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
Agent who is licensed and who markets and services insurance policies in a state in which he or she is not domiciled. ...
Coverage following the same structure as group term, the significant difference being that premiums go toward the purchase of permanent insurance instead of term insurance. The employee has ...
One that combines the two forms of ownership, stock and mutual. A stock insurance company is owned by stockholders, whereas a mutual insurance company is owned by its policyholders. A mixed ...
Liability insurance that provides coverage for the insured in the event the insured's negligent acts and/or omissions result in libel, slander, invasion of privacy, or false arrest suit. ...
Coverage of the employer for all employees on a blanket basis, with the maximum limit of coverage applied to any one loss without regard for the number of employees involved. Both ...
Same as term Buy-Back Deductible: deductible eliminated through the payment of an additional premium, resulting in first-dollar coverage under the policy. ...
Liability or loss resulting from an accident. Such liability or losses are covered under such policies as the following: business automobile policy (BAP), business property and liability ...
Clause in some current ASSUMPTION WHOLE LIFE INSURANCE policies Such as UNIVERSAL LIFE insurance that allows unscheduled premiums to be paid at any time prior to the policy's maturity date, ...
Contract first written in 1918 that provided the basis for modern-day property insurance, both personal and commercial. Forms and endorsements must be added to complete the policy and ...
Have a question or comment?
We're here to help.