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Chris Nuss 666 Grand Ave, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2432

Uncle Sam Needs More Cash – And This Means From You! Recent Tax Law Changes Affecting You and Your Business. Chris Nuss 666 Grand Ave, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2432 E-mail: nuss@brownwinick.com. Example of Federal Tax Increase from 2012 to 2013.

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Chris Nuss 666 Grand Ave, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2432

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  1. Uncle Sam Needs More Cash – And This Means From You! Recent Tax Law Changes Affecting You and Your Business Chris Nuss 666 Grand Ave, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2432 E-mail: nuss@brownwinick.com

  2. Example of Federal Tax Increase from 2012 to 2013 Assumptions: Married filing jointly (w/o dependents) with mixture of salary ($65K), investment income ($90K), pass-through income from S corporations or LLCs ($400K), and pension/social security ($200K), and itemized deductions and exemptions. Illustrative purposes only.

  3. Example of Federal Tax Increase from 2012 to 2013 (cont.)

  4. Why Increase in Taxes from 2012 to 2013? • Earlier phaseout of itemized deductions & loss of exemptions. • Increase of top tax rate on dividends & capital gain. • Increase in top tax rate on ordinary income. • Increase in FICA & Medicare on earnings. • New 3.8% Medicare on net investment income.

  5. Planning Points Going Forward • Estimated tax payments & wage withholding even more important (to avoid large tax bill in April and underpayment penalty). • Defer recognition of income and gain, while accelerating deductions. • Section 179 expense & bonus depreciation • Equity interests in LLCs/partnerships • Other basic deferral mechanisms • Material, or even meaningful, participation in pass-through entity.

  6. Planning Points Going Forward • Forego dependency exemption on children in college. • Gifts and distributions from trusts to family members or others in lower tax brackets. • Revise mix of investment assets. • Change business entity form (e.g., from S corporation to C corporation)?

  7. Other Tax Planning Considerations • IC-DISC for foreign sales: savings = ordinary income tax rate less dividend tax rate x commission • Beware of multi-state operations – compliance!! • New Iowa business property tax exemption • U.S. Supreme Court decided FICA tax withholding on involuntary severance

  8. Possible Future Changes • Keep eye on Congress throughout year. • No cash basis of accounting for service businesses with gross receipts exceeding $10M.

  9. Website: www.brownwinick.com Toll Free Phone Number: 1-888-282-3515 OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa 50309-2510 Telephone: (515) 242-2400 Facsimile: (515) 283-0231 616 Franklin Place Pella, Iowa 50219 Telephone: (641) 628-4513 Facsimile: (641) 628-8494 DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.

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