Key employees in group-term insurance plans adversely affected by Tax Reform Act

Article Abstract:

The Tax Reform Act of 1986 makes a number of changes in the treatment of discriminatory group-term insurance plans. Key employees in these kinds of plans may have additional income as a result. For key employees who are favored by discriminatory plans, the full cost of the insurance is included in the employee's income. The exclusion for the cost of the first $50,000 of insurance is not available. Under the new law, there are three general rules for non-discriminatory group-term plans: an eligibility test; a benefits test; and an alternative test that may be applied in place of the other two tests. Benefits tests are applied separately to active and former employees.

Group insurance

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Equipment leasing limited partnerships continue to provide tax savings

Article Abstract:

Equipment leasing limited partnerships as tax shelters have been affected by the Tax Reform Act of 1986. The top individual tax rate was cut from 50 to 28%, regular investment tax credits repealed, and cost recovery periods for several property categories extended. An investment in an equipment leasing limited partnership compares the effects of the Tax Reform Act with conditions preceding the Act. In the example, after-tax return dropped from 7.6% prior to the Act to 1.5%.

Limited partnership, Limited partnerships, Industrial equipment leases

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Planning can prevent reclassification of independent contractors to employees

Article Abstract:

Properly classifying workers as employees or independent contractors is important in applying many tax provisions, and affects such areas as employment taxes, employee business expenses, and employee benefits. Factors which determine the worker's status, consequences of incorrect classification, and means for insuring the desired classification are discussed.

Management, Employment, Employee benefits, Classification

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