone Commercial Property
Qualified
Opportunity Zone
Partnership Interest
(in O-Zone Business)
Qualified
Opportunity Zone
Stock
(in O-Zone Business)
Qualified Opportunity Zone Business Property Qualified Opportunity Zone Business Property

19. Rules & Qualifications
Qualified Opportunity Zone Businesses
• Indirect Method
• Partnership interest or stock in business.
• LLC ok as long as treated as partnership or
corporation.
• Investment must be acquired after Dec 31st, 2017
in exchange for cash.
• Must be a qualified opportunity zone business or
being organized for the purpose of being a
qualified opportunity zone business.
• Must remain a qualified opportunity zone business
for substantially all the qualified opportunity funds
holding period.
1) Qualified Opportunity
Zone Businesses
Qualified
Opportunity Zone
Partnership Interest
(in O-Zone Business)
Qualified
Opportunity Zone
Stock
(in O-Zone Business)
Qualified Opportunity Zone Business Property

20. Rules & Qualifications
Qualified Opportunity Zone Businesses
1) Qualified Opportunity
Zone Businesses
Qualified
Opportunity Zone
Partnership Interest
(in O-Zone Business)
Qualified
Opportunity Zone
Stock
(in O-Zone Business)
Qualified Opportunity Zone Business Property
• Classified as trade or business in which
substantially all of the tangible property is owned
or leased by the qualified opportunity zone
business property.
• At least 50% of income derived from active
conduct.
• 5% of assets plus reasonable working capital may
be held in cash or liquid investments.
• Intangible assets ok, but must be used in trade or
business.
• No minimum in terms of funds invested in
tangible property.
• No “Sin Businesses” - Private or commercial golf
courses, massage parlor, country club, hot tub or
sun tan facility, gambling related facility, any store
used for the sale of alcohol beverages for
consumption off premises.

21. Rules & Qualifications
Qualified Opportunity Zone Business Property
• Direct Method
• Tangible property used in a trade or business.
• Acquired by purchase from unrelated party (20%
standard) after Dec 31st 2017.
• Commences with taxpayer use OR taxpayer
substantially improves property during any 30-
month period after acquisition, as defined by an
amount equal to adjusted basis of property to
beginning of period.
2) Qualified Opportunity
Zone Commercial Property
Qualified Opportunity Zone Business Property

22. Rules & Qualifications
Qualified Opportunity Zone Business Property
• 90% must be invested in tangible property.
• 10% may be held in intangible property.
• 10% may be held in cash or other liquid
investments.
2) Qualified Opportunity
Zone Commercial Property
Qualified Opportunity Zone Business Property

23. Rules & Qualifications
Statutory Requirements
• Organizes as a Corporation or Partnership (LLC ok)
• An investment vehicle organized for the purpose of investing in opportunity zone
property.
• 90% asset requirement.

24. Rules & Qualifications
Non Compliance Penalty
Failure to Meet 90% Investment Standard
• Per month penalty for failing to meet 90% asset test threshold.
• % shortfall x underpayment rate = Penalty (plus interest).
• No penalty if it is shown failure is due to reasonable cause.

25. Rules & Qualifications
Certification Process
• Self Certification Process.
• Form 8949, attached to tax return.
• No approval or action by IRS required.
• Easy. Simple. Efficient.

26. Rules & Qualifications
State Tax Implications
1) Single opportunity zone transactions may result in multiple state repercussions - For example, if
capital gain was realized from sale in California but opportunity zone investment was in Colorado.
2) Some states are incorporating other benefits in addition to opportunity zones - For example,
California introduced a bill that exempts projects from the California Environmental Quality Act if said
projects are in opportunity zones.
3) States that piggyback on Federal Law may decouple - Hawaii decided to decouple from opportunity
zone when the state traditionally piggybacks on Federal Law.
4) Some states could add opportunity zones at the state level - Alaska, Florida, Nevada, South Dakota,
Texas, Washington, any Wyoming do not have a state income tax. States like Colorado could add
opportunity zone benefits at the state income tax level.

