Federal Capital Gain Tax Rates: Where are they headed?

Now is the time to sell your business and pay a lower Capital Gains Tax.

Since 2003, the top tax rate on most capital gains has been 15% for people in the 25% or higher tax bracket. Although a lower level tax rate has also been in place since 2003 for people in the 15% or lower tax bracket, this rate is only applicable until a person has enough income to cause him / her to enter the 25% tax bracket. As a result, for people incurring a capital gain from selling a business, most of them are in at least the 25% tax bracket so the top 15% rate is generally the rate they experience.

 

The current capital gain rates are scheduled to expire effective December 31, 2010 due to a time lapse built into the regulations associated with the 2003 gain reductions. This time phase-in is known as a sunset provision. Thus, starting in 2011, the top 15% rate is scheduled to revert to its former pre-May 6, 2003 level of 20%.

 

President Obama made a pledge to the American people that he and his administration would not raise taxes. Well, he was able to make this pledge with confidence regarding the tax on capital gains because the sunset provision was already going to cause the rate to increase.

 

The big question now is; Will the top rate only rise to 20% or will congress raise it higher?

So, should a person trigger a capital gain in Year 2010, such as selling a business, if at all possible?   Since most business sales include a blend of capital gain and ordinary income, when considering the known capital gain rate increase, the potential for additional capital gain increases, the pending surtax and the fact that the top federal tax rate returns to 39.6% in Year 2011, a clear answer certainly emerges.   If an entrepreneur wants to experience the lowest tax impact possible from selling his / her business, selling before the tax rates increase is the way to go. If congress decides to implement further increases, anyone who waited until 2011 to sell a business will wish they could go back in time to 2010.   Reprint From January 10, 2010 Article by Business Transaction Strategist, Monty W. Walker

 

How much is your Business worth ? It is of utmost importance that you know how much your business is worth which is the basis of determining your growth potential, options for selling and for borrowing money.

Call us today for a CONFIDENTIAL consultation on how your business can be evaluated at minimal cost.

 

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Do you need a Business Loan to grow your business or to acquire a similar business for growth?

Call us today for a CONFIDENTIAL Consultation as to how you may qualify for an SBA or other business loan. Our professionals are available to assist you evaluate your possiblities and take you through the loan process.
 

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Use your 401K to purchase a business ? Call us today to find out how you can safely use your 401K to purchase a business.

It is easier than you think. We have qualified and Certified Professionals that will walk you through the process. Find your financial independence today through owning your own business !

 

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 NEW SBA RULES & WHAT THEY MEAN TO YOU AS A BUYER !

Because the SBA is continually changing in and improving the SBA Rules and Conditions, contact us here at Dailey Resources, Inc., for the latest in Terms, Conditions, Limits and special loan programs such as the 7A and 504 programs. Here is a quick summary of the new major changes and how they effect anyone seeking or entering into a SBA Loan.

SBA News: 12/15/2009

Senate has introduced a bill to increase 7a loans to $5 million and 504 loans to $5.5 million. They also proposed extending the 90% guarantees on 7a loans and fee eliminations on 7a and 504 loans until December 31, 2010. Obviously this would help us provide more loans immediately.

Now more than ever is the time to find that Business you want to buy. We have both the BUSINESSES and the Lenders you need to move ahead with your dreams of owning a business and the independence it brings to you as a business owner.
Source: Community South.

Contact us today for more specific SBA changes and information.

 

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