6 bracket the taxpayer relief act of 1997 made major

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a 39.6 bracket. The Taxpayer Relief Act of 1997 made major modi fi cations to capital gains. The holding period of capital assets to qualify as long term was extended from more than 12 months to more than 18 months. Also, the long-term capital gains tax rate for many items decreased from 28 percent to 20 percent. The IRS Restructuring and Reform Act of 1998 changed the holding period for long term classi fi cation from more than 18 months to more than 12 months. The year 2000 saw the passage of three important tax bills that contain many provisions impacting taxpayers. The Community Renewal Tax Relief Act of 2000 was contained in the Consolidated Appropriations Act, 2001. This Act renewed provisions designed to enhance investment in low- and moderate-income, rural and urban communities. The Act also extended for two years medical savings accounts (MSAs). Also included was a provision expanding innocent spouse relief. The Installment Tax Correction Act of 2000 reinstated the availability
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3 Instructor’s Manual © 2009 CCH. All Rights Reserved. Chapter 1 of the installment method of accounting for accrual basis taxpayers. The year 2001 brought another tax bill, the Economic Growth and Tax Relief Reconciliation Act of 2001. The major provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 are: reduction in the individual income tax rates; increased 401(k) and IRA contributions; tax relief for fi nancing higher education, including graduate education; estate and gift tax relief; and a reduction in the marriage penalty. The highlights of the Jobs and Growth Tax Relief Reconciliation Act of 2003 are the rate reductions for individuals, the marriage penalty is reduced, the child tax credit is increased, the maximum tax rate for most long-term capital gains is reduced, the tax rate on dividend income is reduced, additional fi rst-year depreciation is increased, the alternative minimum tax exemption is increased, the accumulated earnings tax rate is reduced, and the tax on undistributed personal holding company income is reduced. The Working Families Tax Relief Act of 2004 extended many of the provisions which were set to expire in 2004. The Pension Protection Act of 2006 contains numerous provisions to strengthen current employer pension plans. Speci fi c reference was given to de fi ned bene fi t plans. The Emergency Economic Stabilization Act of 2008 provided $700 billion to stabilize the economy. The Act also extended numerous tax provisions that were set to expire at the end of 2008. Included in this list is the AMT (alternative minimum tax). Basic Tax Concepts ¶1195 Essential Tax Terms De fi ned Terms that have de fi nitions peculiar to income taxation and familiarity with which may be of use before proceeding to the discussion of speci fi c tax topics set out in the chapters are presented for review. Refer to the Glossary of Tax Terms in the back of the book for a comprehensive listing of the tax terms discussed in the explanatory text.
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