One of the biggest FC threats for high-worth individuals is the increase in capital gains taxes from 15% to 20%. Consider this- a $5m personal wealth portfolio that nets 5% a year ($250,000) would have to pay an extra $12,500 annually (over $1,000/mo). Now factor in the upper echelon of folks with $50m having to pay $125,000 more money annually- there are thousands of these people/families/trusts and the FC is a serious threat to their long-term financial growth.
Now, we're within five weeks from the new year and the FC will be in the news every night until it's resolved. To counter investor concerns, publically traded companies will likely begin issuing "special dividends" in the next few weeks. The private equity firms and legacy shareholders will benefit greatly from these rare payouts because they will pay only 15% versus potentially paying 25% more in taxes this calendar year if an FC deal is not reached. To pikers like TM, it doesn't have a major impact but for folks with millions in a single company, these payouts (Dilliard's paying a special dividend at $5/share) can mean major dollars.
It makes sense for us to hold our positions in our large cap companies in case there are windfalls like this that trickle down. Then again, we need (err, Jim needs) to assess our tax situation and determine, again, how heavy the TM burden rests on his shoulders. Two years after we considered an LLC or similar holding company, we continue pressing on with our Treasurer handling the bulk of the responsibility and I'd like to move this organizational concern to the top of the agenda when we reconvene in December at 9:27pm.
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