Philanthropy
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This is intended for informational purposes only. Opinions expressed herein are those of the speakers and may differ from those of other JP Morgan employees and affiliates. Historical information and outlooks are not guarantees of future results. Any views and strategies described may not be appropriate for all participants and should not be intended as personal investment, financial, or other advice. As a reminder, investment products are not FDIC insured, do not have bank guarantee, and they may lose value.
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Hello, my name is BJ Goergen, and I lead Morgan Private Advisory here at JP Morgan in our Private Bank. We have been receiving many questions from our clients in the aftermath of the Los Angeles County wildfires. Those questions have centered around what to do about insurance claims, some of the tax considerations that they should be thinking about when making a decision about what's next, and general planning considerations in the aftermath of a natural disaster.
And I am joined by two very esteemed experts today to help us have that conversation. I'm joined by Naomita Yadav-- she is a tax lawyer and a partner at Withersworldwide-- and Chris Parker, who is a tax expert and runs the tax practice group at Moss Adams. Naomita and Chris are both based in California and working with clients all across the state and around the country that have been impacted by natural disasters. Naomita and Chris, I'd love for you to introduce yourselves.
Thanks so much, BJ, and thank you so much for having us here today. It's our pleasure as always. So on my end, I think you captured the headline. I'm an attorney. I'm a tax attorney. My practice spans-- it has a pretty big California focus. I work with high net worth, ultra high net worth families to do their income tax planning as well as their transfer tax planning, which is gift estate, and also with clients who might have cross border or across the country who have California situs assets.
And in this situation, I think we are the-- as we all turn into this topic, I think I just want to tee it off by just saying that any advice or anything that you get has to be very tailored to your particular situation. So even though we'll be talking right now in general terms, which can be generally applicable to people, they shouldn't take this as a, I should go do this because I heard that xyz consequence because, at the end of the day, it also has to very much matter about their own personal situation.
So we may be talking about tax consequences, for example. But if someone has their entire life in California, it's not just an investment property. They're thinking their next steps will be quite different from somebody who maybe has an adjacent house, but it was an investment property. So I'd just like to lay that as a little bit and hand it over to Chris.
Chris, I'd love for you to give your background.
Thanks, BJ, and thanks again for the opportunity to speak with you and the JP Morgan folks. It's been a great partnership over the years and always appreciate the opportunity to work with you.
My name is Chris Parker. I'm in the private client in state and local tax group at Moss Adams, which means that we work with clients who are focused on state tax matters, including residency transition, disaster relief. And then I also lead our California controversy practice. So those clients who are being audited by the franchise tax board, I'm the first line of defense in that matter, which means I get to see a wide variety of clients across a spectrum of incomes, opportunities, families, executives, business owners, all of whom have been impacted by the fires in LA. And all of whom are struggling to figure out what the next step is.
Some of those folks are coming to us saying, hey, I was already thinking about leaving, and maybe this is the final kick in the seat of the pants to get out. Other folks who fires were adjacent to their property but maybe did not consume their property, they're struggling with getting bids on their house that are so exorbitant over fair market value that they feel conflicted about turning them down. And yet at the same time, they don't want to pass up the opportunity. But then they go, where am I going to live?
And to Naomita's point, a lot of the advice that we're going to talk about today is very high level in general. But each person's individual needs and specific circumstances are highly critical to providing good, individualized advice. And so as she counseled and I want to concur, it is important to seek individual representation to address your specific needs, your family's specific needs. Oftentimes, if young children are involved, educational needs become critical.
If older family members are part of the family and still part of the homestead, their needs may change the way you want to look at certain issues as you're evaluating what to do next. So thanks again, BJ, for the opportunity to speak with you.
Absolutely. And so thematically, I really want to start with insurance because most of our clients-- and I know that you're both working with lots of clients right now-- are immediately getting into the insurance process. So would you talk about some of the themes that you're seeing with some of the clients that you're working with, specifically around insurance and insurance claims?
Sure. I'll kick it off, and then Naomita will undoubtedly have some good comments to share. A couple of things are happening.
One is the challenge of what is insurable value of the property is becoming a real issue. Oftentimes with homeowner's policies, what is being insured is the replacement value of the physical structure, which is to say the market value may be $5 million or $25 million, but the actual cost to replace the physical structure is a much, much smaller number. And that is what, for most folks, their insurance policy covers.
They may have additional riders on their policy that cover things like code changes. So the policy says, hey, look, the house was built in the 1960s. Obviously, the building code has changed substantially since that time, So we have a factor of maybe 10% or 20% for those additional code changes if you do choose to rebuild. But that replacement value is it's a fixed number, and then you're comparing that to whatever your basis in the home is to evaluate whether or not you have gain on the transaction of getting the insurance proceeds or not.
The fundamental question folks are asking, though, is do I want to rebuild? And is this the right time to rebuild? And when you look at the marketplace, there are only so many home builders out there. So if you are rushing to say, hey, I've got to rebuild and I want to rebuild right now, you are competing against a whole lot of other folks who are also rushing to go build right now.
And that means you're going to face some price gouging. That means you're going to have some struggles. The permitting process, while there are efforts at both the state and local government to accelerate, the permitting process is still the permitting process. For those folks who are on the Coast, the California Coastal Commission is notoriously difficult to work through, getting the various approvals that are necessary.
And a lot of clients are also facing remediation because of the contaminants that were released as part of the fires. And that process is its own separate and distinct issue. Was speaking with a client actually just earlier this week, who right now is spending almost $200,000 just to have chemical and contaminant remediation on their home. They're estimating that's going to take several months, and they won't have any access to the home during that time.
So they're going, well, what do we do in the meantime? We have a young child. The young child still wants to be able to see their friends. Their friends are somewhat scattered to the wind right now.
And so it's not just the insurance issue per se, but it is all the surrounding matters that come into that conversation. Naomita, what other thoughts to share?
Just to build off of your last point, I think sitting down with your advisors, whether at JP Morgan or elsewhere, who can take a close look at your insurance policy and actually provide more specific advice on what is really covered, is going to be critical because the thing about remediation, for example, if you have-- maybe your house didn't burn down, but you've had hazardous chemicals that are around there.
