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U.S. wealthy dump assets amid ‘fiscal cliff’ worries

“For many of the wealthy, 2012 is becoming a good year to sell,” Robert Frank reports for CNBC. “They’re worried about the ‘fiscal cliff,’ which is when tax cuts expire and spending cuts are set to go into effect at the end of the year.”

“Fearing an increase in capital gains and dividend taxes, many of the rich are unloading stocks, businesses and homes before the end of the year,” Frank reports. “Wealth advisors say that with capital-gains taxes potentially going to 25 percent from 15 percent, and other possible increases in the dividend tax, estate tax and other taxes, many clients are selling now to save millions in taxes. ‘Under almost any scenario, it makes sense to take the gains this year,’ said Gregory Curtis, chairman and managing director of Greycourt & Co. ‘Clients aren’t selling willy nilly. But if they can and they have a huge gain, they’re selling now.’”

“If the Bush-era tax cuts expire, taxes on capital gains would revert back to its previous rate of 20 percent from its current 15 percent. Another 5 percent may be added from health-care levies and changes in itemized deductions, bringing the rate to 25 percent for many high earners. Taxes on dividends could go from 15 percent to over 43 percent. And the estate tax could go from 35 percent on estates worth more than $5 million to 55 percent on estates over $1 million,” Frank reports. “As a result, the wealthy are taking a close look at all of their assets to see what could or should be sold off now to avoid potentially higher taxes next year.”

Frank reports, “The most noticeable sell-off has been in stocks. Wealth managers many of their clients who have large gains on stocks are selling them now, or selling them or buying them back again to create a higher basis (and thus a lower tax bill later).

Read more in the full article here.

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