Capital Gains Tax Changes
Tuesday, November 3, 2009 at 5:42AM The March Group, a private mergers and acquisitions firm specializing in the sale of middle-market companies, is advising business owners to sell their companies to do so before 2011, when capital gains taxes will take a steep rise.
Effective from January 1st, 2011, capital gains taxes on the sale of assets held longer than a year - and this includes a business - will increase from the current 15 percent rate to 20 percent for most taxpayers, according to the nonpartisan Tax Foundation.
Tax rules are changing
Rates will go up because a key piece of legislation - the Tax Increase Prevention and Reconciliation Act of 2006 (TIPRA) - will expire at the end of 2010. TIPRA extended tax breaks that were granted in the Jobs and Growth Tax Relief and Reconciliation Act of 2003 (JGTRRA), which lowered capital gains taxes to 15 percent for higher income taxpayers through 2008.
Business owners who sell their companies after December 31st, 2010, will pay 33 percent more in capital gains taxes (20 percent versus 15 percent) than those who sell before January 1st, 2011.
The March Group`s Sr. Vice President Mark Schwass advises, "Because it can take months, even a year or longer, to find a buyer and complete an acquisition, we're encouraging business owners to begin the selling process now, if the internal conditions of the business merit," He added, "The sooner your company is put on the market, the sooner the value of your business can be assessed, the sooner the right buyer can be found for your business, and the sooner you can begin negotiating for a mutually acceptable price."
View the March Group's businesses for sale on BusinessesForSale.com
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Reader Comments (1)
Business owners who sell their companies after December 31st, 2010, will pay 33 percent more in capital gains taxes (20 percent versus 15 percent) than those who sell before January 1st, 2011. its a minor change in capital gain.