Now that Congress has acted, 2013 capital gains rates for selling a business have increased significantly over the 2012 federal capital gains tax rate of 15%. The American Tax Payer Relief Act (what relief ?) of 2012 has collided with the Health Care and Education Reconciliation Act of 2010 to usher in a whopping 58% increase in long term capital gains taxes.
Both the now safely defined wealthy, those individuals with incomes above $400,000 and the little bit less wealthy, those with “net investment income” greater than $200,000 will pay $238,000 (vs $150,000 in 2012) for every $1,000,000 in realized (less allowable deductions) long term capital gains taxes from the sale of a business. Net investment income as defined in IRC §1411, reads as investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities, and businesses that are passive activities to the taxpayer (within the meaning of IRC section 469).
It is imperative for those considering the sale of a business in 2013 and beyond obtain a clear understanding from a highly experienced team of advisors the capital gains tax rates from selling a business in 2013.
M&A Advisors, iMerge is a Seattle Washington based m&a technology advisory firm, within the Internet, software, SaaS, cloud computing and technology verticals with over four decades of combined transactional expertise. Contact us today for a complimentary consultation.