Timing can be one of the mostimportant things you need to consider when you're thinking aboutselling an agency. Why? Because the current capital gains tax rate(through the end of 2010) is at a historical low rate of 15 percentfor the higher marginal income tax rates. While it's unclearwhether the capital gains tax rate will rise over the next two tothree years, it's a safe bet that it will not go down.
Assuming Congress takes no action in 2010, under the existinglaws, the capital gains tax rate will automatically increase to 20percent on January 1, 2011 for a whopping 33 percent increase.
So how does this affect owners ofretail insurance agencies, MGAs, and MGUs who are contemplating apotential sale or creating a perpetuation plan? Capital gains taxescan dramatically impact on what you "take to the bank."
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