1. EXCLUSION OF GAIN ON YOUR PERSONAL RESIDENCE

On August 5, 1997, President Clinton signed the Balanced Budget Act of 1997 and the Taxpayer Relief Act of 1997 into law. Heralded by the politicians in Washington as landmark legislation, these two laws are supposed to balance the federal budget by 2002 and cut taxes by about $95 billion over a five-year period. If a balanced budget is achieved, it will be the first time since 1969. The new legislation cuts federal spending by about $260 billion over five years, with $115 billion of that coming from lower Medicare reimbursement to hospitals and doctors. The tax law makes more than 800 changes to the already massive tax code, changes that affect nearly everyone. The effective dates for the changes vary. Some provisions are retroactive, some take effect immediately, and many go into effect in 1998 or later. Many of the new provisions are phased out at differing income levels. Individuals will get a variety of new tax breaks. The law provides a tax credit for children under 17, creates college tuition tax credits and education IRAs, and allows penalty-free withdrawals from individual retirement accounts for qualified education expenses and first home purchases. Capital gains taxes are cut, and the rules for taxing home sales are completely revised. Fewer estates will be subject to taxes, and special estate tax breaks are provided for qualifying small businesses and family farms. Businesses will see many changes, too, including a revision of the rules governing home-office deductions, an exemption from the alternative minimum tax for qualifying small businesses, and an increase in the health insurance deduction for self-employeds. This page is intended to give you general information on the major provisions in the new law. Please take a few minutes to read these pages; then if you have questions about how the new law will affect you, or if you wish to review your tax planning in light of the new law, please contact our office. Filetax has a new tax tip each week, bookmark the page and come back again.

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SOURCE:http://www.filetax.com/97taxact.html#estate

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