The events of the past year have proven that things can happen unexpectedly. We have seen uncertainty related to COVID-19, the economy, and tax policies, to name a few—and it is increasingly important to have estate and trust strategies in place, as the future can be so unpredictable.

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One of the most basic premises of business valuation is that “value” is forward-looking. A company’s historical financial results are only relevant to the extent they are indicative of future results. The Income Approach to business valuation embraces this forward-looking premise by estimating the future financial benefits to be generated and discounting those expected benefits to a present-day value. These future benefits are what the buyer is buying and the seller is giving up at sale.

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The final chapter of 2020 was dominated by the election, jousting over a second stimulus package and the roll out of COVID-19 vaccines. The vaccine news and the anticipation of an eventual return to normal economic activity powered the U.S. Stock Market to new highs. Surprisingly, small cap stocks had the strongest performance in the 4th quarter and ended nearly as strong as larger stocks in 2020.

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President Trump signed into law billions of dollars in long-awaited COVID-19 and economic relief. The relief package is part of the nearly 5,600-page Consolidated Appropriations Act (CAA), which also contains numerous other tax, payroll and retirement provisions. Here are some of the provisions most likely to affect individual taxpayers.

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Late in the evening on Monday, December 21st, Congress passed a gigantic bill that included (among many other things) several provisions that impact year-end tax planning. The President is expected to sign the bill into law.

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Not everyone can contribute as much as they would like to their retirement plans each year, for a variety of reasons. However, it is vital that the maximum amount possible is deposited each year, because the earlier you save, the more it can grow before the date of retirement. There are options to accelerate retirement savings for those who may be behind and closer to retirement age.

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On Wednesday, the IRS issued Revenue Ruling 2020-27, addressing a question that has been on the minds of many PPP loan recipients: whether the timing of PPP loan forgiveness impacts the timing of the nondeductibility of the expenses paid with PPP funds. The ruling concludes the timing of the forgiveness does not alter the timing of the nondeductibility.

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Now that Joe Biden has been projected as the winner of the presidential election by major news outlets, you may wonder if your federal taxes will be affected.

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The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Paycheck Protection Program (PPP) to provide small businesses with liquidity during the coronavirus pandemic.

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While the official numbers are not in yet, it is estimated by that the economy reinflated by 30-35% in the 3rd quarter. Approximately 3.8 million folks returned to work. Amazing figures, but the economy remains down approximately 10% from February. Of the 22 million jobs lost in the spring, it is estimated that over 10.7 million have not returned. Much of those losses are concentrated in the entertainment, travel, and hospitality sectors. While the housing market has been a bright spot in the economy, many economists caution that most of the easy growth has now been captured, and they expect the overall recovery to slow until a vaccine is available. (Sources: Goldman Sachs, Dept. of Labor, JP Morgan)

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