For many,
the idea of taking capital gains in 2012 to take advantage of lower tax rates
vs. what is coming in 2013 is a winner. When you combine the proposed
capital gain rate change of 5.0%, with the 3.8% Medicare surtax, this
represents an increase of $8,800 per $100,000 of gain for taxpayers with
taxable incomes exceeding $250,000 (married filing joint) and $200,000
(single).
That is a 58.7% increase in capital gain tax
You could
consider selling a major stock position and paying the tax and then buying the
stock back if you believe it is rising or it pays a great dividend. Also,
it may be a time to recognize diversification if you have been holding off not
wanting to pay taxes. Paying taxes on gains is likely not going to get any
cheaper than in 2012 for many years and you have about 13 days to decide!
At my
company, we have been diligently working with clients with proactive tax
planning all of 2012.
Note: In an
effort to increase the number of blogs I write, please excuse any typos!
