Pub. 1 2012 Issue 7

Oct/Nov 2012 23 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s continued frompage 19 2012 and 2013 Significant Expiring Individual Provisions In a Joint Committee on Taxation report, there are estimated to be more than 40 tax provisions set to expire on December 31, 2012. While this article won’t detail all the tax provisions scheduled to expire in 2012 and 2013, some major provisions for an owner of a Bank are: • For 2012, the most significant expiration is theAMT (alterna - tive minimum tax) patch. With the lower individual tax rates from the “Bush Tax Cuts,” more and more middle income taxpayers were being impacted by the AMT. To remedy this problem, Congress has passed a patch to increase the threshold. Currently, the 2011 patch has expired and barring no congressional action, a much broader base will be paying higher taxes in 2012 as a result of the AMT. • For 2013, with the expiration of the “Bush Tax Cuts,” the individual tax rates will increase to the following: – The highest individual ordinary income rate will increase from 35% to 39.6% – The highest individual dividend income rate will increase from 15% to 39.6% – The highest individual capital gain rate will increase from 15% to 20% • OnMay22,2012,KansasGovernorSamBrownbacksignedHouse Bill2117,featuringincometaxchangesdesignedtostimulateKansas’ economy and create jobs. This lawwill go into effect on January 1, 2013. – The highest married filing joint individual income tax rate will decrease from 6.45% to 4.9% – ABank owner of an S-corporation is allowed a subtraction for the income reported on the Federal income tax return. Please note that in the past a Bank S-corporation owner was allowed a subtraction for the taxable income on the Kansas Privilege tax return – ABank owner of an S-corporation is required to add-back any individual net operating loss carry-forward amounts Year-end Tax Planning With the “fiscal cliff” approaching and the election year, year-end planning will be crucial for Banks in the current year. As discussed above, there are numerous items that need to be evaluated in the near future. As in any given year, tax planning should be taxpayer specific as one minor change in the facts and circumstances may have a very significant tax implica - tion. While this article summarizes some of the key changes, please visit http://www.bkd.com/thought-center/ to obtain more information. Dallas Mildfelt (Community National Bank, Chanute) put his ball on the green with this great shot. Alan Meyer (State Bank of Bern, Axtell) skillfully lined up his shot on the last hole of the day.