So you're basically deprived of the use. Can you file an insurance claim based on that because you're being deprived of the use of the property? So the what a policy covers and what falls under various umbrellas, I think just assuming coming here what may or may not be covered is the worst thing one can do. I think the best thing is to actually take that, sit down with somebody who does insurance policies and go through with them and then understand what claims you can make and feasibly what type of amount you may get back.
One interesting thing that Chris and I were also thinking about was when you have-- people may not see a payout right away. Because there'll be so many claims being filed, you may not see a payout in the current fiscal year. What if it happens next year and you've had this loss?
And this is segueing a little bit away from the core insurance issue. But it has effects. So whatever amount you're going to get from insurance and when you get it is going to affect your tax reporting and potentially your tax planning.
So when you receive it is when you are going to have to claim it, correct?
No. So you're claiming it right away. But it's only when the proceeds-- it's cash basis. So from a tax perspective, it's when the money hits your bank that really counts. So since Chris and I are both tax attorneys, really, we're not insurance experts. But from our perspective, what we would really be looking at is, OK, if someone's already thought through, What they are claiming? When do they expect the money to hit? we can then say, OK, from a tax perspective, this is how we would think about planning around it, if possible.
That's right. And we even have clients asking very simple questions like, are insurance proceeds taxable?
So I think getting to that-- Chris touched on this briefly-- it depends on what someone's basis is in the property. In all likelihood, even if you've depreciated your property because it was, say, an investment property and you've had it for a long time and you've depreciated it, in the year in which you've had a catastrophic loss, you may have the loss amount still available, even if you're getting insurance proceeds.
So it's not so easy to say, is it per se taxable? No, it just depends on how it runs up, how the entirety of this situation is, like, have you had a total loss? If so, what is the casualty loss figure?
When is that insurance hitting? Are you getting the cash this year? Do you have to reduce your casualty loss based on the amount you're getting from insurance? Because you can't get both the loss as well as money in your hand. But if you get it in the next year, is it better to just go back and amend your return and then reduce it? So those are things that we would think about, depending on someone's specific situation.
And one of my hopes in having this conversation with both of you is for our clients to really think through all of the questions that they should be asking their advisors and also to be really reaching out to the right advisors who have experience in this space because I could see if you're working with counsel, if you're working with an expert to look at a policy that doesn't have expertise in that policy, you could get some really bad advice.
Correct. Correct.
So let's move into some of the tax considerations. So will you talk a little bit about casualty loss and gain versus capital loss? And what are some of the themes that you're seeing and questions that you're getting around tax considerations?
So just one thing, there is nothing like a casualty gain. So capital gain or loss is just something that's a transaction usually, which is in your control. Not always, but usually.
It's you have stock, and you decide to sell the stock. You'll have capital gains or losses if you sell it at a loss. But casualty is just a loss. There's nothing like a casualty gain. It's like you had something, and now it's wiped out.
So one thing is more market transaction, usually in your own hands. The other one is natural disaster and has to be federally declared usually.
And I think one of the complications that some clients are running into is part of their house is destroyed. Maybe it was a five bedroom house, and now it's a three bedroom house because two of the bedrooms are gone. And trying to evaluate what percentage of the property is unusable, if there are chemical remediation efforts that have to be undertaken and what does that look like?
One of our clients is very concerned about security. So they have placed private security around the property because they don't want looters coming in while nobody is around because, obviously, with the fires, a lot of people that would normally be there are not. They're now spending $40,000 a month on security for their property.
How do you think through some of those costs? And it is going to be an individual by individual situation. But, BJ, you hit the nail on the head. You really want to have thoughtful expert advice that is focused on your particular policy, what riders you had in your policy or did not have in your policy, and then what your circumstances are regarding your particular property and how those parlay into what relief may be available to you.
We've had the federal disaster declaration. We've had the state disaster declaration. We have the extended tax deadlines from both the IRS and the franchise tax board. So those are all relief opportunities, but those are not very comforting for somebody who lost their home or lost most of their home and all of their collectibles and all of their personal items.
And now they're being told, well, what inventory do you have of your personal belongings? The old joke was take a video camera around and basically take a video of everything. But that's not necessarily going to capture the value of some of those items.
And if you had a client who recently got some artwork or recently has expanded their collection of whatever they like to collect and they don't have solid documentation that they can provide to an insurer about that value and about the value that's lost, it's going to be very difficult for them to get any replacement value. And particularly with unique collectibles, if they didn't have it appraised and they didn't have a rider specific to that unique collectible, it may be impossible for them to really get the relief for some of those items.
So, Chris, I think this is something that you and I would probably work with somebody to gauge the best alternative to think about this strategically because normally people would think about, I suffered a loss. I should try to get insurance proceeds.
But what if the better alternative for some people might be just to claim a loss on their income tax returns? So it really depends, again, on how much offset income they might have. It may actually work out, once you run the numbers, a little bit better to claim a loss, provided, again, you can't just like claim even on your tax returns. You still have to provide some on back up. But you may have an easier time of it than with an insurance provider.
And that--
So--
Back up-- sorry, BJ. Go ahead.
Yeah, no, no. Finish your thought. I was going to say.
Nomita hit-- Naomita-- excuse me-- hits on a very important point, and this is something we run into with tax controversy matters all the time. The documentation is critical. And that's a very hard conversation to have with somebody who just lost their home. But it is still critical.
You can't just say, hey, I lost $1 million of personal belongings. You actually have to be able to document what those personal belongings consisted of and then provide how you reach that million dollar number in order to have the revenue authority respect the number.
And the revenue authority may be trying to be somewhat accommodating, but they're still auditors. They're still very driven by ticking and tying out the amounts. And they really do want to see representative documentation.
You can get prior year tax returns from the agencies. That's helpful for some folks but not necessarily a thorough capture of all of their information. So it is going to come back to those personal pictures, the communications with friends about, hey, I just got a new couch or we just got a new collectible item, and what documentation you have to support that and then what documentation you have to support the value.
And when all those records were lost recently with the fire, now you're really going to be looking to all of those advisors that you've been working with and saying, hey, I think I sent you an email about this, or I think I copied you on this. Or I think I sent you a copy of this physical document to store. And that's really going to become ever more critical as you're trying to piece together the potential loss claim and how that may be structured.
