End of year is when many a small family woodworking business looks at its books and determines whether or not it is still, legitimately, in business. The ledger shows equity, which may consist of lumber inventory, work in progress, tools and machinery, and good will established among loyal customers.
If your good will has grown, and your customers are contractors, designers and commercial businesses likely return steadily for reorders, there is a business to hand on the another generation - provided there is interest among successors in operating a wood shop.
The lightening rod issue of estate taxes looms large here, as the debate in Washington rages around growing revenue and reducing deductions -and avoid of the Fiscal Cliff.
Our government representatives, who haven't provided guiding leadership in industrial policies, are missing an opportunity with the forest products industries in particular - with our abundance of timber resources and ready export markets.
Will they stumble once more in settling on an adjustment to the estate tax? If not handled properly, changes in estate tax can doom small businesses, like sawmills and lumbering operations, from continuing on to a succeeding generation. In short, to pay the tax bill, descendants have to sell the business, or in find ways reduce its taxable value that can harm it as an ongoing business.
It's true that the Internal Revenue Service allows agricultural-based businesses to make these payments in installments, but it places debt on the balance sheet and makes the business a less desirable loan applicant.
The President is proposing to raise the estate tax on inheritances from the current 35% up to 45%; and to tax the first $3.5 million of an estate's value (up from the current base of $5.12 - which could land-heavy put family-run forest and timber operations on the endangered list, as well as many architectural millwork businesses that have reached significant scale.
We should look elsewhere for revenue.
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