ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

WILL YOU BE RETIRING OR SELLING YOUR AGENCY IN 2012 OR 2013

IF SO, BE AWARE OF TAX LAW CHANGES THAT “COULD” DEVALUE YOUR AGENCY!!

Most of us are aware that there will be some fall-out from National Health Care to our taxes. But some of the “nastier” side effects could occur December 31, 2012 unless Congress changes some of the proposed tax law revisions.

One of the side effects is an increase in Capital Gains tax. If all goes according to plan, January 1, 2013, your Capital Gains tax rate is to increase from 15% to 20% IF the Bush Tax Cuts are allowed to expire (they’ve been extended to 12/31/12). However, what most people don’t realize is that there is another 3.8% tax proposed on all unearned income (including capital gains) above $250,000, presumably to pay for National Health Care. That would mean that a $1,000,000 capital gain that would cost you $150,000 in taxes up to December 31, 2012 could cost you $228,500 if the sale occurs January 1, 2013, an over 50% increase in taxes.

So, if a move toward retirement or sale of your asset is to occur in the near future, either we must hope that Congress regains its senses and alters these revisions OR consider closing the deal on or before 12/31/2012.

Obviously there are many more considerations around the timing of a sale, but this is one that you need to be aware about. Call us. We can help you with all phases of a sale of asset 800-779-2430.