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Permalink Reply by Frank Walker on July 10, 2012 at 12:57pm

I think you're really out on a limb with your prognostications.  I agree it is likely Lessors will pay more tax under President Obama in general.  The President has placed a target on the backs of those with high incomes, and Lessors oftentimes fall into President Obama's target zone for a year or two after signing a lease.

But nobody really knows, today, what is destined to happen.  Election results are unknown, Romney's ability to keep promises is unknown, the makeup of the Congress is unknown.  Efforts to do tax planning under these circumstances face the headwind of "insufficient data".

If taxes are really a huge consideration for you, one thing you could consider is a structured payout of your bonus . . . and maybe even royalties, too.  I don't personally believe in structured payouts.  I think they are risky for several reasons.  But such an arrangement might be right for a person fixated on saving taxes.  At least you would circumvent all the unknowns currently in the mix.

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Permalink Reply by Steven Kacerski on July 11, 2012 at 2:46am

Structured settlements aren't an option for royalties. 

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Permalink Reply by Brad on July 10, 2012 at 1:50pm

Frank,

I am not prophesying anything.  I am simply providing two scenarios that could come to fruition based on what the candidates themselves have conveyed to be their plan.  Bottom line......Obama's plan is to take more of one's income than Romney's plan.  If individuals want to potentially vote themselves out of thousands of dollars that is their prerogative.  I simply laid out the numbers in an objective fashion per the candidates official websites.  Do numbers have bias, or do numbers lie?  Of course we do not know if Romney will "keep his promise", but his word(and Obama's) is the only thing we have to base our facts/decisions upon.  Shall we say, "well Romney might not keep his word, so I'm going to vote for Obama"?  That would be ludicrous.  And yes, the taxes are(or should be) a huge consideration for many, and especially for those who own larger tracts of land.  A person who owns 100 acres and leases it for 500K will discover a $40,000 difference in tax revenue when comparing the two candidates tax plans.  I do consider that to be something of concern.   The people on this site are sensible people and can decide for themselves.       

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Permalink Reply by David Perotto on July 10, 2012 at 3:28pm

Obama just came out and stated they will keep the Bush tax cut for one more year (election year pandering). His administration did say that the highest tax bracket will see an increase. This should be on your radar if you think you will get a deal done soon and get paid before the end of the year. If he wins and you own a chunk of land, you will pay more in tax. In the above example that is a lot of money, expediency will help avoid the potential problem. The right company/lease and payment terms could keep some of that in your pocket.

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Permalink Reply by jason smith on July 10, 2012 at 5:59pm

Obama is buying votes to give your wealth away to a nonproducer,plain & simple.

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Permalink Reply by Steven Kacerski on July 11, 2012 at 2:44am

You would also need to consider the new Medicare surtax of 3.8% when calculating your expected tax burden.  This is more of an impact on whether you should take the money in 2012 or wait until 2013 hoping for a higher per acre bonus.

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Permalink Reply by Brad on July 11, 2012 at 4:51am

Yes that is another thing to consider although only those who make over 250K will be affected by the Medicare Tax. One of the main points of my initial post was this: Those who do not make over 250K or are not in the top two tax brackets ($217,450 or more filing jointly) should not see a raise in taxes if Obama is re-elected. His proposed plan is to only raise the top two tax brackets for whatever reason….and discourage the creation of new jobs…….simple economics…..another discussion for a different day. The majority of landowners(i.e. 30 acres or less) will not fall into the two categories afore mentioned and will therefore see no increase in taxes according to Obama. On the other hand, all of these landowners(30 acres or less) could see a substantial decrease from current rates IF Romney is elected and IF he implements the tax cuts he has pledged to. His official plan is to cut all rates by 20%. Thus it could be advantageous to wait and see if Romney is re-elected, at least for smaller landowners…… since they will most likely not be affected directly by tax increase anyway. It is a gamble either way and each landowner has to decide for himself/herself. I am optimistic that we will see a landslide in November, because people have finally realized what a Marxist Obama is. I will therefore most likely choose to lease in 2013. I am more of a risk taker than some. Sometimes it pays…..sometimes it doesn’t. :) I guess the questions people have to ask themselves is: Do I want to keep more of my own money? Which candidate is most likely to make that happen? I strongly believe in charitable giving, but not via the forceful hand of an inefficient, bloated government

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Permalink Reply by Steven Kacerski on July 11, 2012 at 5:27am

You're right, there is a lot to consider, especially on the tax side.  The uncertainty over the change in future tax rates makes it even more difficult, although it keeps CPA's like me very busy.  I only brought up the medicare surtax since you're initial example was based on someone earning $300K. 

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