GAAP valuation is the book value on a GAAP financial statement or other applicable financial statement (generally, statements prepared for the SEC or other government agency). This is the value of assets net of depreciation. This value may be used for leased assets only if a value is required to be reported on the financial statement. The alternate valuation is unadjusted cost basis for tax purposes. This value is before depreciation. For leased property, the alternate valuation method is the present value of the lease payments using the applicable federal rate (a rate announced monthly by the IRS) as the discount rate. A QOF or QOZB must choose which method to use each year, and is not required to use the same method each year. If a QOF or QOZB does not have GAAP or other applicable financial statements, it must use the alternate valuation method.
