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
State laws based on a model law of the National Association of Insurance Commissioners (NAIC) that allow insurers to set rates independently; or adopt those rates developed by a rating ...
Coverage for liability for damage to property of others from untimely discharge of fire-fighting sprinkler systems. This coverage is available as an endorsement to broad-form comprehensive ...
Inquiry conducted by a committee of the legislature of the State of New York in 1905 that looked at abuses of life insurance companies operating in the state. This study led to stricter ...
Insurance company that is a member of a rating bureau. The insurer usually joins such an organization when its statistical experience in a given line of insurance is not sufficient for it ...
Estimate of maximum dollar value that can be lost under realistic situations. For example, a fire or other peril occurs, but a sprinkler system works and a fire department responds in good ...
Type of benefit in which an employee obtains shares of stock in the company, the amount normally determined by the employee's level of compensation. ESOP acts as a leverage tool through ...
Structure. In general, company functions are delegated to several departments: actuarial, agency, claims and loss control, investments, legal, marketing, and underwriting. ...
Figure used in calculating a worker's primary insurance amount (PIA) to determine Social Security benefits in the following manner: calculate the number of years between the worker's ...
Percentage of income required by a retiree to maintain a desired standard of living during the retirement years. ...
Have a question or comment?
We're here to help.