By Beau Ryan
Senior Vice President & Chief Operating Officer
As we’re getting ready to mail our investment partners their K-1’s and audited financials, and since the April 15 tax deadline is around the corner, I would like to share with you key information about the American Taxpayer Relief Act (ATRA) of 2012 and its impacts on this year’s tax season.
The passage of ATRA permanently extends many of the Bush-era tax cuts for lower and moderate income individuals. It also imposes a maximum 39.6 percent tax rate on income and a maximum 20 percent tax rate on capital gains and dividends on individuals with a taxable income over $400,000 and families with income over $450,000. More importantly, the passage of ATRA provided much needed certainty for estate tax planners and for taxpayers who want to arrange their financial affairs.
Here’s information that you might find beneficial to know.
– For the first time in 10 years, beginning January 1, 2013, the maximum estate tax rate, the inflation-adjusted exclusion, and other estate tax features have been made permanent;
– The new top tax rate is 40 percent, the maximum exclusion for both estate and gift taxes is a unified amount of $5 million (indexed at $5.12 million for 2012 and $5.25 million for 2013);
– The tax basis for property acquired from a decedent is stepped up, and the portability of a deceased spouse’s unused exclusion (DSUE) amount is preserved; and
– The generation-skipping transfer (GST) tax exemption which is tied to the estate tax rate is also set at $5 million, adjusted for inflation.
Here at Rockspring, we stay well-informed of key regulations that impact our company and investor base. We’ll make sure to highlight any key regulations that pass in the upcoming months in our next newsletter.