Federal Tax consequences may be only half the answer

There are a lot of good tax planning discussions in the media and internet.? Most of these discussions cover federal income taxes only.? For those of us that live in high income tax states (California), we need to also understand the impact of state taxation.? A prime California example is Opportunity Zones.? California does not conform to either the gain deferral or step-up in basis.? So, while your federal gains will be reduced and deferred you will need to pay California income taxes on the gains at the sale date.? This is a real bummer with the current SALT limitation.? Spidell’s Quick Guide to California Nonconformity is twelve pages long! So, it is dangerous for California residents to base tax planning moves on the Federal tax consequences only.? Effective Tax Planning takes close collaboration between the taxpayer, their tax professional and their financial planner.? We need to all work together to ensure the best client outcomes.