17800 N. Perimeter Drive · Suite 210 · Scottsdale, AZ 85255 (480) 860-2000

The Opportunity in Opportunity Zones

The 2017 Tax Cuts and Jobs Act created a new tool for economic development that provides tax incentives to stimulate capital investment in areas designated by each state. These targeted areas are called Opportunity Zones (“OZ’s”). 

Investment in OZ’s are made through Qualified Opportunity Funds (“OF’s”). OF’s can invest in multiple projects, but are required to have 90% of their assets invested in OZ’s. Investment in OF’s offer the following benefits:

Program Benefits

Deferral of Existing Capital Gains

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Step up in Bases

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Exclusion of Capital Gain on OZ Investment

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Can invest basis and/or gain in Opportunity Fund.




Doesn’t have to be “like-for-like”.

Definitions

  • Opportunity Zone (aka “OZ” or ”O-Zone”)
    • Property designated as an OZ and certified by the Treasury.
    • 168 census tracts nominated in Arizona.


  • Qualified Opportunity Fund (aka “OF” or “O-Fund”)
    • Investment vehicle/intermediary between the investor and investment in OZ’s. 
    • Corporation or Partnership certified by Department of Treasury. 
    • 90% of assets must be invested in OZ’s
      • Tested every 6-months

Investment Benefits

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Program Rules

Detail your services

If customers can’t find it, it doesn’t exist. Clearly list and describe the services you offer. Also, be sure to showcase a premium service.

Announce coming events

Having a big sale, on-site celebrity, or other event? Be sure to announce it so everybody knows and gets excited about it.

Display real testimonials

Are your customers raving about you on social media? Share their great stories to help turn potential customers into loyal ones.

Promote current deals

Running a holiday sale or weekly special? Definitely promote it here to get customers excited about getting a sweet deal.

Share the big news

Have you opened a new location, redesigned your shop, or added a new product or service? Don't keep it to yourself, let folks know.

Display their FAQs

Customers have questions, you have answers. Display the most frequently asked questions, so everybody benefits.

OF/OZ Example

  • 6/30/18 - Investor sells stock for $12M, $10M of which is gain.
  • 9/30/18 - Investor invests $10M into an OF. OF invests in OZ.
  • 10/1/23 - Investor’s basis is stepped up by $1M (10%).
    • Capital gains now payable only on $9M. 
  • 10/1/25 - Investor’s basis is stepped up by $500k (5%).
    • Capital gains now payable only on $8.5M.
  • 12/31/26 - Investor must pay tax on $8.5M.
  • 10/1/28 - Investor sells $25M OF interest.
    • No capital gains due on $15M appreciation of OF interest.

About SIM OF I

  • Formed as an LLC and certified through the Department of Treasury.
  • Investment in SIM O-Fund provides investor a partnership interest. 
  • SIM will maintain required certifications, ratios, investor reporting, fund management, and ancillary services.
  • SIM will continue looking for newer OZ projects which could be added to future OF’s.