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Print articleOut of the Fiscal Ditch, but Still on the Cliff - the Tax Provisions of the Fiscal Cliff Legislation Passed by the House and Senate on January 1, 2013
January, 2013 -
The so-named “American Taxpayer Relief Act,” now signed by the President after having been passed in the wee hours by the Senate on January 1, 2013, and later that day by the House, may pull the country back from a self-created fiscal/political ditch, but leaves the country at the edge of a fiscal cliff with spending cut issues, debt ceiling issues and undoubtedly more tax issues to be dealt with before March 1, 2013.
Overview. This legislation increases the tax on individual taxpayers with taxable income above specified thresholds (generally stated to be $400,000 or $450,000). Note, limited liability companies are now the predominate form of closely held businesses and a source of much of the US job growth. LLC income that is retained by the business nevertheless is included in the owner’s taxable income subject to this tax increase.
The legislation also increases the capital gains tax rate for such taxpayers phases out personal exemptions and phases down itemized deductions for taxpayers with a lower adjusted gross income threshold of $300,000/$250,000, retains the $5,000,000 estate and gift tax exclusion but raises the tax rate to 40%. provides a permanent, indexed and higher alternative minimum tax exemption, and has a number of “extenders” for provisions that generally expired at the end of 2011 to carry them through 2013. IRA distributions to
