Mark Lobb is an attorney with Lobb and Cliff, a law firm specializing in tax and estate planning who is also a part of the Inland Empire Business Doctors, a group which we are a member of. The Lobb Report has been so informative, we got permission to reprint it here. Enjoy. – Ed.
The Lobb Report
Lobb & Cliff, LLP
Volume 5, January 3, 2011
Happy 2011! As you know, a lot happened in Washington D.C. during the last three weeks of last year. Below is a brief analysis of laws and extended laws which concern you and your business.
President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (referred to in this e-mail as the “Band-Aid”) into law on December 17. The Band-Aid includes the all important extension of the 2001/2003 Bush administration tax cuts for two years. Our government gave Band-Aids to everyone in every tax bracket. We also have a new two year Band-Aid as it concerns estate tax provisions. The Band-Aid includes not only an extension of some current laws, but also contains some new laws, so don’t look at the Band-Aid as business as usual.
If my math is correct, there will be an election in November of 2012. The timing may cause more Band-Aid legislation and last minute deals. However, I predict the Band-Aid legislation will lapse and we will revert back to the 2001 rates going into 2013. I say this because I do not see Congress and the President coming to terms in order to ink a new deal in the next election year. If the Democrats believe they will be able to take back the House and hold onto the Senate and the Executive office as 2012 comes to a close, they will have no incentive to negotiate with the Republican controlled House. If the Republicans believe they will take the Senate and Executive office, they will have no incentive to deal with the Democrats in 2012. It may be that early in 2013, a new tax bill is negotiated and signed into law with an effective date retroactive to January 1, 2013. This gives us a lot to think about in regards to selling capital assets, estate planning, succession planning, etc. as we move through the next two years.
For the next two years, we will have the following rate provisions:
Individual Tax Rates: The individual income tax rate brackets will be at 10%, 25%, 28%, 33% and 35%. The threatened highest rate approaching 40% has been avoided.
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