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
Pension funding agreement under which funds paid into a retirement plan are not currently allocated to purchase retirement benefits. The funds of one plan can not be commingled with funds ...
Fund established to pay specified losses, usually the low severity property losses. This type of account is an excellent device in conjunction with a self-insurance plan, in which the fund ...
Professional designation earned after the successful completion of five national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as accident ...
Same as term Cost-Of-Living Adjustment: automatic adjustment applied to Social Security retirement payments when the consumer price index increases at a rate of at least 3%, the first ...
under contract law, anything of value exchanged for a promise or for performance that is needed to make an instrument binding on the contracting parties. adherence to all provisions of an ...
Standard set under the occupational safety and health act that sets allowable levels of worker exposure to such toxic substances as asbestos, certain chemicals, and radiation. In many cases ...
Provision that the equity of an insured in a life insurance policy cannot be forfeited. There are four benefits a policyholder can select under the option: cash surrender value, extended ...
Arrangement between the seller and the buyer in which the buyer has the right to buy (call option) or sell (put option) a security at some time in the future at a price stipulated at ...
Legislation that provides support for legal actions against individuals or organizations involved in systematic illegal activities. This act has been applied against insurance organizations ...
Have a question or comment?
We're here to help.