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Oh, sorry. One other thing. Sorry, BJ. We keep [INAUDIBLE] but just even if somebody is not successful in a claim, like with the insurance, if you have coverage, like you actually have had some kind of coverage for jewelry, for example, you can attach that as proof on your income tax returns to say, this was covered. This is the value.
So at least you have some support for market value of that property. Now, of course, if you didn't update it for 10 years or whatever, it may not be the current value. But if you've been a little bit on top of getting your insurance upped, that is a very good backup proof to show loss on your income tax return.
That's an excellent point. I want to also raise an issue that you've both talked to me about and that I've heard from our advisors in California that people are really thinking about whether they should rebuild their homes, whether they should sell their homes, or whether they should walk away from their homes completely. And so I want to know if there are tax considerations that you're advising clients to think about or planning considerations.
How are you helping people navigate that decision? Because generally when they call you, they're not saying, I'm ready to sell. They're trying to decide, should I sell or not? And that's what we're getting. It's not, I've made my decision. Now I want to implement it. It is, what are the things I need to take into consideration to help me make an educated decision about rebuilding, selling, or just walking away completely?
Yeah. I'll start with the easiest one, which is selling. Frankly, that is the one that it is truly an easy analysis because you have already your documentation for your bases. You purchased the property. If you've done major capital improvements, on a year by year basis, hopefully you've been actually giving some support about that to your CPAs, whoever's keeping track.
Especially if you've been using a property as an investment property, you will be having all of that because they're taking depreciation. So the sell part is actually easy in that sense because if you're getting a great offer, you will have capital gains. But other than that right, you can just decide if you want to cash in.
And if people were to ask me, other than, I have the capital gains, I'm just like, look, there are going to be a lot of other things that are going to happen around here, which you may not like the consequences in the future, including if there's going to be a reassessment. We don't know. If you put in more money, would your property get reassessed?
How will this play out? How will these neighborhoods end up in the future? So if you have a great offer, why not take it? At least you know exactly how you will end up if you are able to do that. So that's the easiest one. Take your money and run.
It is the easiest one. And to give a real life example of that, one of our clients whose home was somewhat adjacent to the fires-- it's within about a mile, but they just ended up with some ash on their windowsills. They don't really seem to have any major chemical contamination.
They just got an offer for $10 million over fair market value. And the decision was, hey, we would be silly not to take this. Now, they happen to be in a situation where they have another residence that they can move into. Most folks are not necessarily in that circumstance. But there are opportunities to rent or go to a slightly different geography if you want to look at Orange County or something.
That's if you're able to take the emotions out of it because it is still an emotional decision when it's your primary home. If you've raised your family there or your parents raised you there, there may be a lot of emotional connection to it that weighs in and has nothing to do with tax.
But to Naomita's point, if you're just going to sell, that's probably one of the cleaner avenues to go. I think the more difficult question that you asked and the one that has a lot of tie or I guess strings connected to it is, what if you just say, I give up, I'm going to walk away? What does that look like?
And that creates a series of events that you have to live through, which is when we go back to the Great Recession and all the houses being foreclosed upon, a lot of protections were put in place for homeowners after that. There were forbearance opportunities. There were extensive eviction changes and the rules to push somebody out of their home, there was a lot of process there to delay that so that somebody has an opportunity try and recover.
And there does not seem at the moment to be any acceleration of that process. So you still have all of those protocols in place that somebody has to go through if they do want to walk away.
And what does that look like in California? Is that a year? Is that six months?
Yeah, Naomita, do you want to pick up?
I've heard like a year plus. I don't generally deal with-- but just to clarify, when Chris is saying walk away, we are talking right now, you can walk away. But if you have a mortgage on the property, what do you do then? Can you walk away from a mortgage? And that is, I think the core of what he's saying, what these look like.
But just to set level set, most mortgages are what we call as nonrecourse, which means that the bank who, like you guys, BJ, have the ability, if all the process is done and foreclosure, et cetera, to take the property rather than go after somebody personally. So if someone has most of their other assets in a bank account, that is still fine, and they can just say, well, thank you. You can have this burnt down piece of property.
But the decision is not quite that simple because, number one, if you walk away from a mortgage like that, you will actually have cancellation of debt income. So on your income tax return, it is actually counted as income . when you say that, I'm walking away from debt. That is just going to get canceled.
Now, here it's not technically cancellation because the bank will end up owning the underlying asset. So from perspective of the homeowner, I guess, you would think about the cancellation of debt versus if you can claim a casualty loss. So think about a house that's completely burned down. We saw many horrific pictures like that.
In that case, the homeowner has both the casualty loss. But if they say we are not rebuilding, we're not doing anything, we're just going to walk away, and, JP Morgan, thank you, but you can keep this burnt down property, they may have a cancellation of debt income.
But beyond just the immediate tax things, there are other very important nontax considerations, such as, do you ever want credit again? Because if you have been in foreclosure, the chances of your getting a decent credit from anyone goes down. And things like liability, liability doesn't necessarily go away while this foreclosure process is going on.
So if you just leave the property as is, you do no remediation, nothing, while everyone else is doing some cleanup of their property or whatever it is and somebody falls sick because you didn't remove the chemicals from your property or there's burnt out metal and someone gets hurt, you can still be liable for that. And that's not necessarily covered.
So you talked about selling being easy and walking away being really complex. What about rebuilding? What are some of the tax considerations around deciding to rebuild or not?
I think in a way it's probably similar to the walking away. You rebuild if you want to keep the property. I think that is a very fundamental decision to rebuild. You will rebuild only if you want to keep that property going for yourself as an investment, personal use, whatever it is.
So going back to our very opening thing, these situations and the decisions and how do you think about different consequences are so personal in this case that you have to know someone's-- do they want to live there? Well, if they want to live there, then rebuilding will make more sense.
But other than that, if you do rebuild, you may have to think about something like a property tax reassessment because if you have a brand new property or more like a brand new property and you had old property taxes, will that necessarily carry through? That is another question.
