2013 Pork Management Conference June 20, 2013 Denver, Colorado.
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Transcript of 2013 Pork Management Conference June 20, 2013 Denver, Colorado.
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2013 Pork Management Conference
June 20, 2013
Denver, Colorado
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American TaxpayerRelief Act
January 2, 2013
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American Taxpayer Relief Act
Individual Impact
Generally ATRA provides for higher taxes
in 2013 for many Americans.
These changes concert with the 3.8% & 0.9% Medicare taxes enacted as part of the Affordable Care Act (2010) which apply starting in 2013.
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American Taxpayer Relief Act
Individual Impact • Avoided the so called “Fiscal Cliff” for some • Permanent AMT Relief
• Individual Income Tax Rates
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Individual Tax Rate Changes
• Bush Era Tax Cuts Expired at 12/31/2012 for:• Individuals with Incomes > $400,000• Families with Incomes > $450,000
• Long-Term Capital Gains – From 15% to 20%• Dividend Rates – From 15% to 20%
• With 3.8% - Max Rate of 23.8% Applies• Maximum Tax Rate – From 35% to 39.6%
• With 3.8% - Max Rate of 43.4% Applies
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American Taxpayer Relief Act
Individual Impact (cont.) • 2% Payroll Tax Holiday Ended 12.31.12• American Opportunity Tax Credit - 2017
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Other Notable Items (Healthcare)
• Supreme Court Affirmed Obamacare Decision 6.28.12
• Increased Threshold for Claiming Medical Expenses
• From 7.5% of AGI to 10% of AGI in 2013
• Additional Medicare Tax on High Income Workers• From 1.45% to 2.35% for $200K Plus Wages
• Medicare Surtax – 3.8% on Net Investment Income (2013)
•Top Tax Bracket will Actually Be 39.6% + 3.8% = 43.4%
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American Taxpayer Relief Act
Business Impact
• Section 179 Expensing• Bonus Depreciation• Tax Credit Extension
- R&D Credit / WOTC Thru 2013
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Business Income Tax Relief
• Section 179 Expensing• $500k in Immediate Expensing – 2012/13• $2mm Threshold – 2012/13• New or Used Qualifying Property• Can’t Create a Loss with Section 179• Drops to $25k/$200k Threshold in 2014
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Business Income Tax Relief
Bonus Depreciation
• 50% Write-off of Qualifying Property (2013)• New Property Only• Bonus Depreciation Expires 12/31/2013
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American Taxpayer Relief Act
Estate Planning Impact
• $5mm Indexed Exemption - Permanent• Top Rate for 2013 and Beyond – 40%• Permanent Unification of Estate, Gift & GST Taxes• Permanent Extension of Portability
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Estate Taxes:Post-American Taxpayer Relief Act
Calendar Year Applicable Exclusion Amount
Top Rate
2010 $5,000,000 35%
2011 $5,000,000 35%
2012 $5,120,000 35%
2013 and Beyond $5,250,000 40%
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Tax on Net Investment Income
• Net Investment Income Tax (NIIT) took effect on 1.1.2013.
• NIIT applies at a rate of 3.8% to certain Net Investment Income of Individuals, Estates & Trusts that have
income in excess of statutory threshold amounts.
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Tax on Net Investment Income
• 3.8% of the lesser of:
• Net Investment Income (NII) –
•or •The excess (if any) of: Modified Adjusted Gross Income over threshold MAGI equals AGI Plus Foreign Earned Income Exclusion
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Individual MAGI Threshold Amts
• Single $200,000• MFJ (or Surviving Spouse) $250,000• H of H $200,000• MFS $125,000
• Amounts not indexed for inflation
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Net Investment Income Includes:
• Interest• Dividends• Non-Qualified Annuities• Royalties• Rents• Passive Activity Income• Capital Gain• Oil & Gas Income (Not Considered aWorking Interest)
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Net Investment Income Excludes:
• Wages, Salaries & Bonuses• Unemployment Compensation• Operating Income from Nonpassive Business• Social Security Benefits• Alimony• Tax Exempt Interest• Self Employment Income• Distributions from Qualified Plans & IRA’s
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Top Ten Tax Developments of 20121. Tax law uncertainty2. Supreme Court upholds PPACA3. “Repair” regs4. New Medicare taxes5. Worker classification6. IRS fresh start initiative7. Limitations/basis overstatement8. FATCA/FBAR compliance9. Whistleblower regs10.Practitioner oversight
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Repair Regs Continue to Have Sweeping Impact
• Temporary regulations issued December 2011
• Focus on issues of• Materials and supplies• De minimis expensing rule• Definition of Unit of Property• Single/multiple asset accounts • General asset accounts
• Application delayed until 2014
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IRS Whistleblower Program – Successful or Concerning?
• Large awards paid - $104 million to UBS employee, $2 million to Wall Street Executive
• IRS collections $1.5 billion, pays out $200 million
• Pays 15 to 30% of tax collected
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IRS Audit, Return, and Collections Statistics
• Budget effects on audit enforcement efforts (quality more so than quantity)
• 237 million returns processed
• 123 million refunds
• Net collections of $2.2 trillion
• Individuals examined – 1%, range from ½ to 27%
• Corporations – small 1.7%, large 10%, top end 45%
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President Unveils 2014 Budget – $3.77 Trillion
• Tax extenders – permanent vs. extension
• So called “Buffet Rule”
• High income earners – limit itemized deduction benefit to 28%
• Estate tax – 45% rate, $3.5 million exemption, ($1 million for gifts)
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Focus on Tax Reform
• Joint committee on taxation issued report - 11 tax reform working groups
• Senate Finance committee - TaxReform.gov
• House Ways and Means discussion draft
• All budgets put tax reform forward as a principal theme
• Must be coordinated with deficit reduction
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2013 Pork Management Conference
Thank You
Rob Gunther, [email protected]
Frost, PLLC(800) 766-9241
Direct: (501) 975-0112