U.S. Apple investors, beware looming expiration of Bush era tax cuts

“What’s better? Capital gains and dividend income, or just capital gains? News that Apple plans to pay out $2.65 per share per quarter starting later this year has more than a few scurrying to answer that question,” Robert Powell reports for MarketWatch. “Under current law, taxpayers in the 10% and 15% tax brackets don’t pay any taxes on long-term capital gains and qualified dividends, while those in the 25% to 35% tax brackets will pay a 15% tax on long-term capital gains and qualified dividends. In essence, having long-term capital gains and/or dividends didn’t really matter all that much. (Short-term capital gains and qualified dividends, by the way, are under current law taxed at a maximum rate of 35%.)”

Powell reports, “But come 2013, all that is scheduled to change, making the question about Apple and its dividend less academic. Yes, the so-called Bush tax cuts are scheduled to expire. And that has investment and tax professionals talking in general about the need to start harvesting gains — now.”

“Consider: In 2013, the maximum tax rate will rise to 21.2% on long-term capital gains and 40.8% for short-term capital gains. The extra 1.2% is due to the return of the 3% disallowance of itemized deductions for income earned above a threshold, according to Bernie Kent, J.D., CPA, and managing director of Telemus Wealth Advisors,” Powell reports. “In addition, beginning in 2013, the new federal health-care program imposes a 3.8% tax on the investment income, including capital gains, of high-income taxpayers. ‘These two changes would result in a combined 66 2/3% increase in the maximum federal income tax in the long-term capital gains rates on the sale of stock in 2013 compared to a sale in 2012 (a 25% rate compared to a 15% rate),’ Kent wrote in the LISI Income Tax Planning Newsletter #25. ‘Further, if President Obama’s proposed ‘Buffett Rule’ is enacted, millionaires could face a minimum tax rate of 30% on their long-term capital gains as early as 2013.'”

“What’s more, starting in 2013, the distinction between ordinary and qualified dividends will disappear, and all dividends will be subject to the ordinary tax rates, which are scheduled to change in 2013 as well. Absent any legislation, the 10% rate will be collapsed into the 15% rate for 2013; the 25% rate will become 28%; the 28% rate will become 31%; the 33% rate will become 36%; and the 35% rate will become 39.6%,” Powell reports. “And so the question of having capital gains and dividend income with Apple (or any other stock for that matter) is more than academic. Now one has to figure out what the best course of action might be. Sell this year and pay taxes at current rates? Hold and pay taxes on dividends at this and next year’s rates? Or pursue some other course of action?”

Read more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Related articles:
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011


        1. Maybe his brain is spinning from all of the liberal vomit spewing throughout the US these days. If all your worried about is someone’s iPad typo then you really have your priorities up your ass.

  1. The so-called “Buffett Rule” would collect $31 billion over the coming 11 years.

    Here are Obama’s budget-projection deficits for the next four years, from the CBO using Obama’s rose-colored glasses economic scenarios:

    – FY 2012 (current year) – $1.3 trillion
    – FY 2013 – $977 billion
    – FY 2014 – $702 billion
    – FY 2015 – $539 billion
    – FY 2016 – $529 billion

    That $3 billion per year amounts to:

    – 0.23% of the FY2012 deficit
    – 0.31% of the FY2013 deficit
    – 0.43% of the FY2014 deficit
    – 0.56% of the FY2015 deficit
    – 0.57% of the FY2016 deficit

    In other words, despite spending nearly eight months pushing this as one of the main solutions for the deficit crisis, Obama’s policy wouldn’t even touch 99.43% of the problem in any year of a second term. It does, however, leave him 99.43% pure as a class warrior.

    As FactChecker stated above: “Great Presidents don’t turn citizens against each other for political gain.”

    The Buffett Rule is aptly named. He’s a doddering old fool. I have better returns than him in my AAPL-heavy portfolio.

      1. Good times were the 80s with Reagan and 90s with Conservative Congress. Dip Shit!

        If liberalism works so well why do you jack asses keep needing Trillions more dollars???? Because it’s a complete failure and not meant to help. It’s meant to take down the US from within. Wake the hell up.

        1. So you think some large group of Americans want to destroy our own country? Does that make sense? Is Joseph McCarthy standing next to you? Don’t you think that’s a hair paranoid?

          Reagan raised taxes as did Bush Sr. Nixon approved setting up the EPA and providing Medicare. These were reasonable Republicans who looked out for the best interests of the country in the long term NOT Grover Norquist.

          1. Yes they do. And you trying to act like it’s some kind of far out joke doesn’t change the fact that that’s exactly what is happening. Did you grow up in the US?? If so and you weren’t brain washed you would understand what is going on.

            Liberals are out for all out collapse of the system. Cloward Piven, read the communist play book for taking out the US. The Democrats are following it. You suck Fealing/being brain dead.

            1. So how will the system collapse exactly? I thought GM and Chrysler and the banks were all saved. Aren’t they part of the system? Help me not be brainwashed.

              Wait?! What’s there to be gained by people collapsing the system? Will we be a communist country then like the old USSR? If Obama is already President what more does he want?

              “You suck Fealing/being brain dead.” What does this sentence mean?

            2. Chrysler and GM were forcefully taken over by the government and the bond holders had their assets stolen from them and given to the unions. Beyond unbelievable and that is part of collapsing the system.

              GM is being turned into a Chinese company in the end. Makes a lot of sense if you’re a Marxist.

    1. Uh, daaaaaaaah, can I have some more free shit for me???? Take if from those evil “rich” people……. Life sucks and I’m an idiot Democrat.

