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Important Year-End Tax Planning Seminar, Dec '12

Terence J. Shepherd, CM&AA, CPA, MST, Partner of ROCG Shepherd & Goldstein Consulting Group and Managing Partner of Shepherd & Goldstein, LLP will present an important year-end tax planning seminar on Wednesday December 12th from 8:00 AM - 9:30 AM. 

The election closed one uncertainty, but the bigger questions remain unanswered regarding the automatic spending cuts and tax increases scheduled to go into effect after December 31, 2012.

It has been written about over and over again leading up to the election, but here is a brief summary of what's in store:

  • If nothing is done legislatively before the end of the year, the maximum regular income tax rate will increase to 39.6% from 35%, capital gain rates will increase to 20% from 15% and dividends could go as high as 23.8% and 43.4% as a result of the 2010 Health Care Law.
  • The Health Care Law applies a 3.8% Medicare surtax on unearned income such as capital gains, dividends and interest starting in 2013 for married couples making more than $250,000 and individuals making more than $200,000.
  • Further, bonus depreciation will not be available after 2012 and the maximum amount of fixed asset expensing will be decreased.
  • The estate and gift tax laws will also be changing.  The $5.12 million that can currently be transferred free of gift or estate tax will decrease to $1 million, along with an increase in the top tax rates to 55% from 35%.

The good news is that there is still time for tax maneuvering before the end of the year to mitigate the pending tax hikes.  Some of the considerations include:

  • C and S Corporations with earnings and profits should consider making dividend distributions.
  • Investors with dividend paying stocks should consider selling them in favor of growth stocks.
  • Consider closing pending sales on businesses, real estate and investment assets.
  • Investors should consider realizing the capital gains held in stocks and look to repurchasing them, depending on the stock's long term outlook.
  • Consider making major family gifts.
  • Consider accelerating income and deferring expenses.
  • Consider accelerating early 2013 purchases of equipment and machinery in the year 2012.

Whatever tax planning you may have already executed, with the election over and the certainty of tax increases now imminent, we encourage you to take a good look at your overall income and estate situation to reduce your tax exposure before the current more favorable tax provisions disappear at the end of the year.

 

 

 

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