Insights

Now may be the right time to take action if you are a business owner considering the sale or recapitalization of your business.

The scheduled expiration of the tax cuts included in the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), the reinstatement of the itemized deduction phase-out, and the introduction of new taxes under the Health Care Reform Bill may cause a significant increase in tax rates between 2012 and 2013. Unless Congress and the President are able to agree to step in as they did in 2010, wage income rates are scheduled to increase from 35.00% to 41.70%, capital gains rates are scheduled to increase from 15.00% to 25.00%, and dividends rates are expected to increase from 15.00% to 44.60%.

Taking action now to complete a liquidity event in 2012 at the lower tax rates may increase the after-tax proceeds of your planned transaction. Typically M&A and recapitalization transactions require six to nine months from start to finish, so initiating a process soon is imperative to be assured of closing in 2012.

Schneider Downs Corporate Finance, L.P. (SDCF) provides comprehensive investment banking and advisory services, including sale of business and capital raising services, to medium-sized businesses. Visit the SDCF website to learn more about our Company Sales and Capital Raising services.

Schneider Downs Corporate Finance, LP is a registered broker/dealer. Member FINRA/SIPC.

Ron Kramer, Tax Director at Schneider Downs, also contributed to this Insight.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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