And have there been any guidance or thinking in California around whether or not these property taxes are going to be reassessed? Do you guys have any indication of what might happen?
I haven't seen anything on that yet. I think it's still fresh enough that they're trying to figure out what to do. And property taxes are usually based on the neighborhood and the area around it. So part of it's going to be a question of, what is rebuilt and whether or not there are zoning changes to the area?
I was down in LA with some of your folks a couple of weeks ago, and there was mentioned that there is an interest by Los Angeles and some of the surrounding areas to rezone part of the Palisades because it is now vacant land and some of the first vacant land that's been available in that area for a very long time. And maybe it makes sense to revisit the zoning and whether or not maybe high-density housing, like a condo tower or another type of housing, would be a better use of the available land than what is there currently.
To circle back, though, on the tax implications of rebuilding, you do have some basis implications for what your value in the home is. That is also going to have to be assessed individually and something you're going to have to work through with your advisor there too. And what I want to stress is the documentation is going to be critical because, at some point in the future, you're either going to want to sell the property, or you're going to want to transfer it to the next generation.
And your basis and understanding what your basis is, as adjusted with the insurance proceeds and whatever loss was taken on it, is going to be critical to making sure that you understand what you're either-- whether you want to put it into a trust, you want to sell it, or you want to transfer it to a future generation.
So I just want to close with talking about some of the best practices and planning best practices that all of our clients should be thinking about. I've heard you talk about documentation, both of you, multiple times. I've heard you both talk about really understanding, what are your goals for the next step?
Is this a place where you want to live? Do you have any flexibility to live somewhere else? Do you want to or not? Asking some of those fundamental questions before you go into action what's next. Are there any other planning considerations that you would suggest based on what you're seeing come in from clients right now?
So a lot of people do wealth transfer planning, trust planning, where I'm talking not just your living trust or your revocable planning but irrevocable, like gift planning, et cetera. With real property in California, it's generally been a very good wealth transfer mechanism.
So a lot of these properties may be owned partly or in whole by trusts. So the number one thing is, if you haven't done this already, you have to make sure that your trust is a coinsured or an insured, whichever way the property is held, so that because technically it's the legal owner which who claims insurance. So if you haven't done that, check that. Get that done.
Yeah. I think one of the recurring themes in our conversation is take a breath and really take a step back. Get good advice from folks who are not emotionally invested in the intensity of the situation. It is an emotionally intense situation for anybody to suffer a loss of your home.
And think through, what do you want to do next? To your point, BJ, and it's spot on because it is the conversation we're having with a lot of clients now, which is, hey, I was already starting to think about moving. And with this event, I do want to move. Now it's a question of, do I want to move out of California? Or do I just want to move to a different part of California?
And part of that is looking at your employment situation, looking at what you want to do in the future, what your kids want to do, where their friends and families are relocating to if they are relocating. The other thing I think strategically to think about is, longer term, this is really going to change the LA landscape. And thinking through what that looks like and how that evolves may impact some of those decisions.
And while we are in the early stages of recovery, I think there'll be a lot more clarity about how some of those decisions are going to be determined probably in the next six months to a year. And it will be a very different landscape and a very different conversation than if we're trying to rush through the questions now about what to do and how to respond.
So I just want to thank you both so much for taking the time to be with us today. You are clearly experts in your field and so thoughtful, and I just appreciate you sharing some of that expertise and what you're seeing with us.
And if you're listening to this conversation, it's because you have either been impacted directly by the wildfires or you know somebody who's been impacted directly. So I want you to know that our thoughts go out to you and that we're here to help in any way that we can. Thank you so much.
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This is intended for informational purposes only. Opinions expressed herein are those of the speakers and may differ from those of other JP Morgan employees and affiliates. Historical information and outlooks are not guarantees of future results.
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Text: J.P. Morgan Private Bank. L.A. Fires working title. Photos below of the following people, Chris Parker, Principal at Moss Adams, Naomita Yadav, Partner at Withersworldwide, BJ Goergen, Global Head of J.P. Morgan Private Advisory
Goergen with the gold script J.P. Morgan logo on the wall behind. Text: BJ Goergen, Global Head of J.P. Morgan Private Advisory
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Hello, my name is BJ Goergen, and I lead Morgan Private Advisory here at JP Morgan in our Private Bank. We have been receiving many questions from our clients in the aftermath of the Los Angeles County wildfires. Those questions have centered around what to do about insurance claims, some of the tax considerations that they should be thinking about when making a decision about what's next, and general planning considerations in the aftermath of a natural disaster.
And I am joined by two very esteemed experts today to help us have that conversation. I'm joined by Naomita Yadav-- she is a tax lawyer and a partner at Withersworldwide-- and Chris Parker, who is a tax expert and runs the tax practice group at Moss Adams. Naomita and Chris are both based in California and working with clients all across the state and around the country that have been impacted by natural disasters. Naomita and Chris, I'd love for you to introduce yourselves.
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Yadav wearing headphones with the witherswordwide W logo behind. Text: Naomita Yadav, Partner at Withersworldwide
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Thanks so much, BJ, and thank you so much for having us here today. It's our pleasure as always. So on my end, I think you captured the headline. I'm an attorney. I'm a tax attorney. My practice spans-- it has a pretty big California focus. I work with high net worth, ultra high net worth families to do their income tax planning as well as their transfer tax planning, which is gift estate, and also with clients who might have cross border or across the country who have California situs assets.
And in this situation, I think we are the-- as we all turn into this topic, I think I just want to tee it off by just saying that any advice or anything that you get has to be very tailored to your particular situation. So even though we'll be talking right now in general terms, which can be generally applicable to people, they shouldn't take this as a, I should go do this because I heard that xyz consequence because, at the end of the day, it also has to very much matter about their own personal situation.
So we may be talking about tax consequences, for example. But if someone has their entire life in California, it's not just an investment property. They're thinking their next steps will be quite different from somebody who maybe has an adjacent house, but it was an investment property. So I'd just like to lay that as a little bit and hand it over to Chris.
Chris, I'd love for you to give your background.
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Parker wearing glasses. Text: Chris Parker, Principal At Moss Adams
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Thanks, BJ, and thanks again for the opportunity to speak with you and the JP Morgan folks. It's been a great partnership over the years and always appreciate the opportunity to work with you.
