Minimum Tax Reform Act of 1985

Summary

Minimum Tax Reform Act of 1985 - Amends the Internal Revenue Code to reduce from 20 percent to 15 percent the rate of the alternate minimum tax for individuals. Increases the amounts exempted from such tax from: (1) $40,000 to $50,000 in the case of joint returns; (2) $30,000 to $40,000 in the case of individual returns; and (3) $20,000 to $25,000 in the case of estates or trusts and married individuals filing separately. Includes State and local taxes as an itemized income tax deduction for the alternative minimum tax. Provides that the alternative minimum taxable income shall not be less than the alternative minimum taxable income floor. Defines "alternative minimum taxable floor" as the sum of: (1) alternative tax investment income; plus (2) the quarter of earned income or the controlled business income of the taxpayer for the taxable year, reduced by the alternative tax itemized deductions for the taxable year. Makes specified modifications to the items of tax preference of individuals relating to dividends, circulation and experimental expenditures, bad debt reserve losses, intangible drilling costs, and the accelerated cost recovery deduction. Revises the method of calculating the alternative minimum tax on corporations. Sets the amount of such tax at an amount equal to the excess of 15 percent of the corporate alternative minimum taxable income exceeding $100,000 over the regular tax for the taxable year. Specifies the items of tax preference for purposes of the alternative minimum tax on corporations as: (1) accelerated depreciation of real property; (2) accelerated depreciation of leased personal property; (3) amortization of certified pollution control facilities; (4) mining exploration and development costs; (5) circulation and research and experimental expenditures; (6) reserves for losses on bad debts; (7) depletion; (8) intangible drilling costs; (9) accelerated cost recovery deductions; (10) certain interest where the taxpayer has tax-exempt income; (11) tertiary injectant expenses; (12) construction period carrying charges; (13) trademark and trade name expenditures; (14) completed contract method of accounting; (15) reforestation and land clearing expenses; (16) certain shipping income; (17) exempt foreign trade income; (18) interest on amounts used to acquire employee stock ownership plans; and (19) certain life insurance company deductions. Revises the method of calculating the corporate alternative minimum tax net operating loss deduction. Disallows any income tax credits to be taken against the corporate alternative minimum tax except the foreign tax credit.

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1 official file

• Introduced in Senate

  summary · EN · 18 April 1985

  Open at official source

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