Tag: Annual

Important Year-End Tax Implications For Ranchers

Sanjiv Gupta CPA - 8 years ago
The thing about taxes is that you always have to pay them at one point in your life. In fact, at some point, it is said that the only thing human beings are sure about is death and taxes. Ranchers make up a fairly large percentage of the human population in the USA. So what are the implications of end of year tax implications to the ranchers in the USA?The answer to this particular question is somewhat complicated in itself owing to the multifaceted way in which it can be tackled. This is because the implications can be economical, social and fiscal in nature. The magnitude of these implications is also something that needs to be looked at, especially considering that a larger part of the population is just picking itself up from the throes of financial recession. However, in this article, we are going to look at the major financial implications of the end of year tax changes to the average rancher.The baseline of this article is simple; if congress does not act this year to shield the local folk by enacting safety nets with regard to ranching, then the result is that the New Year will not be too good to the ranchers. This is because such a move will have the net effect of raising the rates on virtually all the taxes that taxpayers pay, and in this case, ranchers. Such taxes include, but are not limited to income taxes, capital gains, dividends, wages, gifts, and estates. Looking at the wholesome situation, most of the tax provisions that expire at the end of the year actually have a direct bearing on the tax amount that is paid by the ranchers and farmers in much of the USA. Most of the farmers and ranchers in the USA are owners of a large estate through which they carry out their businesses. Estate taxes are some of those taxes that are bound to increase if changes are not made. As such, a person paying a 35% tax on his estate may be slapped with a top rate tax of up to 55%. Such increases are bound to increase the cost of business and of the products sourced from these ranches. This is one of the reasons that experts advise businessmen to take care of their estates before the year-end. If not, then the net result may be something that is not entirely good.It is for this particular reason that the end of year tax implications should be put into account not only by the accountants as they crunch the numbers but also by the government and the legislators as they continue to debate the taxation issue. Initially, there were exemptions to the extent of 10 million dollars; however, with the expiry of the tax breaks, the situation is bound to get a little tighter. This is because only exemptions of up to 1 million will be entertained by the taxman. 

2012 Year End Tax Implications

Sanjiv Gupta CPA - 8 years ago
The fat lady is almost singing to signal the end of the current gift and estate tax exemptions and rates. To start with, the so-called “fiscal cliff”, which is the estate tax exemption, is on course to fall precipitously in 2013 while at the same time the maximum estate tax rate is expected to rise. The net result of all these changes in tax thresholds is that many high net worth clients are being requested to consider giving away part of their wealth in order to take advantage of the current exemption just before this period lapses. The thing is with most of the exemption strategies in gift-giving often the least effective means is to give the gifts as cash. On the other hand, one can also use some of the other strategies such as the use of Family Limited Partnership (FLP) to acquire a valuation discount for the assets being gifted may be used. Some of the other ways to give away gifts include using the Intentionally Defective Grantor Trust (IDGT) and then use the trust as seed money to purchase different assets from the estate.However, this is not usually the situation in most cases as there are different things that come into play when gifting away part of your estate. For instance, there are many important caveats that include the risk of an estate tax clawback as well as the affordability of the gift itself. You must also take care of the state estate tax laws that may be due on the estate. As such, it is very important for the high-end members of the population to determine whether they would rather give away part of their wealth or simply sit back and endure the tax burden that will be coming at the turn of the year.Taking Advantage of the Current Gift Exemption: To start with, for a person to take advantage of the gifting it is important to know a few things. In essence, the basic principle that is behind gifting is to start by making a gift while the exemption is currently at $5.12 million. At the end of the year, the exemption will drop from $5.12 million to only $1 million. While, the exemptions that are set to expire at the end of the year, it is quite possible that the tax burden that an individual will have at the start of the next year will be very huge. Gifting is a way through which individual spread their wealth, not only to the people around them but also help themselves take care of the financial aspect of their estates. Gifting can also be done to a member of the family as well as to charities and other less fortunate members of the community.While on the case of gifting away wealth, it is usually advisable to gift away pieces of property instead of cash. This is because it is a better way of spreading the wealth to future generations who may not be old enough to handle huge sums of money.
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