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.
Do
you have a question concerning wealth management or trusts?
Send your inquiry to tormey@pgbank.com.
(November 2012)
© 2012 M.A. Co. All rights reserved.
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