Biden’s Capital Gains Tax Proposals: How G&S Accountancy Can Help You Save

With potential changes to capital gains taxes on the horizon, staying ahead of the curve is crucial for business clients and high-income earners. President Biden’s capital gains tax proposals could significantly impact your financial strategy, but with proactive planning, you can mitigate these effects and even capitalize on current tax laws. At G&S Accountancy Inc, we are dedicated to guiding you through these complexities, ensuring that your financial future remains secure and prosperous.

What Are Biden’s Capital Gains Tax Proposals?

• Increased Capital Gains Tax Rate: Proposes raising the long-term capital gains tax rate from 20% to 39.6% for individuals earning over $1 million annually.
• Taxing Unrealized Gains at Death: Aims to tax unrealized gains at death for gains exceeding $5 million for individuals ($10 million for married couples).
• Elimination of Stepped-Up Basis: Plans to eliminate the stepped-up basis for gains over the same thresholds, potentially leading to higher tax liabilities for heirs.

Will These Proposals Pass?

The passage of these proposals is uncertain. The divided Congress, with Republicans controlling the House, presents a significant hurdle. Additionally, the Senate’s stance will be crucial. Historically, similar proposals have faced challenges even with Democratic control. Thus, while these proposals indicate the administration’s priorities, their implementation is not guaranteed.

How G&S Accountancy Can Help You Navigate These Changes

1. Comprehensive Evaluation of Your Financial Situation

At G&S Accountancy, we start by thoroughly understanding your current financial landscape. We assess your asset portfolio, capital gains exposure, and identify opportunities for tax optimization. This initial evaluation is critical for tailoring strategies that align with your financial goals.

2. Strategic Timing of Asset Sales

With potential increases in capital gains tax rates, realizing gains under the current lower rates can lead to significant savings. For example, if you have highly appreciated assets, selling them now could lock in the current 20% rate rather than facing a potential 39.6% rate in the future. Our team will guide you on the best timing for these transactions to minimize your tax burden.

3. Offsetting Gains with Losses

One effective strategy is to offset capital gains with capital losses. By selling underperforming assets to counterbalance gains, you can reduce your taxable income. For instance, if you have a $100,000 gain from the sale of a property and a $30,000 loss from an investment, the net taxable gain is reduced to $70,000, resulting in lower taxes.

4. Utilizing Long-Term Losses for Deductions

Long-term losses can be carried forward to offset future gains, creating ongoing tax benefits. Suppose you have a $50,000 loss this year that exceeds your gains. You can deduct $3,000 from your ordinary income this year and carry over the remaining $47,000 to offset gains in subsequent years. This strategy helps in managing tax liabilities over time.

5. Custom Tax-Efficient Investment Strategies

At G&S Accountancy, we advise on tax-efficient investment strategies that align with your long-term financial goals. For instance, investing in Qualified Small Business Stock (QSBS) can offer significant tax benefits, including the potential for tax-free gains under Section 1202. We help you identify and invest in opportunities that maximize tax advantages.

Real-Life Success Stories

Our approach has led to favorable outcomes for many clients. For example:

• Business Owner Success: A client owning multiple properties was able to save over $200,000 in taxes by strategically timing the sale of appreciated assets and utilizing offsetting losses.
• High-Income Earner Benefit: Another client, a high-income earner, avoided a substantial tax hit by restructuring their investment portfolio to include QSBS, resulting in significant tax-free gains.

Our Process: Tailored to Your Needs

1. In-Depth Consultation

We begin with a detailed discussion about your financial situation, goals, and concerns.

2. Customized Strategy Development

Based on our evaluation, we develop personalized strategies to minimize your tax liabilities and optimize financial outcomes..

3. Implementation and Monitoring

We assist in executing these strategies and continuously monitor your financial status to adapt to any changes in tax laws or your circumstances.

G&S Accountancy Inc – Your Guide to Financial Success

As your trusted guide, G&S Accountancy is committed to helping you navigate the complexities of capital gains taxes. Our proactive approach ensures that you can take advantage of current tax laws and mitigate the impact of potential changes. Contact us today to schedule a consultation and start optimizing your tax strategy.

Empower your business with our strategic tax planning services. Let us help you navigate the complexities of capital gains taxes and achieve your financial goals. Contact us today!