My name is Chris Parker. I'm in the private client in state and local tax group at Moss Adams, which means that we work with clients who are focused on state tax matters, including residency transition, disaster relief. And then I also lead our California controversy practice. So those clients who are being audited by the franchise tax board, I'm the first line of defense in that matter, which means I get to see a wide variety of clients across a spectrum of incomes, opportunities, families, executives, business owners, all of whom have been impacted by the fires in LA. And all of whom are struggling to figure out what the next step is.
Some of those folks are coming to us saying, hey, I was already thinking about leaving, and maybe this is the final kick in the seat of the pants to get out. Other folks who fires were adjacent to their property but maybe did not consume their property, they're struggling with getting bids on their house that are so exorbitant over fair market value that they feel conflicted about turning them down. And yet at the same time, they don't want to pass up the opportunity. But then they go, where am I going to live?
And to Naomita's point, a lot of the advice that we're going to talk about today is very high level in general. But each person's individual needs and specific circumstances are highly critical to providing good, individualized advice. And so as she counseled and I want to concur, it is important to seek individual representation to address your specific needs, your family's specific needs. Oftentimes, if young children are involved, educational needs become critical.
If older family members are part of the family and still part of the homestead, their needs may change the way you want to look at certain issues as you're evaluating what to do next. So thanks again, BJ, for the opportunity to speak with you.
Absolutely. And so thematically, I really want to start with insurance because most of our clients-- and I know that you're both working with lots of clients right now-- are immediately getting into the insurance process. So would you talk about some of the themes that you're seeing with some of the clients that you're working with, specifically around insurance and insurance claims?
Sure. I'll kick it off, and then Naomita will undoubtedly have some good comments to share. A couple of things are happening.
One is the challenge of what is insurable value of the property is becoming a real issue. Oftentimes with homeowner's policies, what is being insured is the replacement value of the physical structure, which is to say the market value may be $5 million or $25 million, but the actual cost to replace the physical structure is a much, much smaller number. And that is what, for most folks, their insurance policy covers.
They may have additional riders on their policy that cover things like code changes. So the policy says, hey, look, the house was built in the 1960s. Obviously, the building code has changed substantially since that time, So we have a factor of maybe 10% or 20% for those additional code changes if you do choose to rebuild. But that replacement value is it's a fixed number, and then you're comparing that to whatever your basis in the home is to evaluate whether or not you have gain on the transaction of getting the insurance proceeds or not.
The fundamental question folks are asking, though, is do I want to rebuild? And is this the right time to rebuild? And when you look at the marketplace, there are only so many home builders out there. So if you are rushing to say, hey, I've got to rebuild and I want to rebuild right now, you are competing against a whole lot of other folks who are also rushing to go build right now.
And that means you're going to face some price gouging. That means you're going to have some struggles. The permitting process, while there are efforts at both the state and local government to accelerate, the permitting process is still the permitting process. For those folks who are on the Coast, the California Coastal Commission is notoriously difficult to work through, getting the various approvals that are necessary.
And a lot of clients are also facing remediation because of the contaminants that were released as part of the fires. And that process is its own separate and distinct issue. Was speaking with a client actually just earlier this week, who right now is spending almost $200,000 just to have chemical and contaminant remediation on their home. They're estimating that's going to take several months, and they won't have any access to the home during that time.
So they're going, well, what do we do in the meantime? We have a young child. The young child still wants to be able to see their friends. Their friends are somewhat scattered to the wind right now.
And so it's not just the insurance issue per se, but it is all the surrounding matters that come into that conversation. Naomita, what other thoughts to share?
Just to build off of your last point, I think sitting down with your advisors, whether at JP Morgan or elsewhere, who can take a close look at your insurance policy and actually provide more specific advice on what is really covered, is going to be critical because the thing about remediation, for example, if you have-- maybe your house didn't burn down, but you've had hazardous chemicals that are around there.
So you're basically deprived of the use. Can you file an insurance claim based on that because you're being deprived of the use of the property? So the what a policy covers and what falls under various umbrellas, I think just assuming coming here what may or may not be covered is the worst thing one can do. I think the best thing is to actually take that, sit down with somebody who does insurance policies and go through with them and then understand what claims you can make and feasibly what type of amount you may get back.
One interesting thing that Chris and I were also thinking about was when you have-- people may not see a payout right away. Because there'll be so many claims being filed, you may not see a payout in the current fiscal year. What if it happens next year and you've had this loss?
And this is segueing a little bit away from the core insurance issue. But it has effects. So whatever amount you're going to get from insurance and when you get it is going to affect your tax reporting and potentially your tax planning.
So when you receive it is when you are going to have to claim it, correct?
No. So you're claiming it right away. But it's only when the proceeds-- it's cash basis. So from a tax perspective, it's when the money hits your bank that really counts. So since Chris and I are both tax attorneys, really, we're not insurance experts. But from our perspective, what we would really be looking at is, OK, if someone's already thought through, What they are claiming? When do they expect the money to hit? we can then say, OK, from a tax perspective, this is how we would think about planning around it, if possible.
That's right. And we even have clients asking very simple questions like, are insurance proceeds taxable?
So I think getting to that-- Chris touched on this briefly-- it depends on what someone's basis is in the property. In all likelihood, even if you've depreciated your property because it was, say, an investment property and you've had it for a long time and you've depreciated it, in the year in which you've had a catastrophic loss, you may have the loss amount still available, even if you're getting insurance proceeds.
So it's not so easy to say, is it per se taxable? No, it just depends on how it runs up, how the entirety of this situation is, like, have you had a total loss? If so, what is the casualty loss figure?
When is that insurance hitting? Are you getting the cash this year? Do you have to reduce your casualty loss based on the amount you're getting from insurance? Because you can't get both the loss as well as money in your hand. But if you get it in the next year, is it better to just go back and amend your return and then reduce it? So those are things that we would think about, depending on someone's specific situation.
And one of my hopes in having this conversation with both of you is for our clients to really think through all of the questions that they should be asking their advisors and also to be really reaching out to the right advisors who have experience in this space because I could see if you're working with counsel, if you're working with an expert to look at a policy that doesn't have expertise in that policy, you could get some really bad advice.
