BULLETIN NUMBER
TWELVE
POST ELECTION TAX NEWS
THERE ARE A NUMBER OF THINGS GOING ON IN CONGRESS REGARDING
TAXES IN 2005. WHILE NOTHING IS
FINALIZED YET, HERE ARE SEVERAL ITEMS YOU MAY WANT TO STAY AWARE OF:
-
THE 3%
DEDUCTION FOR DOMESTIC PRODUCTION (BULLETIN NUMBER 11) APPEARS TO BE
RUNNING INTO COMPLIANCE ISSUES.
ORIGINALLY THIS WAS SET FOR BUSINESSES TO BE ABLE TO DEDUCT 3% OF
NET INCOME FROM US PRODUCTION ACTIVITIES-WAS SCHEDULED TO INCREASE TO 6%
IN 2006 AND 9% IN 2010. TAXWRITERS
THINK SOMEONE MIGHT CLAIM NON QUALIFIED ACTIVITIES (WHO WOULD DO THAT!?)
SO ARE LOOKING AT A CORPORATE RATE CUT INSTEAD. THAT HELPS THE INDUSTRIES THAT AREN’T IN
THE PRODUCTION, CONSTRUCTION OR FARMING CATEGORIES.
-
ALTERNATIVE
MINIMUM TAX NEEDS TO BE CHANGED BUT NO ONE SEEMS TO BE PAYING MUCH
ATTENTION RIGHT NOW. THIS IS A TAX
TO BE SURE YOU PAY AT LEAST SOME MINIMUM TAXES (SOUNDS GOOD THERE) BUT WAS
NOT INDEXED FOR INFLATION OR GENERAL INCREASES IN THE ECONOMY. CONSEQUENTLY, IT HAS GOTTEN SO IT NABS
MANY MIDDLE-INCOMERS. SINCE IT
ELIMINATES SO MANY DEDUCTIONS AND CREDITS IT HAS BECOME ALMOST FLAT-RATES
VARY.
-
ESTATE
TAX REPEAL-THIS HAS A HIGH PRIORITY WITH CONGRESS. THE CURRENT CHANGES ARE SET TO ELIMINATE
THE TAX AFTER 2009 FOR A YEAR THEN SLIP BACK TO THE OLD $600K BASE. HOUSE WANTS TO ELIMINATE THIS TAX ALL
TOGETHER BUT SENATE DOESN’T THINK SO.
ONE OF THE BIG ISSUES IS WHAT BASE THE INHERITED ASSETS WOULD BE
VALUED AT. CURRENTLY HEIRS GET
VALUE OF ASSET AT DATE OF DEATH OR SIX MONTHS AFTER. GENERALLY THE CHANGES PROPOSE HAVING
HEIRS USE DECEDENTS BASE (OOPS-DAD GOT THAT LAND 60 YEARS AGO IN A CARD
GAME) THEN HAVING AN EXEMPTION OF SOME SORT-THE TWO HOUSES OF CONGRESS
DIFFER ON HOW MUCH AND WHAT MAXIMUM TAX RATE TO LOWER THE INHERITANCE TAX
TO. THE DIRECTION SEEMS TO BE TO
TRY TO LIGHTEN THE INHERITANCE TAX LOAD FOR ALL BUT THE EXTREMELY
WEALTHY. LOOKS LIKE THE INHERITANCE
TAX MAY BE LOWERED BUT CAPITAL GAINS COULD INCREASE SIGNIFICANTLY WHEN THE
ASSET IS SOLD. AT THIS POINT THAT
CAN BE QUITE A BIT LOWER THAN THE INHERITANCE TAX.
-
ENERGY
CREDITS HAVE COME TO LIGHT AGAIN (WONDER WHY). CREDITS FOR ENERGY-EFFICIENT HOME
IMPROVEMENTS WITH PERCENTAGES AND UPPER LIMITS TO BE IN PLACE ARE EXPECTED
TO BE INCLUDED. FASTER WRITE-OFFS
FOR PRODUCERS ARE ALSO BEING CONSIDERED.
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