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A Potential Rise in the Capital Gains Tax Rate- Plan Your Business Accordingly

President Biden campaigned on essentially abolishing the long-term capital gains tax rate by increasing it to the same top rate he’s proposing for ordinary income. This could mean an increase of 66% or more in Uncle Sam’s share of your ‘exit proceeds’. There are a number of things that an owner should consider when made aware of this fact.

Three (3) Parties to Every Transaction

It is helpful to think about the government as a part of your future exit transaction. In fact, it has been said that each exit transaction has not only the buyer and seller, but a 3rd party: the government. As a party to your transaction, the government is quite clear on its expectation of payment. It is your job to be just as clear and to make plans to see if this ‘3rd party’s role’ in your deal may be reduced in order to leave you with more exit proceeds from your transaction.

As Judge Learned Hand said in two (2) opinions: “Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)

And, “Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”

Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) – dissenting opinion Uncle Sam Is a Partner in Your Exit Privately-held business owners know all too well that the Federal government is a partner in the success of their privately-held business – the taxes that they pay each year are evidence of this fact. But did you know that the government is also a partner in your exit transaction? And, without proper planning, the government’s take on your business transaction may be significantly larger than you might expect.

Business Exit Readiness Index™

At some point, you ARE going to leave your business. The question is When, How, and on What terms? According to BizEquity, a leading national firm on business valuation, 86% of private business owners lack a formal Exit and Succession strategy for their business.

Gauging your financial and mental readiness to leave your business is an absolute necessity, take our Business Exit Readiness Index (BERI) survey and receive a free, 6-page report with your results

Securities are offered through LPL Financial, Member FINRA/SIPC. Investment Advisory Services are offered through Jacobi Capital Management, LLC, an SEC Registered Investment Adviser. Jacobi Capital Management, LLC and Jacobi Wealth Advisors are entirely separate entities from LPL Financial. Jacobi Capital Management, LLC employs (or contracts with) individuals who may be (1)registered representatives of LPL and Investment Adviser Representatives of Jacobi Capital Management, LLC; or (2) solely Investment Adviser Representatives of Jacobi Capital Management, LLC. Although all personnel operate their businesses under the name of Jacobi Capital Management, LLC or Jacobi Wealth Advisors, they are each possibly subject to the differing obligations and limitations and may be able to provide differing products or services. Please speak with your financial professional for more information or see their personnel bio pages on the Jacobi Wealth Advisors website at

Pinnacle Equity Solutions, BizEquity,  Jacobi Wealth Advisors and LPL Financial are all separate entities.

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