Chicago, IL (PressExposure) December 09, 2007 -- Proposed changes in the AMT (alternative minimum tax) may eventually result in increased capital gains tax rate, significantly impacting business owners, warned David Kauppi, editor of the Exit Strategy Newsletter. The newsletter is published by MidMarket Capital, an M&A advisory firm for privately owned businesses.
âIf you are a business owner and are thinking of selling your business within the next five years, you may want to move up your exit timeframe to the next 24 months, â said Kauppi.
He noted that the current 15% tax rate on capital gains, previously scheduled to expire in 2008, has been extended through 2010 as a result of the Tax Reconciliation Act signed into law by President Bush in 2006. In 2011 these reduced tax rates will revert to the rates in effect before 2003, which were generally 20%.
The federal estate tax threshold will rise to $3.5 million in 2009 and is theoretically scheduled to be abolished altogether in 2010. However, the need for tax revenues makes it likely the tax will continue in some form.
âCongress is likely to pass a bill eliminating the AMT this year. That is going to result in a $800 billion reduction in federal tax receipts. Lawmakers will be looking to raise the money from other sources and increasing the capital gains tax or the estate tax will be a tempting options. In either case, small business owners would face increased rates,â said Kauppi.
Chicago-based MidMarket Capital provides investment banking and M&A advisory services to healthcare, IT and consumer products companies. In addition to Exit Strategy newsletter, a variety of articles on business ownership transition are available at http://www.midmarkcap.com.