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September 15, 2012
There are several key advantages that may make it more attractive for owners to consider a sale of their business by the end of 2012 rather than holding the business until 2013 or beyond.
Below are a few key highlights:
Tax Rates
For certain business owners, selling in 2012 versus 2013 could mean saving as much as an extra million dollars in taxes for every $10 million in taxable gain.
Gift Exemption Amounts
Owners should take advantage of this and implement a plan with their wealth advisors as soon as possible to further reduce their tax burden upon the sale of their business.
Key Questions to Ask:
With respect to selling your business, three critical questions must be considered:
What could happen?
In February 2012, President Obama called for an end of the tax cuts for high-income households, and upped the ante by calling for capital gains and dividends to be taxed at the same rates as ordinary income. As a result, some taxpayers could pay as much as 43.4% in federal taxes on gains and dividends next year, nearly three times today's rate.
Growing political pressure to focus on the "1%" and increasing pressures on federal and state budgets make it is less likely that Congress will be able to once again extend the current favorable tax treatment of capital gains. Unlike the 2010 extension that followed a change of control in the House, current political realities make it likely that this historically low tax environment for business owners will end this year.
In summary, unless Congress acts with purpose and is able to pass sweeping tax reforms, immediately following the upcoming presidential election, owners can expect to pocket a lot less from their lifetime of work if they wait too long to act. The time for business owners to take advantage of the current historically low tax environment is quickly running out.
Contact us to see how we can help you maximize the proceeds from your business.
About Carter Morse & Mathias
Founded in 1987, Carter Morse & Mathias (www.cartermorse.com) is an independent investment bank that provides the highest quality financial advisory services for outstanding closely-held middle-market companies. We provide a full range of investment banking services to assist our clients with business sales and divestitures, equity and debt capital raises, strategic acquisitions and financial advisory. Carter Morse & Mathias is also a charter member of the Alliance of International Corporate Advisors (www.aoica.org), an international network of M&A professionals in over 22 countries across the Americas, Europe, Asia and the Middle East. Our senior professionals have helped hundreds of business owners conceive, plan, execute and close transactions that maximize shareholder value.
For more than three decades, Carter Morse & Goodrich has excelled at maximizing shareholder value for our clients and leading transactions through to successful completion.
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