There is a lot of excitement in Washington coming on the heels of the election. Change is in the air, and with this change comes the promise of higher income taxes.
None of us can predict how the new administration and the new Congress will change the tax Code. We can be fairly certain that they will increase the marginal tax rates. Specifically, there is an expectation of an increase in the capital gains tax rate. How can we plan for that?
We do the opposite of what is instinctive and what our training tells us to do. We accelerate taxable events into 2008, as opposed to trying to push them back into 2009. Congress does not increase tax rates with retroactive application to a prior calendar year. Congress an increase tax rates in 2009 with retroactive date of January 1, 2009.
If you are thinking of selling your assets, sell them today. Do not wait until 2009, unless you have a very good reason. Almost every other tax attorney and tax accountant that we have discussed this week holds to this point of view and for a good reason. The new administration is no friend of the taxpayer.