Correct. Correct.
So let's move into some of the tax considerations. So will you talk a little bit about casualty loss and gain versus capital loss? And what are some of the themes that you're seeing and questions that you're getting around tax considerations?
So just one thing, there is nothing like a casualty gain. So capital gain or loss is just something that's a transaction usually, which is in your control. Not always, but usually.
It's you have stock, and you decide to sell the stock. You'll have capital gains or losses if you sell it at a loss. But casualty is just a loss. There's nothing like a casualty gain. It's like you had something, and now it's wiped out.
So one thing is more market transaction, usually in your own hands. The other one is natural disaster and has to be federally declared usually.
And I think one of the complications that some clients are running into is part of their house is destroyed. Maybe it was a five bedroom house, and now it's a three bedroom house because two of the bedrooms are gone. And trying to evaluate what percentage of the property is unusable, if there are chemical remediation efforts that have to be undertaken and what does that look like?
One of our clients is very concerned about security. So they have placed private security around the property because they don't want looters coming in while nobody is around because, obviously, with the fires, a lot of people that would normally be there are not. They're now spending $40,000 a month on security for their property.
How do you think through some of those costs? And it is going to be an individual by individual situation. But, BJ, you hit the nail on the head. You really want to have thoughtful expert advice that is focused on your particular policy, what riders you had in your policy or did not have in your policy, and then what your circumstances are regarding your particular property and how those parlay into what relief may be available to you.
We've had the federal disaster declaration. We've had the state disaster declaration. We have the extended tax deadlines from both the IRS and the franchise tax board. So those are all relief opportunities, but those are not very comforting for somebody who lost their home or lost most of their home and all of their collectibles and all of their personal items.
And now they're being told, well, what inventory do you have of your personal belongings? The old joke was take a video camera around and basically take a video of everything. But that's not necessarily going to capture the value of some of those items.
And if you had a client who recently got some artwork or recently has expanded their collection of whatever they like to collect and they don't have solid documentation that they can provide to an insurer about that value and about the value that's lost, it's going to be very difficult for them to get any replacement value. And particularly with unique collectibles, if they didn't have it appraised and they didn't have a rider specific to that unique collectible, it may be impossible for them to really get the relief for some of those items.
So, Chris, I think this is something that you and I would probably work with somebody to gauge the best alternative to think about this strategically because normally people would think about, I suffered a loss. I should try to get insurance proceeds.
But what if the better alternative for some people might be just to claim a loss on their income tax returns? So it really depends, again, on how much offset income they might have. It may actually work out, once you run the numbers, a little bit better to claim a loss, provided, again, you can't just like claim even on your tax returns. You still have to provide some on back up. But you may have an easier time of it than with an insurance provider.
And that--
So--
Back up-- sorry, BJ. Go ahead.
Yeah, no, no. Finish your thought. I was going to say.
Nomita hit-- Naomita-- excuse me-- hits on a very important point, and this is something we run into with tax controversy matters all the time. The documentation is critical. And that's a very hard conversation to have with somebody who just lost their home. But it is still critical.
You can't just say, hey, I lost $1 million of personal belongings. You actually have to be able to document what those personal belongings consisted of and then provide how you reach that million dollar number in order to have the revenue authority respect the number.
And the revenue authority may be trying to be somewhat accommodating, but they're still auditors. They're still very driven by ticking and tying out the amounts. And they really do want to see representative documentation.
You can get prior year tax returns from the agencies. That's helpful for some folks but not necessarily a thorough capture of all of their information. So it is going to come back to those personal pictures, the communications with friends about, hey, I just got a new couch or we just got a new collectible item, and what documentation you have to support that and then what documentation you have to support the value.
And when all those records were lost recently with the fire, now you're really going to be looking to all of those advisors that you've been working with and saying, hey, I think I sent you an email about this, or I think I copied you on this. Or I think I sent you a copy of this physical document to store. And that's really going to become ever more critical as you're trying to piece together the potential loss claim and how that may be structured.
[INTERPOSING VOICES]
Oh, sorry. One other thing. Sorry, BJ. We keep [INAUDIBLE] but just even if somebody is not successful in a claim, like with the insurance, if you have coverage, like you actually have had some kind of coverage for jewelry, for example, you can attach that as proof on your income tax returns to say, this was covered. This is the value.
So at least you have some support for market value of that property. Now, of course, if you didn't update it for 10 years or whatever, it may not be the current value. But if you've been a little bit on top of getting your insurance upped, that is a very good backup proof to show loss on your income tax return.
That's an excellent point. I want to also raise an issue that you've both talked to me about and that I've heard from our advisors in California that people are really thinking about whether they should rebuild their homes, whether they should sell their homes, or whether they should walk away from their homes completely. And so I want to know if there are tax considerations that you're advising clients to think about or planning considerations.
How are you helping people navigate that decision? Because generally when they call you, they're not saying, I'm ready to sell. They're trying to decide, should I sell or not? And that's what we're getting. It's not, I've made my decision. Now I want to implement it. It is, what are the things I need to take into consideration to help me make an educated decision about rebuilding, selling, or just walking away completely?
Yeah. I'll start with the easiest one, which is selling. Frankly, that is the one that it is truly an easy analysis because you have already your documentation for your bases. You purchased the property. If you've done major capital improvements, on a year by year basis, hopefully you've been actually giving some support about that to your CPAs, whoever's keeping track.
Especially if you've been using a property as an investment property, you will be having all of that because they're taking depreciation. So the sell part is actually easy in that sense because if you're getting a great offer, you will have capital gains. But other than that right, you can just decide if you want to cash in.
And if people were to ask me, other than, I have the capital gains, I'm just like, look, there are going to be a lot of other things that are going to happen around here, which you may not like the consequences in the future, including if there's going to be a reassessment. We don't know. If you put in more money, would your property get reassessed?
How will this play out? How will these neighborhoods end up in the future? So if you have a great offer, why not take it? At least you know exactly how you will end up if you are able to do that. So that's the easiest one. Take your money and run.
