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    Nov 14 12

    Selling Your Business? The Clock is Ticking for Newport Beach Families

    Newport Beach Law Firm

    Many
    business owners—mostly founders who could gain a lot from a sale—are looking to
    close deals before next year, when the maximum tax on investment income is
    scheduled to rise from 15% currently to at least 23.8% on most capital gains,
    at least for higher-income households. Many sellers intend to convert their
    equity into retirement funds or just start anew.

    Alarm ClockThere’s only so much time left
    in 2012, and yet so much to do. Hopefully Congress will get to work and hammer
    out a deal to avoid the “fiscal cliff” (and trigger another recession).

    Regardless, it certainly looks
    like 2013 still won’t be quite as advantageous as the current tax code. This
    especially is the case if you’re looking to make a major sale that will invoke
    capital gains taxation. Accordingly, you’d better get to work and get that sale
    completed before the ball drops in Times Square!

    For business owners considering
    the sale of their businesses, this advice includes you. In fact, you will be
    interested in a recent article in The
    Wall Street Journal
    titled “Looming Tax Hike Motivates Owners to Sell.”

    As you likely know, the first
    tsunami to hit will be the automatic relapse in the tax code to pre-Bush era
    days, with an effective increase in capital gains taxation from a current 15%
    to a less advantageous 20%. And it gets worse: the Affordable Care Act (Obamacare)
    tacks on an extra 3.8% to capital gains that also goes into effect next year.
    Bottom line: capital gains will increase to 23.8% (that’s an increase of almost
    60%!).

    It’s yet to be seen what the
    lame-duck Congress will do with their time or how they’ll solve this problem.
    But it seems unlikely that Obamacare and that extra 3.8 % surcharge is going
    anywhere. That alone is enough to encourage some business owners to advance
    their sale dates to 2012.

    It might already be too late to
    sell your business. Nevertheless, there may be time yet or other transfers
    besides. Looking for an example? Well it’s worth noting that George Lucas
    didn’t wait until January to sell his company, Lucasfilm, to Disney, potentially shaving $176 million
    off his would-be tax bill.

    Contact your Newport Beach
    estate planning attorneys at Meier Law Firm to discuss all of your estate
    planning needs
    .

    References: The Wall Street
    Journal
    (November 1, 2012) “Looming Tax Hike Motivates Owners to Sell

    The
    Trust Advisor
    (November 4, 2012) “Disney Deal Gives George Lucas a
    Billion-Dollar Tax Break




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