As a leading regional CPA, business advisory and business turnaround firm, VonLehman understands the impact uncertainty in Washington can have on our clients and community.   As such, we do our best to keep you apprised of critical insights on current legislative issues.  Please contact us at any time via info@vlcpa.com with questions or concerns about the impact current issues could have on your business or your personal financial situation.   

As you have undoubtedly read or heard through your preferred news outlets, without corrective action by our legislators, many negative tax changes will automatically happen. Among its effects are – an increase in marginal income taxes for most taxpayers, an increase in long-term capital gains rates, and an expiration of the special tax benefits of certain corporate dividends. Be sure to contact your VonLehman Team or email info@vlcpa.com at any time, with any questions or concerns you may have.

The key question is – are you prepared to act on this?

Here are several ways to minimize the cliff's effect on your financial affairs, compiled by VonLehman's Colleague CPAmerica firm Davenport, Marvin, Joyce & Co., LLP or "DMJ":

1. If you have unrealized long-term capital gain assets in your portfolio, are you prepared to sell them to lock in the current 15% federal rate?
2. Consult with your financial advisor as to whether your business is still in the best tax entity for your specific situation.
3. If you have sold property this year under the installment method, have you considered electing to tax all of the proceeds this year? You have until your return is filed next year to make such a decision, but start thinking about it, and planning for it, now.
4. If you have been thinking about major wealth transfers to your descendants, 2012 is an excellent year to do so while there is a $5.12 million cumulative exemption from federal transfer taxes.
5. Have you been considering a Roth conversion of your IRA? If so, 2012 may be the last, best year to do so, given lower tax rates this year, and the 2013 imposition of a new Medicare surtax on investment income.
6. If your business is a "C" corporation, or an "S" corporation that was previously a "C" corporation, ask your tax adviser if you have earnings and profits inside your corporation. Do you want to pay that out in 2012 while you can do so at a 15% federal rate? If might cost as much as 45% federal in 2013, after the higher marginal rates, Medicare surtax on investment income, and phased-out itemized deductions and exemptions.

Finally, be on the lookout for news developments on remedies for the fiscal cliff, and watch for updates from your team at VonLehman. There is no way to know if these changes will be prevented through legislation, or when such changes will be effective. So stay alert, and along with the advice of your tax adviser, be prepared to act, perhaps with very little notice.

Again, contact your VonLehman Team or email info@vlcpa.com at any time, with any questions or concerns you may have.

Disclaimer: The technical information presented is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. No Rendering of Advice: The information contained herein is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, professional or financial advice from a professional accountant and/or other relevant provider. All written, video and online content is © Copyright VonLehman & Company Inc. All rights reserved.