Five Points – 34

Opportunity Zones  –

I’ve mentioned my enjoyment and gained knowledge from Fred Wilson‘s blog multiple times here on Five Points and he has yet again shared a kernel that you may find valuable.

As part of the December 2017 Trump tax cut, an unlikely group of billionaires and politicians quietly inserted a generous and complicated new tax break designed to lure big dollars into struggling areas known as Opportunity Zones, or O-zones.  About 8,700 O-zones nationwide, ranging from run-down inner cities to dusty rural hamlets,  have already been designated. But investors who want to take advantage of the new O-zone tax scheme can’t plow money into these areas directly. Instead, they must do so through qualified opportunity funds, or O-funds. These funds will have remarkable freedom to invest in just about anything—from real estate to tech start-ups—so long as it’s located in an O-zone and isn’t a business Congress considers a vice. (No casinos, liquor stores or massage parlors.)

Here’s how it works. Investors who sell assets have 180 days to plow their taxable capital gains into an approved opportunity fund, which must hold 90% of its assets in Opportunity Zone projects. To put money to work fast, the law requires that the funds invest all of their cash within some specified time frame. (The Treasury Department is still deciding on that and other crucial details.) Tax on the original reinvested gain isn’t due until 2026, and the taxable gain is cut by 15%. Meanwhile the new opportunity investment grows tax-free, like a Roth IRA, provided it’s held for at least ten years. (If it’s sold earlier, it can be rolled into another opportunity fund and remain tax-free.

For a census tract to qualify as an O-zone, it must have a poverty rate of 20% or higher or a median household income that is less than 80% of the surrounding area. Governors are allowed to designate 25% of their states’ eligible tracts as O-zones. In all, about 8,700 areas, ranging from rusty industrial towns to dusty rural hamlets, have been approved.

Unlike previous development incentives such as Enterprise Zones and New Market Tax credits, which capped tax benefits and placed restrictions on the industries and regions you could invest in, the O-zone law is broad and scalable. Vice businesses (liquor stores, casinos, massage parlors) are barred. And while venture capitalists, private-equity shops and banks will be essential for launching opportunity funds, those firms can’t simply locate in an O-zone and grow tax-free. Other than that, the investment options and those who can invest are broad.

Here’s a map of O-zones in the United States.
Forbes has a long piece on how these rules came to be and how they work.

If this is interesting to you and are keen to discuss in more depth, please do contact me.  I have privately shared this with several capable investors and am considering organizing a fund for investment in O-zones surrounding Nashville, TN.

The Biographer’s Lover –

Friends doing awesome stuff alert!!!

Ruby Murray just let the world know her second book is available for pre-order.

Why has no one heard of Edna Cranmer?

When a young writer is hired to put together the life of an unknown artist from Geelong, of all places, she thinks it will be just another quick commission paid for by a rich, grieving family obsessed with their own past.

But Edna Cranmer was not a privileged housewife with a paintbrush. Edna’s work spans decades. Her soaring images of red dirt, close interiors and distant jungles have the potential to change the way the nation views itself.

Edna could have been an official war artist. Did she choose to hide herself away? Or were there people who didn’t want her to be famous? As the biographer is pulled into Edna’s life, she is confronted with the fact that how she tells Edna’s past will affect her own future.

This elegant and engrossing novel explores how we value and celebrate art and artists’ lives. The Biographer’s Lover reminds us that all memory is an act of curation.


Do yourself a favor…or treat someone you care about to a special gift…

It’s available for pre-order now:

Ruby is an incredible wordsmith and even better person.

7’s Rugby World Cup – San Francisco, CA

Friends doing awesome stuff alert!!!

Super proud of Dallen Stanford for being selected to announce the 7’s Rugby World Cup this weekend in San Francisco, CA.  He is prolific in rich commentary and educational information about the game and players, one-liners to have you big belly roll laughing, and access to the game’s brightest stars.

His role as commentator is second only to his career as player, having represented the United States for many years on the international stage.

Most importantly, he’s one of the best friends a guy could ask for.

Prefabricated Homes – 

My friend Isaac Roth sent along a link to what I find to be a simple, but beautiful prefabricated house.

Exploration – Control Your Data.  Collect Your Money.

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