Q: Now that the Supreme Court has upheld The Patient Protection and Affordable Care Act, how will this affect my business in the years to come?
A: First off, the PPACA is a law that is workable for business owners to deal with. It requires business and tax planning like most laws do, but the law is manageable. Of most immediate concern is the 3.8% additional tax on incomes above $250,000. While many people do not earn this level of income, those buying and selling their businesses should be cognizant of this additional tax as it typically causes their income to spike.
Q: How can this income spike be avoided?
A: With proper planning, income spikes can be avoided on the sale of a business. What comes to mind first are the usage of like kind exchanges where possible and the use of installment sales can be used to smooth income. There are other tools in the chest and can be used to smooth income over a period of years.
Q: As far as selling a business or appreciated assets, is 2012 a better year to close as opposed to 2013?
A: The year 2012 is certainly a better year to close in as opposed to 2013. With the low tax rate, business owners are better advised to close business sales this year as opposed to next when higher capital gains rates apply.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors