SO HOW HIGH CAN WE ANTICIPATE INCOME TAX RATES GOING?

You would have to be living under a rock these days to be unaware of the massive spending coming out of Washington D.C. these days. The Associated Press reported today that President Obama's deficit estimates may be significantly lower than reality. As reported in today's Ft. Lauderdale Sun-Sentinal:

As noted in the article, one method to address deficits is to raise taxes. Below is a table that I came across that summarizes the maximum income tax rates in the U.S. since the enactment of the income tax. Younger readers who were not taxpayers before 1987 may find it an eye opener. All readers may want to take a look at the jump in maximum rates from 1932 to 1933 – a time period that also experienced a substantial expansion in federal spending in response to an economic crisis and a President who was not afraid to raise taxes:

At a minimum, one should expect rates to revert to pre-Bush levels, per the scheduled expiration of the Bush tax cuts in 2011. However, given the above history of maximum tax rates, substantially higher rates may ensue.

APPLICABLE FEDERAL RATES – APRIL 2009

IRS ALLOWS APPLICATION OF LIKE-KIND EXCHANGE RULES TO TRADEMARKS AND TRADE NAMES

In my September 28, 2008 posting, I discussed a 2006 technical advice memorandum (TAM 200602034) that extensively analyzed various Section 1031 issues, including like-kind exchanges of trademarks and trade names. That TAM provided that trademarks and trade names could not be exchanged tax-free under Section 1031 since they were too close akin to goodwill and going concern value, two items which cannot make use of the like-kind exchange rules.

The IRS has rethought its position on that in a recent TAM.

Instead, the Service is allowing the Newark Morning Ledger Co. case, which held that intangible assets are not always part of goodwill, and acknowledged that they can be treated as separate assets if they can be separately described  and valued apart from goodwill. This separation from goodwill will now be recognized in the Code Section 1031 area for trademarks and trade names.

The Service is not saying that all trademarks and trade names are automatically "like-kind" with other trademarks and trade names. Instead, the "nature" and "character rules" under Regs. Section 1.1031(a)-2(c)(1) still must be met. How that will work itself out in practice is hard to determine at this point - hopefully future TAMs or IRS rulings will provide some useful (and not too restrictive) interpretations of what types of trademarks and trade names will be considered like-kind. For example, since Regs. Section 1.1031(a)-2(c)(1) includes a review of the nature and character of the underlying property, one can anticipate that the IRS may limit the application of Section 1031 in this context to exchanges of trademarks or trade names when the property to which the trademark or trade name relates is itself like-kind with the property to which the trademark or trade name relates that is received back in the exchange.

Office of Chief Counsel Internal Revenue Service Memorandum 200911006