CED

February 2013

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Taxes thresholds now set for the 20 percent capital gain rate. The NII surtax thresholds are not affected by the American Taxpayer Relief Act. AED Says: There are thoughts that these "permanent" rates and thresholds may be amended prior to the end of 2013. Therefore, those dealers who have not taken advantage of these favorable transfer opportunities will want to consider doing so as soon as possible. AED Says: Many dealers are contacting their customers in an effort to generate additional sales because of this enhanced tax benefit. 6. ATRA extends 50 percent bonus depreciation through 2013. This is a big benefit for the dealer and for the dealership customer. 7. ATRA extends through 2013 the 15-year recovery period for qualified leasehold improvements and qualified retail improvements. 4. ATRA permanently provides for a maximum federal estate tax rate of 40 percent with an annually inflationadjusted $5 million exclusion for estates of decedents dying after Dec. 31, 2012. The law provides a 40 percent tax rate and a unified estate and gift tax exemption of $5 million (inflation adjusted) for gifts made after 2012. AED Says: Both dealers and customers need to review their 2012 activity to determine if Sec. 179 would be beneficial for 2012, which could indirectly provide benefit to 2013. 8. The law reduces the recognition period for S corporation built-in gains tax to five years rather than 10, if the fifth year after the election ends before 2012 for 2012 year or before 2013 for 2013 year. This is favorable for S-elections made in 2008 or earlier. 9. IRA Distributions to Charity extends for two years, through Dec. 31, 2013; the provision allows tax-free distributions from individual retirement accounts to public charities, by individuals age 701/2 or older, up to a maximum of $100,000 per taxpayer per year. One rule allows taxpayers to recharacterize distributions made in January 2013 as made on Dec. 31, 2012. Another rule permits taxpayers to treat a distribution from the IRA to the taxpayer made in December 2012 as a charitable distribution if transferred to charity before Feb. 1, 2013. 10. Starting in 2013, phase out of personal exemptions 5. Small Business Expensing extends through 2013 the enhanced Code Section 179 small business expensing. The dollar limit for tax years 2012 and 2013 is $500,000 with a $2 million investment limit. The rule allowing off-the shelf computer software is also extended. and reduction in itemized deductions starts when adjusted gross income reaches $300,000 for married couples and $250,000 for unmarried taxpayers.n Rex Collins, CPA, CVA, heads up the Dealership Team and is a member of the Litigation & Valuation Team at Somerset CPAs in Indianapolis, Ind. Garry Bartecki is staff vice president of Finance at AED – for more information about the content of this article, please contact him at gbartecki@aednet.org, 630-574-0650, ext. 323. February 2013 | Construction Equipment Distribution | www.cedmag.com | 43 42_Fiscal_Feature_KP.indd 43 1/30/13 3:16 PM

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