It is the easiest one. And to give a real life example of that, one of our clients whose home was somewhat adjacent to the fires-- it's within about a mile, but they just ended up with some ash on their windowsills. They don't really seem to have any major chemical contamination.
They just got an offer for $10 million over fair market value. And the decision was, hey, we would be silly not to take this. Now, they happen to be in a situation where they have another residence that they can move into. Most folks are not necessarily in that circumstance. But there are opportunities to rent or go to a slightly different geography if you want to look at Orange County or something.
That's if you're able to take the emotions out of it because it is still an emotional decision when it's your primary home. If you've raised your family there or your parents raised you there, there may be a lot of emotional connection to it that weighs in and has nothing to do with tax.
But to Naomita's point, if you're just going to sell, that's probably one of the cleaner avenues to go. I think the more difficult question that you asked and the one that has a lot of tie or I guess strings connected to it is, what if you just say, I give up, I'm going to walk away? What does that look like?
And that creates a series of events that you have to live through, which is when we go back to the Great Recession and all the houses being foreclosed upon, a lot of protections were put in place for homeowners after that. There were forbearance opportunities. There were extensive eviction changes and the rules to push somebody out of their home, there was a lot of process there to delay that so that somebody has an opportunity try and recover.
And there does not seem at the moment to be any acceleration of that process. So you still have all of those protocols in place that somebody has to go through if they do want to walk away.
And what does that look like in California? Is that a year? Is that six months?
Yeah, Naomita, do you want to pick up?
I've heard like a year plus. I don't generally deal with-- but just to clarify, when Chris is saying walk away, we are talking right now, you can walk away. But if you have a mortgage on the property, what do you do then? Can you walk away from a mortgage? And that is, I think the core of what he's saying, what these look like.
But just to set level set, most mortgages are what we call as nonrecourse, which means that the bank who, like you guys, BJ, have the ability, if all the process is done and foreclosure, et cetera, to take the property rather than go after somebody personally. So if someone has most of their other assets in a bank account, that is still fine, and they can just say, well, thank you. You can have this burnt down piece of property.
But the decision is not quite that simple because, number one, if you walk away from a mortgage like that, you will actually have cancellation of debt income. So on your income tax return, it is actually counted as income . when you say that, I'm walking away from debt. That is just going to get canceled.
Now, here it's not technically cancellation because the bank will end up owning the underlying asset. So from perspective of the homeowner, I guess, you would think about the cancellation of debt versus if you can claim a casualty loss. So think about a house that's completely burned down. We saw many horrific pictures like that.
In that case, the homeowner has both the casualty loss. But if they say we are not rebuilding, we're not doing anything, we're just going to walk away, and, JP Morgan, thank you, but you can keep this burnt down property, they may have a cancellation of debt income.
But beyond just the immediate tax things, there are other very important nontax considerations, such as, do you ever want credit again? Because if you have been in foreclosure, the chances of your getting a decent credit from anyone goes down. And things like liability, liability doesn't necessarily go away while this foreclosure process is going on.
So if you just leave the property as is, you do no remediation, nothing, while everyone else is doing some cleanup of their property or whatever it is and somebody falls sick because you didn't remove the chemicals from your property or there's burnt out metal and someone gets hurt, you can still be liable for that. And that's not necessarily covered.
So you talked about selling being easy and walking away being really complex. What about rebuilding? What are some of the tax considerations around deciding to rebuild or not?
I think in a way it's probably similar to the walking away. You rebuild if you want to keep the property. I think that is a very fundamental decision to rebuild. You will rebuild only if you want to keep that property going for yourself as an investment, personal use, whatever it is.
So going back to our very opening thing, these situations and the decisions and how do you think about different consequences are so personal in this case that you have to know someone's-- do they want to live there? Well, if they want to live there, then rebuilding will make more sense.
But other than that, if you do rebuild, you may have to think about something like a property tax reassessment because if you have a brand new property or more like a brand new property and you had old property taxes, will that necessarily carry through? That is another question.
And have there been any guidance or thinking in California around whether or not these property taxes are going to be reassessed? Do you guys have any indication of what might happen?
I haven't seen anything on that yet. I think it's still fresh enough that they're trying to figure out what to do. And property taxes are usually based on the neighborhood and the area around it. So part of it's going to be a question of, what is rebuilt and whether or not there are zoning changes to the area?
I was down in LA with some of your folks a couple of weeks ago, and there was mentioned that there is an interest by Los Angeles and some of the surrounding areas to rezone part of the Palisades because it is now vacant land and some of the first vacant land that's been available in that area for a very long time. And maybe it makes sense to revisit the zoning and whether or not maybe high-density housing, like a condo tower or another type of housing, would be a better use of the available land than what is there currently.
To circle back, though, on the tax implications of rebuilding, you do have some basis implications for what your value in the home is. That is also going to have to be assessed individually and something you're going to have to work through with your advisor there too. And what I want to stress is the documentation is going to be critical because, at some point in the future, you're either going to want to sell the property, or you're going to want to transfer it to the next generation.
And your basis and understanding what your basis is, as adjusted with the insurance proceeds and whatever loss was taken on it, is going to be critical to making sure that you understand what you're either-- whether you want to put it into a trust, you want to sell it, or you want to transfer it to a future generation.
So I just want to close with talking about some of the best practices and planning best practices that all of our clients should be thinking about. I've heard you talk about documentation, both of you, multiple times. I've heard you both talk about really understanding, what are your goals for the next step?
Is this a place where you want to live? Do you have any flexibility to live somewhere else? Do you want to or not? Asking some of those fundamental questions before you go into action what's next. Are there any other planning considerations that you would suggest based on what you're seeing come in from clients right now?
So a lot of people do wealth transfer planning, trust planning, where I'm talking not just your living trust or your revocable planning but irrevocable, like gift planning, et cetera. With real property in California, it's generally been a very good wealth transfer mechanism.
So a lot of these properties may be owned partly or in whole by trusts. So the number one thing is, if you haven't done this already, you have to make sure that your trust is a coinsured or an insured, whichever way the property is held, so that because technically it's the legal owner which who claims insurance. So if you haven't done that, check that. Get that done.
