An overview of the major aspects of the expiration of the Bush tax cuts and how they impact business owners and investors.

1. What the 2013 Tax Changes
Mean for Business Owners
Presentation by
Schwartz Heslin Group, Inc. (SHG)

2. The Bush Tax Cuts
The Bush-era tax cuts are due to expire at the end of
2012 – barring any intervening legislation in the interim.
But the impasse between Congressional Republicans
and Democrats over the extension of all of the tax cuts
will almost certainly result in…
…The Expiration of the Bush Tax
Cuts

3. Summary of the Changes (1)
Income Type 2012 2013 Percent
Increase
Ordinary Income 35% 39.6% 13.1%
Capital Gains 15% 20% 33.3%
Qualified Dividends 15% 39.6% 164%
*New Medicare Tax on 0% 3.8% NA
Unearned Income
Notes:
*The added Medicare Tax on Unearned Income is not a component of the Bush-era
tax cuts.
**Tax rates are all maximum posted rate.

4. Summary of the Changes (2)
Estate Tax 2012 2013 Percent
Change
Maximum Rate 35% 55% 57.1%
Exemption (thousands 5,000 1,000 -80%
USD)
Gift Tax 2012 2013 Percent
Change
Maximum Rate 35% 55% 57.1%
Exemption (thousands 5,000 1,000 -80%
USD)

5. Effective Capital Gains Tax
With the capital gains tax rate rising to 20% and
the introduction of a 3.8% Medicare tax on
unearned income,
The effective maximum tax rate on
the sale of a business will rise to
23.8%

6. Key Point
The increase in the maximum capital gains
tax rate will reverse nearly 2 decades of
declining capital gains taxes
 And reduce the after-tax
sale value of a business

7. Additional Liability
Based on the projected 2013 tax rates:
The after-tax value of the sale of a business worth
$25M:
only $19.05M
The after-tax value of a $5M gift:
only $2.25M
Note: Calculations assume zero base.

8. After Tax Deal Value: 2012 vs 2013
90 85
Sales Value After Tax (Millions
80 76.2
70
60
50
USD)
42.5
40 38.1
30
21.25 19.05
20
10
0
25 50 100
Pre-Tax Deal Value (Million USD)
Note: Calculations assume zero base.

9. Conclusion…
If a sale is consistent with your personal long-
term financial goals,
The selling environment is
decidedly more favorable in
advance of these changes

10. Conclusion…
First step:
 Have a professional assess the value of
your enterprise
 See for yourself just how large a
difference selling in 2012 could
make

11. Conclusion…
Keep in mind,
after January 1, 2013,
the selling environment
is unlikely to improve
for the foreseeable
future.

12. Presented by:
Schwartz Heslin Group
Address: Or visit us on:
8 Airport Park Bvld.
Latham, NY 12110
Phone:
518-586-7733
Web:
www.shggroup.com