CED

February 2013

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Taxes Top 10 Things Dealers Should Know About the American Taxpayer Relief Act of 2012 Tax legislation highlights from the Fiscal Cliff bill, and AED's 'cliff' notes By Rex Collins with notes from Garry Bartecki Following are the key points from the American Taxpayer Relief Act of 2012 (ATRA) that most impact dealerships. While the so-called Fiscal Cliff legislation generates new tax opportunities for both 2012 and 2013, it is important for dealers to comprehend all the issues relevant to their businesses, including the "dual use" issue related to rent-to-sell transactions. We strongly urge every AED dealer member – doing both rent-to-sell and rent-to-rent transactions – to register for AED's Financial Updates webinar on Feb. 22, 10 a.m. CST. (www.aedu. org/events) The one-hour webinar will cover the passive nature of rental activities, the net investment income tax and the dual-use standards required to comply with IRS expectations. 2. ATRA raises the top rate for capital gains and dividends to 20 percent, up from the Bush-era maximum 15 percent rate. That top rate will apply to the extent that a dealer's income exceeds the thresholds set for the 39.6 percent rate above. AED Says: Net Investment Income includes passive income from rental activity including the gains on the sale of rental equipment. Now in Effect 1. ATRA makes permanent for 2013 and beyond the lower Bush-era income tax rates for all, except for individuals with taxable income above $400,000 ($450,000 for married taxpayers). Income above these levels will be taxed at a 39.6 percent rate. 3. Higher income individuals must also start paying a 3.8 percent additional tax on Net Investment Income (NII) to the extent certain threshold amounts of income are exceeded ($200,000 for single filers, $250,000 for joint returns). Those threshold amounts stand, despite higher 42 | www.cedmag.com | Construction Equipment Distribution | February 2013 42_Fiscal_Feature_KP.indd 42 1/30/13 3:16 PM

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