I was having lunch today and...

it suddenly dawned on me.  I felt like an idiot for not reaching this conclusion earlier.

I'd been wondering why George Lucas had chosen to sell his company, Lucasfilm to Disney when he did.  I don't believe he's going to completely retire.  I believe he plans to make more films, including a prequel and sequel to "Red Tails".  He will definitely be a consultant on Star Wars, Episode VII for Disney.

So why did he sell?  Because he's a genius.  We knew that from his creation of Star Wars.  We knew that from his negotiating with Fox to get the merchandising rights, sequel rights and rights to novelizations of anything connected with Star Wars.  Following his success in this arena, no film studio would ever consider giving up any major piece of those rights to a director afterward.

But what makes this move to sell his company now genius?  Because it will save him tens, maybe hundreds of millions of dollars in income tax.  Capital gains taxes in 2012 are set at 15% for someone in Lucas' tax bracket.  They will go up to 20% on January 1st, 2013.  In addition, there will be an additional tax on these gains of 3.8% to pay for Obamacare.  So his profit on the sale of his company will be taxed 8.8% less by selling now than selling in the future; unless of course, Congress chooses to lower those rates back to present levels as part of avoiding the so-called 'fiscal cliff'.

Lucas sold his company for just over $4 billion.  If his profit on the transaction is only one-half of that amount, or $2 billion, then selling in 2012 is saving him $176 million in taxes.  If the profit is $3 billion, that's roughly $264 million in tax savings.  Even when you're worth more than $4 billion, saving a quarter billion in tax is a significant amount of money.

I think there are a lot of other smart people out there, doing just what George Lucas is doing.  This raises a danger that I think we and more importantly, our politicians need to be aware of as they're trying to deal with this fiscal cliff thing.  There is going to be a lot of extra capital gains income tax collected in FY2012 over prior years.  Some will look at this as a positive sign and use it to justify reduced cuts in spending.  That's a trap because the one year increase in revenue is artificial, caused by this tax increase.  Unless Congress repeals those tax increases, there will be more sell-offs of investments before the end of the year, to capture those tax savings.

Maybe this is the time for you to make such a move.  If you have investments that you've had a large gain on that's subject to capital gains taxation, you might want to consider selling now.  Of course, consult with your tax and investment advisors.

But there's no question, George Lucas is a genius.