One of today’s most discussed political topics is the expected expiration of the Bush tax cuts after December 31, 2012. If Congress doesn’t act, among other things, the individual U.S. federal income tax rate on long-term capital gains will increase on January 1, 2013 for those earning more than $200,000 per year from 15% currently to 23.8%. (An approximately 60% increase in the rate!) Furthermore, California Governor Jerry Brown intends to seek a referendum to increase the individual tax rate on millionaires from 10.3% to 12.3% after this year — a 20% increase.

The impact of these increased tax rates could be substantial on the after-tax proceeds realized by a business owner upon a sale. A typical sale transaction can take six to eight months to complete from the time the decision to sell is made. Consequently, it is important that any business owner seeking to sell his or her business in the near term take immediate steps to ensure the sale will close in 2012 before the rates increase.

The purpose of this alert is to help a potential seller assess how ready they are to complete a sale transaction in 2012 and accelerate the negotiation and completion of a definitive sales agreement. The following are some key questions every potential seller should ask to assess their readiness and some key steps they should take to make sure they are ready for a sale.

Please see full alert below for more information.