Tax Reform Act Of 1986
Definition of "Tax reform act of 1986"
Legislation to eliminate most tax shelters and write-offs in exchange for lower rates for both corporation and individuals. It was intended to be revenue neutral; that is, to bring in the same amount of revenue as the previous law.
- For individuals, it eliminated deductions for most tax shelters such as tax-advantaged limited partnerships; it eliminated special treatment for capital gains by taxing them at the same rate as ordinary income.
- Deductions for an INDIVIDUAL RETIREMENT ACCOUNT (IRA) no longer applied to those with incomes above $35,000 and couples above$50,000 unless they had no company pension plan. Individuals with incomes between $25,000 and $35,000 and couples between$40,000 and $50,000 got a partial deduction.
- For company-sponsored 401 (k) salary reduction plans, the maximum annual limit was reduced from $30,000 to $7000; antidiscrimination rules were tightened; and a 10% penalty was imposed for withdrawals before age 59/2.
- Other administrative changes made it more expensive for companies to start or maintain a company pension plan.
- CASH VALUE LIFE INSURANCE was one of the few retirement vehicles to retain its tax-deferred status.
- Top individual tax rates were reduced from a series of rates going up to 50% to two rates: 15% and 28%, although the top marginalrate was 33%.
- The top corporate rate down from 46% to 34%.
- The investment tax credit was eliminated and depreciation schedules were lengthened.
- Many industries lost special advantages they held under the old code.
- The alternative minimum tax was stiffened for individuals and one was added for corporations.
Popular Insurance Terms
Holding of property, or otherwise acting on behalf of another in trust. The fiduciary must exercise due care in safeguarding property left under personal care, custody, and control. ...
Rate used as the basis for calculating benefits under workers compensation insurance. ...
Method of calculating retirement benefits under pen ...
Premise that, out of a large group of people, a given number will die each year (conversely, a given number will remain alive each year) until all the people in that original group are ...
Unit of the life office management association (LOMA), which prepares and administers educational materials for the Fellow Life Management Institute (FLMI) Program. Upon successful ...
Over a long period of time, the average loss an individual, individuals, or an organization can expect to incur from a particular exposure. ...
Program instituted by the Small Business Administration (SBA) that guarantees a construction contract bond in the event the issuing surety company suffers a loss. This is an effort by the ...
Direct relationship between the use to which a building is put and the likelihood that it will catch on fire. Occupancy is one of the most important factors in setting fire insurance rates. ...
Arrangement by an employer in which employees share in profits of the business. To be a qualified plan, a predetermined formula must be used to determine contributions to the plan and ...
Have a question or comment?
We're here to help.