This document is intended to provide information to help investors understand aspects of the relevant regulations issued by the Treasury related to Opportunity Zone investing. Nothing contained in is this document should be considered legal or tax advice and investors should consult their legal and tax advisors before making any decision to defer capital gains or make an investment in Qualified Opportunity Zone Property or a Qualified Opportunity Zone Business.

One of the greatest impediments investors face in making the decision to invest in Opportunity Zones is the 180 day time horizon for having ninety percent of a Qualified Opportunity Fund’s (“QOF”) assets invested in a Qualified Opportunity Zone Business (“QOZP”) or a Qualified Opportunity Zone Property (“QOZP”). JMP has developed a structure that effectively provides investors with a solution that can extend the 180 days and provide up to 31 months for the deployment of capital in Opportunity Zone investments.

The first step is for the investor to create and fund a QOF within 180 days of the transaction giving rise to the capital gain. This is not 6 months; it is 180 days including the day on which the transaction occurred. For gains allocated on K-1s, the deemed transaction date giving rise to the capital gain is December 31 of the year for which the K-1 is issued. The amount funded in the QOF is the amount of gain the investor wishes to commit to Opportunity Zone investments and, therefore, the amount of gain for which capital gains taxes are deferred until December 31, 2026 making them due and payable on April 15th of 2027.

Once the QOF is established and funded, the investor has 180 days to have 90% of the QOF’s assets invested in a singular or multiple QOZBs or QOZPs. There are requirements that both QOZBs and QOZPs must meet to remain qualified which aren’t relevant to this discussion but which we can detail if necessary.

For QOZBs and QOZPs, they have up to 31 months to deploy their capital under a working capital safe harbor contained in the law. The deployment of the capital needs to be in accordance with a plan that covers how and when the capital will be deployed.

JMP has developed solution for investors.

JMP has a turnkey QOF solution that can establish, create, document and get funded on behalf of an investor very quickly. Our “QOF in a box” solution complies with the law and allows investors with limited time before the expiration of the 180-day period to achieve deferral. This entity can be created and funded within days.

In addition, JMP offers a turnkey QOZB solution that enables an investor to invest their QOF funds into an operating QOZB. The QOZB entity operated by JMP on behalf of the investor develops a plan to invest the assets within the 31-month period in accordance with the investor’s investment objectives. This JMP affiliated QOZB can deploy the investor’s assets into other operating QOZBs and QOZPs over time.

The attached document shows how this structure can work for an investor using the JMP QOF and QOZB entities.