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Tax Blog

The 32-item List for Valuation and Estate/Succession Planning: Part 2 of 2.

Now that you have been introduced to the list from part one of this two-part blog series, we can dive into the specifics of the list and the “why” behind some of the categories.

Background Data and Why it Matters.

People often underestimate the background data section and its importance. The first item on the list is, “A statement as to the objective and purpose of the valuation and/or succession plan.” The “why?” matters here. Not all clients will want the same things when planning their exit as everyone is in a different situation. One individual may be organizing their estate in preparation of retirement, where others may focus on strategically transferring their wealth to their children. The purpose of the valuation, estate or succession plan will indicate and allow your advisor to fully understand your goals and structure your plan accordingly.

Item 32: Including but not limited to a synopsis and documentation of any Qualified Opportunity Zones and/or Funds, Tax Increment Financing, Enterprise Zones, or any State & Local Subsidies obtained and/or used by the company.

This item was recently added to our 32-item list. As new tax incentives have become available, we have seen a large increase in long-term investment strategies successfully taking advantage of the opportunities. Speaking of opportunities, Qualified Opportunity Zones offer a deferral of capital gain for 5 years and a 10% step-up in basis. Meaning if a taxpayer invests their gain into a Qualified Opportunity Zone, they will only pay tax on 90% of that gain five years in the future. But that’s not all, any appreciation on the investment made will be tax free after the investment has been held for more than ten years. So, if a taxpayer invests $1 million into the Qualified Opportunity Zone and after ten years the value has appreciated to $10 million, when the investment is sold the taxpayer will not be taxed on any of the $9 million dollar gain. Opportunity zones are only one example of long-term investment strategies included in item 32 of the 32-item list.

Tax Increment Financing (TIF), a tax incentive similar to the Qualified Opportunity Program encourages investment in a community’s infrastructure. For example, certain programs may offer a refund in property taxes for a business that offers affordable housing to low-income individuals. Or the TIF may offer funding for repairs and improvement to certain properties such as sidewalks or parking lots. In many counties throughout the Country, taxpayers looking to defer and reduce gain are locating Qualified Opportunity Zones in TIF Districts to gain the benefit of both.

Keeping the 32-item listed updated can save a HUGE amount of time and headache in preparing for a valuation, estate, or succession plan. If you have any further question or would like a copy of the 32-item list, contact the tax planning professionals at The Center for Financial, Legal and Tax Planning online at or call (618) 997-8370.

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