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
Coverage that is renewable at the option of the insured, who is not required to take a medical examination. Regardless of physical condition, the insured must be allowed to renew the policy ...
Same as term Fair access to Insurance Requirements: insurance that grew out of the urban demonstrations and riots of the 1960s. Because of the deteriorated social and economic circumstances ...
Automobile purchased or leased by the insured or the insured's spouse that takes the place of the insured or the insured spouse's present car as covered in the personal automobile policy ...
Coverage for bodily injury, property damage or destruction, for which the insured garage and/or its representatives become legally liable resulting from the operation of the garage. For ...
Coverage in which individuals who cannot obtain conventional automobile liability insurance, usually because of adverse driving records, are placed in a residual insurance market. Insurance ...
Annual contributions to a pension plan that exceed or are smaller than the minimum required for future employee benefits currently being earned; and any supplemental liability for past ...
Means used by a direct fire underwriter to protect against accumulation for a fire account, as well as against extremely large fire account liability. For example, heavy liabilities under ...
Type of livestock insurance that covers for cattle and sheep on the range from October 1 to May 1 in the Western states. Perils insured against are the weather, including freezing; most ...
Liability reserve required to be maintained by the national association of insurance commissioners (naic) prior to 1992 for fluctuations in the values of investments in securities. Realized ...
Have a question or comment?
We're here to help.