Estate Planning for Jedi Masters —CBS Marketwatch

Star Wars Creator Strikes Savvy Deal with Disney

Quentin Fottrell at CBS MarketWatch reports that Disney will buy George Lucas’ LucasFilm for $4.05 billion in cash and stock, the two companies announced Tuesday:

Wade Westhoff, a financial adviser based in Danville, Calif., says of the Disney deal. “This is a textbook example of exit planning for a private business owner.” (Lucas and a spokesman for LucasFilm were not immediately available for comment.)

That Lucas struck a deal in 2012 may be no accident, either, advisers say. Long-term capital gains tax from the sale of assets held more than one year are taxed at a rate of 15% for investors in the 25% income-tax bracket or above (Lucas’s level), and zero for investors in the 10% or 15% bracket. Those rates are set to jump to 20% and 10%, respectively in January. “He probably wanted to take advantage of the lower rate on long-term capital gain while it’s certain,” says Bill Smith, managing director at CBIZ MHM, a national accounting and professional services provider.

It’s a trend, writes John D. McKinnon at the Wall Street Journal in a piece titled “Looming Tax Hike Motivates Owners to Sell.” 

A looming increase in the capital-gains tax rate next year is fueling sales of some privately-held businesses.

Many business owners—mostly founders who could gain a lot from a sale—are looking to close deals before next year, when the maximum tax on investment income is scheduled to rise from 15% currently to at least 23.8% on most capital gains, at least for higher-income households. Many sellers intend to convert their equity into retirement funds or just start anew.

“It just made more sense for me to take my chips off the table and go do something else,” said Bert Wolf, 60 years old, who has an agreement to sell his compressed-gas business, Acetylene Oxygen Co. of Harlingen, Tex., before year-end.

Mr. Wolf added that if he waited until after the tax increase to sell, he would have to expand the business at the current rate “for at least 3 or 4 more years to achieve the same after-tax sales dollar.” He is profiting on the sale of his business to Praxair Inc., PX +1.36% a public company.

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