The busiest season for taxes is usually in the spring but it could pick up in the next two months as small business owners and high net worth individuals try to protect their assets from anticipated changes in tax law with a Barack Obama presidency, according to tax attorney Phil Tortorich, who is based in President-Elect Obama’s hometown of Chicago..
“Most immediately, we’ll see our clients looking to get the most from estate tax minimization,” says Tortorich, who specializes in estate planning law as a partner at Katten Muchin Rosenman LLP. “That will be true through the end of the year especially as they try to make changes before any major new policies go into effect.”
President-elect Obama is expected to take a more regulated, Clinton-esque view on family limited partnerships and close any perceived “loopholes” that currently allow clients to transfer assets to minimize their tax burden, according to Tortorich.
Individuals with appreciated assets (or low-basis assets) could also be impacted by the new president as details of his proposal on capital gains taxes show a hike to 20 percent. Here again, many clients are already considering methods of intentionally incurring capital gain now in order to lock in the 15 percent long-term capital gains tax.
While this goes against conventional wisdom of deferring tax recognition events for as long as possible, the large potential increase in the tax rate makes it more effective to pay the tax now, according to Tortorich.