Yeah. I think one of the recurring themes in our conversation is take a breath and really take a step back. Get good advice from folks who are not emotionally invested in the intensity of the situation. It is an emotionally intense situation for anybody to suffer a loss of your home.
And think through, what do you want to do next? To your point, BJ, and it's spot on because it is the conversation we're having with a lot of clients now, which is, hey, I was already starting to think about moving. And with this event, I do want to move. Now it's a question of, do I want to move out of California? Or do I just want to move to a different part of California?
And part of that is looking at your employment situation, looking at what you want to do in the future, what your kids want to do, where their friends and families are relocating to if they are relocating. The other thing I think strategically to think about is, longer term, this is really going to change the LA landscape. And thinking through what that looks like and how that evolves may impact some of those decisions.
And while we are in the early stages of recovery, I think there'll be a lot more clarity about how some of those decisions are going to be determined probably in the next six months to a year. And it will be a very different landscape and a very different conversation than if we're trying to rush through the questions now about what to do and how to respond.
So I just want to thank you both so much for taking the time to be with us today. You are clearly experts in your field and so thoughtful, and I just appreciate you sharing some of that expertise and what you're seeing with us.
And if you're listening to this conversation, it's because you have either been impacted directly by the wildfires or you know somebody who's been impacted directly. So I want you to know that our thoughts go out to you and that we're here to help in any way that we can. Thank you so much.
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LEGAL ENTITY, BRAND & REGULATORY INFORMATION. In Germany, this material is issued by J.P. Morgan SE, with its registered office at Taunustor 1 (TaunusTurm), 60310 Frankfurt am Main, Germany, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB). In Luxembourg this material is issued by J.P. Morgan SE - Luxembourg Branch with registered office at European Bank and Business Centre, 6 route de Treves, L-2633, Senningerberg, Luxembourg, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE - Luxembourg Branch is also supervised by the Commission de Surveillance du Secteur Financier (CSSF); registered under R.C.S Luxembourg B255938. In the United Kingdom this material is issued by J.P. Morgan SE - London Branch, registered office at 25 Bank Street, Canary Wharf, London E14 5JP, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE - London Branch is also supervised by the Financial Conduct Authority and Prudential Regulation Authority. In Spain, this material is distributed by J.P. Morgan SE, Sucursal en Espana, with registered office at Paseo de la Castellana, 31, 28046 Madrid, Spain, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB): J.P. Morgan SE, Sucursal en Espana is also supervised by the Spanish Securities Market Commission (CNMV); registered with Bank of Spain as a branch of J.P. Morgan SE under code 1567. In Italy, this material is distributed by J.P. Morgan SE - Milan Branch, with its registered office at Via Cordusio, n.3. Milan 20123, Italy, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB): J.P. Morgan SE - Milan Branch is also supervised by Bank of Italy and the Commissione Nazionale per le Società e la Borsa (CONSOB): registered with Bank of Italy as a branch of J.P. Morgan SE under code 8076; Milan Chamber of Commerce Registered Number: REA MI 2536325.
LEGAL ENTITY, BRAND & REGULATORY INFORMATION. In the Netherlands, this material is distributed by J.P. Morgan SE - Amsterdam Branch, with registered office at World Trade Centre. Tower B, Strawinskylaan 1135. 1077 XX, Amsterdam, The Netherlands, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE - Amsterdam Branch is also supervised by De Nederlandsche Bank (DNB) and the Autoriteit Financièle Markten (AFM) in the Netherlands. Registered with the Kamer van Koophandel as a branch of J.P. Morgan SE under registration number 72610220. In Denmark this material is distributed by J.P. Morgan SE - Copenhagen Branch, filial af J.P. Morgan SE, Tyskland, with registered office at Kalvebod Brygge 39-41, 1560 Kobenhavn V. Denmark, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE - Copenhagen Branch, filial af J.P. Morgan SE, Tyskland is also supervised by Finanstilsynet (Danish FSA) and is registered with Finanstilsynet as a branch of J.P. Morgan SE under code 29010. In Sweden, this material is distributed by J.P. Morgan SE - Stockholm Bankfilial with registered office at Hamngatan 15, Stockholm, 11147, Sweden, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE - Stockholm Bankfilial is also supervised by Finansinspektionen (Swedish FSA): registered with Finansinspektionen as a branch of J.P. Morgan SE.
In Belgium, this material is distributed by J.P. Morgan SE - Brussels Branch with registered office at 35 Boulevard du Régent, 1000, Brussels, Belgium, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB): J.P. Morgan SE Brussels Branch is also supervised by the National Bank of Belgium (NBB) and the Financial Services and Markets Authority (FSMA) in Belgium; registered with the NBB under registration number 0715.622.844. In Greece, this material is distributed by J.P. Morgan SE - Athens Branch, with its registered office at 3 Haritos Street, Athens, 10675, Greece, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB): J.P. Morgan SE - Athens Branch is also supervised by Bank of Greece; registered with Bank of Greece as a branch of J.P. Morgan SE under code 124; Athens Chamber of Commerce Registered Number 158683760001; VAT Number 99676577. In France, this material is distributed by JPMorgan Chase Bank, N.A. Paris Branch, registered office at 14,Place Vendome, Paris 75001, France, registered at the Registry of the Commercial Court of Paris under number 712 041 334 and
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With respect to countries in Latin America, the distribution of this material may be restricted in certain jurisdictions. We may offer and/or sell to you securities or other financial instruments which may not be registered under, and are not the subject of a public offering under, the securities or other financial regulatory laws of your home country. Such securities or instruments are offered and/or sold to you on a private basis only. Any communication by us to you regarding such securities or instruments including without limitation the delivery of a prospectus, term sheet or other offering document is not intended by us as an offer to sell or a solicitation of an offer to buy any securities or instruments in any jurisdiction in which such an offer or a solicitation is unlawful. Furthermore, such securities or instruments may be subject to certain regulatory and/or contractual restrictions on subsequent transfer by you, and you are solely responsible for ascertaining and complying with such restrictions. To the extent this content makes reference to a fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund's securities in compliance with the laws of the corresponding jurisdiction.
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General Risks & Considerations
Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g., equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.
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