  2. Oh puleez! Sell now to avoid a couple of percentage point increase in marginal tax rate, and thereby forego a 50-100% ROI? Only silly fools let taxes drive their investment strategy.

    1. Citizen, we don’t have to worry at all. Mitt is going to drop the cap gains tax to zero for the few lucky ones of us making less that 250k. So we should hang on to every share, that is 15% more in your pocket. I am torn whether I want no cap gain taxes via Mitt, $2.50 gas via Newt or no pornography via Rick. Very tough choices to make. What is a fella to do?

      1. The Republicans have hung themselves. Until they come back toward the center, they will never win.

        I miss the Republican party of the 70s, 80s and 90s. I know I am not the only one…

        Face it, the current Republican party does not represent the views of the majority of Americans. Unfortunately, in a Democracy, you need the support of a majority.

          1. When Obama gets re-elected in November you are going to really need some pharma to get through the day.

            I’m not voting for Obama, but Willard RawMoney has about as much chance as a snowball in hell. And that is WITH Republican thumbs on the scales.

            1. When Maobama gets landslided this November in the elections your tiny-little-Lemming-Brain-Stem will implode on what little of it there is. Progressive nut case.

        1. cb bought and paid for liberoTARD TROLL. The democrat party has gone off the communist deep end and has lost 3/4 of the country. Landslide loss for Obamanidagene come November!!!!!!

          1. Au contraire, the “Republicans” have alienated women, blacks, latinos, the center, and just about anyone with an IQ over 69 who hasn’t been brainwashed by Fox and isn’t a sexist, racist, crude, mouth-breathing, flat-earther bigot. Wave your flag, confederate or northern, from your antenna. Come 2012, you’ll be praying to Jeezuz in deliverance country, and your neighbors will all be coming after you with their precious guns for some obesity fuel. (Then again, you sound too young- and stupid- to vote…)

            1. …Says a left-wing liberal who’s clearly bought hook, line, and sinker into the progressive stream of crap shoveled out at light speed by the likes of MSNBC, Huffington Post, MediaMatters, and parroted by the DNC.

              You’re exactly the sort of ideologue you apparently despise, auramac.

  3. If we’re going to have an income tax, then all income – meaning money you take in above and beyond money you pay toward debts – should be taxed exactly the same. There should be no difference whether you make it from investments, behind a desk, or from hard labor.

    And yes, it should be at increasingly progressive rates – less for the poor, more for the rich.

    In a society where the social safety net is minimal (and sure to be shredded to nothing by the Clinton/Obama/Romney/Paul Republicrats that are in Wall Street’s pocket), progressive income taxation is the VERY LEAST that should be done to help the little guy/girl keep their heads above water.

    After all, if the rich want a $1 Trillion + Defense/Intelligence/Oil conglomerate paid for by public taxes & debt so bad, let THEIR income be hit the hardest for it.

    1. You are a brain dead shit head. Yes punish success. It’s no fair that some people work harder and thus bear the fruits of their hard work. NOOOOOOOO, let’s forcefully take it away from them and make them give to the lazy losers of the world. You are the problem. Jack ASS 67.

      You wouldn’t have survived very long a few hundred years ago with your mentality.

  4. Guess I’ll buy more AAPL, on two pieces of evidence:
    1) Apple products appeal to the entire US political spectrum including the inarticulate fringe
    2) Many in that fringe will be selling their stock soon to avoid large gains in favor of small taxes

    Both of these bode well for value investors.

    Now, let’s see if we can bait some climate trolls: anyone seen how much water Texas has these days?

  5. If the last two paragraphs of the MDN article don’t tell you we need a complete overhaul of taxation in the United States I cannot imagine what would.

    As to the laughable Ryan tax plan- a sketched outline of Republican talking points full of assumptions not based upon sound economic analysis- it was concocted for political effect- not policy.

    As to the taxation- the bills must be paid and most of the money is due internally. Despite the well worn Republican talking point about China holding most of our debt the truth is most of the debt is owed to Americans. China is only the largest external holder of new debt.

    One can not generate prosperity with tax cuts although one can generate massive debt.

    1. You are laughable. Ryan is right on the button, correct. YOu want more of the same. We want prosperity, happiness, and freedom. Liberals are haters of everything. Conservatives are lovers of success. We only hate you commies. That’s it. Screw you and your advice progressivelemming.

      1. You are full of assumptions. This is not a binary world and I did not vote for Obama and will not again this fall. That said, I know all too well that what Ryan is pushing is nothing different than the same crap Republicans have been pushing since the age of the robber barons.

        The Teabagger agenda is not to roll back the Great Society or the New Deal but to roll things back to the Gilded Age- a time of no Federal Income Taxes, no regulation, no direct election of Senators, no vote for women, poll taxes, higher ed for the very few, Jim Crow, miscegenation laws, union busting by the National Guard, etc.

        As someone who is old enough to remember, those “job killing’ regulations were imposed because the “free market” saw fit to dump pollution into the air & water and on the land-everyone else’s health be damned. The Cuyahoga River in Ohio is described in Wikipedia as follows:

        “There have reportedly been at least thirteen fires on the Cuyahoga River, the first occurring in 1868. The largest river fire in 1952 caused over $1 million in damage to boats and a riverfront office building. Fires erupted on the river several more times before June 22, 1969, when a river fire captured the attention of Time magazine, which described the Cuyahoga as the river that “oozes rather than flows” and in which a person “does not drown but decays.”

        This river was the poster child for the Clean Water Act- one of the many regulations the Koch Brothers and their tools (Faux, Hannity, Rush, Savage, WorldNut Daily, Washington Times, etc) would dearly love to repeal.

        No thanks.

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