In Part 1 of Do Potential Tax Changes Have You Thinking About Selling? we looked at proposed changes to the Capital Gains Tax, Payroll Tax, Individual Income Tax and some potential mitigation strategies. Let’s take a further look at some of the other specific proposed changes, their potential ramifications, and some financial planning strategies you may be able to use to help lessen your burden.
Transfers of Appreciated Property or “Deemed Sales”
Proposed Changes
Taxpayers transferring appreciated property after 1/1/22 during certain events would realize capital gains based on the difference between the fair market value and tax basis of the property at the time of transfer.
Note: A White House official told FOX Business recently that the American Families Plan will include protections for family-owned businesses and farms so they do not get hit by the president’s desire to eliminate stepped-up basis when they transfer to family members.
Possible Strategies
Gifting and Estate Tax Changes
Proposed Changes
Possible Strategies
Other Possible Proposed Changes
The Bottom Line
There’s a window of opportunity here in 2021 to do some significant planning to try to head off a number of these potential tax changes. Here are some things to consider:
As a business owner, it’s important to understand how taxes can affect you and your business now and in the future. The proposed tax law changes will directly impact all business owners in multiple ways. Particularly, if you’re thinking about selling your business, it’s critical that you understand the tax implications of the sale whether you plan to sell to an outside buyer or employees or “gift” your business to family members.
If you have any questions about your specific situation or would like to discuss advanced tax strategies, we invite you to schedule a complimentary call with us. We’re here to help.
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