November 2012


Ask a trust officer:

“May the force be with you


DEAR TRUST OFFICER:  I heard that George Lucas is selling his Star Wars business to Disney. I’m a business owner, looking ahead to retirement.  Is there something I should know?—THINKING OF SELLING OUT


DEAR THINKING: Mr. Lucas’ stated motivation for selling this year is to preserve the Star Wars legacy by putting it into the hands of a major company with the resources to build on its foundation in the future.


There’s also an important tax reason for selling in 2012, as opposed to 2013.  Next year the total tax on capital gains is scheduled to jump by more than 50%, from this year’s 15% to 23.8%.  That includes both the expiration of lower tax rates on long-term capital gains and the new 3.8% tax for Medicare on net investment income.


Reportedly, the purchase price is over $4 billion.  If Mr. Lucas has to recognize $2 billion of long-term gain on the cash that he receives, the tax cost of waiting until next year to sell would be $166 million.


Tax consequences are just one of many considerations that business owners must face when the time comes to find new owners.  See your tax and financial advisors to learn more.


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 (November 2012)

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