27. For Business Owners IN Opportunity
Zones

28. For Business Owners IN Opportunity Zones
For Business Owners IN Opportunity Zones
• Added incentive for investors to buy your company / property
over non-opportunity zone options.
• Requires quick turnaround for buyers.
• Have your ducks in a row to move at the speed of buyers needs.
• Be proactive - have business / property appraised, have
documents organized, clean up entire business. Be ready for if /
when interested buyer comes around.
• If you are contemplating a sale, consider reinvesting capital gain
in an opportunity zone.

29. For Investors

30. For Investors
History of Opportunity ZonesFor Investors
• Significant benefit to patient capital.
• Highly advantageous for operating businesses.
• Buy - Side: Identify multiple opportunities to ensure capital is
placed within window and not missed due to dead deal.
• Sell - Side: Can potentially offer exit opportunities free of capital
gains tax, making value add opportunities even more valuable.
• LLC ok, treated as Partnership or Corporation.
• Easy setup with form 8949.

31. For Investors
History of Opportunity ZonesEndless Options To Diversify Your Portfolio

32. Colorado Locations

33. Colorado Locations
Colorado Locations
126 Census Tracks
Covers extremely diverse group
of options for Investors

34. Colorado Locations
All of Colorado
Source: https://choosecolorado.com/opportunity-zones/

35. Colorado Locations
Denver Colorado
Source: https://choosecolorado.com/opportunity-zones/
Mile High Stadium Area - Denver Park Hill Area - Denver
DIA Denver International Airport Area - Denver North Denver Area - Denver

36. Colorado Locations
Denver Colorado
West Denver - Denver East Colfax Area - Denver
Source: https://choosecolorado.com/opportunity-zones/

37. Colorado Locations
Broomfield Colorado
Broomfield Area
Source: https://choosecolorado.com/opportunity-zones/

38. Colorado Locations
Boulder Colorado
Boulder Area
Source: https://choosecolorado.com/opportunity-zones/

39. Colorado Locations
Colorado Springs Colorado
Colorado Springs Area
Source: https://choosecolorado.com/opportunity-zones/

40. Colorado Locations
Estes Park Colorado
Estes Park Area
Source: https://choosecolorado.com/opportunity-zones/

41. Colorado Locations
Monte Vista Colorado
Monte Vista Area
Source: https://choosecolorado.com/opportunity-zones/

42. Colorado Locations
Durango Colorado
Durango Area
Source: https://choosecolorado.com/opportunity-zones/

43. Colorado Locations
Grand Junction Colorado
Grand Junction Area
Source: https://choosecolorado.com/opportunity-zones/

44. Colorado Locations
Fort Collins Colorado
Fort Collins Area
Source: https://choosecolorado.com/opportunity-zones/

45. Colorado Locations
Greeley Colorado
Greeley Area
Source: https://choosecolorado.com/opportunity-zones/

46. Colorado Locations
Garden City Colorado
Garden City Area
Source: https://choosecolorado.com/opportunity-zones/

47. Colorado Locations
Pueblo Colorado
Pueblo Area
Source: https://choosecolorado.com/opportunity-zones/

48. Colorado Locations
Canon City Colorado
Canon City Area
Source: https://choosecolorado.com/opportunity-zones/

49. Resources

50. Resources
Covering Q/A’s, State Publications, Maps to Locate Opportunity Zones, Etc…
• Common Q / A’s IRS - https://www.irs.gov/newsroom/opportunity-zones-
frequently-asked-questions
• IRS Form 8949 - https://www.irs.gov/pub/irs-pdf/f8949.pdf
• Choose Colorado - https://choosecolorado.com/opportunity-zones/
• Colorado Listings in Opportunity Zones - https://www.colorado-invest.com/
• CDFA Updates - https://www.cdfa.net/cdfa/cdfaweb.nsf/newsletter.html?
open&news=8132600899&archive=show&pager=hide
• US Department of Treasury Opportunity Zone Resources - https://
www.cdfifund.gov/Pages/Opportunity-Zones.aspx

51. Here to Help…

52. How Singleton Valuations Can Help
Get more information via www.SingletonValuations.com or by calling (720) 330 - 3542.
Owners Currently In Opp Zones Investors
• Buy-Side / Sell-Side Valuations
• Value add enhancement
strategies to maximize benefits of
opportunity zone.
• Access to our network of tailored
specialist familiar with
opportunity zones.
• Business Valuations & Appraisals
ready you for when buyers call.
• Value enhancement strategies to
maximize sale price of your
enterprise.