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
Same as term Dynamic: changing state of the economy associated with changes in human wants and desires such that losses or gains occur. Dynamic changes are not insurable. ...
Funding of an employee's benefits in a pension plan for his or her beginning past service of employment. This is a significant cost factor in pension planning and financing of future ...
Type of guaranteed investment contract in which the interest rate credited is tied to an external index such as the United States Treasury Bond Index. ...
Policy used to provide the funds for buy and sell agreements under which an income payment or a series of income payments is paid to the buyer of the disabled partner's interest contained ...
State law that limits the admitted value of an insurance company's EDP equipment to 3% of the company's ADJUSTED SURPLUS. ...
Unfunded trust that acts as the owner of a life insurance policy. The trust receives a donor's cash payments on a periodic basis, from which the beneficiary of the trust has a specified ...
Specified amount received by an insured at the end of an endowment period (usually the face amount of the endowment policy), or by the owner of an ordinary life policy (usually the ...
Explicit liability reserve, required by the national association of insurance commissioners (naic), established for all invested asset classes. Specific reserves are established for real ...
Bonds that are less than investment grade plus the bonds that are in or approaching default, which comprise part of the insurance company's investment bond portfolio. ...

Have a question or comment?
We're here to help.