Tax Break

Essential reading: Looming capital gains tax hike motivates owners to sell, and more

November 1, 2012

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Looming tax hike motivates owners to sell. John McKinnon – The Wall Street Journal. A looming increase in the capital-gains tax rate next year is fueling sales of some privately-held businesses. Many business owners—mostly founders who could gain a lot from a sale—are looking to close deals before next year, when the maximum tax on investment income is scheduled to rise from 15 percent currently to at least 23.8 percent on most capital gains, at least for higher-income households. Many sellers intend to convert their equity into retirement funds or just start anew. Link

* Tax deadline extended for Sandy victims. Siobhan Hughes – The Wall Street Journal. The Internal Revenue Service said it would give people affected by superstorm Sandy one more week to file tax returns and make payments that otherwise would have been due Wednesday. The government said taxpayers and tax preparers affected by Sandy would have until Nov. 7 to submit forms and payments. Link

* Gay couples may want to file to protective tax refund claims. Ann Carrins – The New York Times. The recent decision by a federal appeals court regarding the Defense of Marriage Act suggests gay couples may want to file something known as a protective refund claim with the Internal Revenue Service in the event the Supreme Court overturns the law, according to accounting experts. If the high court invalidates DOMA, legally married same-sex couples will be able to file claims for refunds of federal tax overpayments. Link  

* Chicago’s Cook County drops bullet tax, but keeps gun levy. Mary Wisniewski – Reuters. The top executive of the county that includes Chicago on Wednesday dropped a proposed tax on bullets but kept a plan to tax firearms to help defray healthcare expenses associated with the high rate of gun violence. Cook County Board President Toni Preckwinkle dropped a proposed tax of 5 cents a bullet because the tax in some cases would have been more than the ammunition price itself. Link  

* Revenue ‘performs well’ on tax avoiders. Vanessa Houlder – The Financial Times. Investigations into multinational businesses have recovered £4.7bn over the past five years, Revenue & Customs told MPs on Wednesday, as it defended its record on tackling avoidance by companies shifting profits to lower tax jurisdictions. Lin Homer, chief executive, said analysis of the tax gap – the difference between what the Revenue collects and what it is owed – showed the UK “performs really well” by international standards. Link  

* Interactive: Make Mitt Romney’s tax plan add up. Dylan Matthews and Ezra Klein – The Washington Post. The two parties may not agree on much, but they do agree on this: It’s time to reform the tax code. The last time the tax code got a deep clean was 1986. Since then, it has been clogged up with deductions, credits and loopholes that have made tax time a burden for individuals and tax decisions distortive for businesses. Link 

* Jerry Brown’s tax cliff. The Wall Street Journal editorial. The most important single vote in America next Tuesday, after the Presidential race, is Governor Jerry Brown’s attempt to stick Californians with another giant tax increase. The real choice before voters is whether to issue Sacramento’s incorrigible spendthrifts another blank check. Link  

* The winners and losers under Romney’s tax plan. Victor Fleischer – The New York Times opinion. Tax reform always has its winners and losers. Mitt Romney’s proposed plan to lower tax rates and limit deductions is no different, but it takes some digging to sort it out. Link

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