On February 13th the United States Treasury released its Green Book which is the Treasury’s explanations of the Administration’s Fiscal Year 2013 revenue proposals. There are many proposed tax changes, which are significant. These are the Administration’s proposals and will have a long road before they become law. Below is a list of some of the major tax proposals:

  • Tax certain “carried interest” as ordinary income, instead of capital gains rate. This item has been proposed on many occasions but so far has not been enacted as it has a strong opposition from the private equity groups.
  • Effective for expenses paid or incurred after the date of enactment, deductions for expenses paid or incurred in connection with outsourcing a U.S. trade or business would be disallowed.
  • Retroactively effective after Dec. 31, 2011, make the research credit permanent and increase the rate of the alternative simplified research credit from 14% to 17%.
  • The estate, generation-skipping transfer, and gift tax rate would be 45% and the exclusion amount would be $3.5 million for estate and generation-skipping taxes, and $1 million for gift taxes. These changes would apply for estates of decedents dying, and for transfers made, after Dec. 31, 2012.

The Administration’s budget calls for increases in IRS’s tax enforcement and compliance budget to enable IRS to more effectively crack down on “tax cheats and delinquents,” and implement many recent tax law changes.

View the PDF to read more about the proposed changes, including tax rates on qualified dividends, gain inclusion for QSBS and changes in long-term capital gains.

Contact your GHJ tax advisors to discuss how these proposed changed may affect you or your business.

Polina Chapiro, Corporate and International Tax

Patrizia Copping, Public Charities and Private Foundations

Farshad Yashar, Corporate and Federal Tax