Tax Reform Act

Tax Reform Act - Title I: Income Tax Amendments - Repeals Internal Revenue Code tax preference provisions pertaining to work incentive programs, alternative tax, minimum tax, dividend exclusion for individuals, depreciation of low-income rental housing, class lives, amortization of pollution control facilities, research, development, and experimental expenditures, amortization of railway rolling stock and job training and child care facilities, and coal, timber and domestic iron ore, expenditures, trusts and estates, earned income, DISCS, ESOPS, small business stock, and the 50 percent tax limitation on personal service income. Directs the Secretary of the Treasury to report to Congress concerning tax credit provisions which are not contained within the Internal Revenue Code.

Increases the maximum surtax exemption, but reduces it, along a graduated scale, for larger corporations. Limits the investment tax credit to taxpayers with net assets below $2, million. Limits intangible drilling expense deductions to exploratory wells. Limits certain business deductions for taxpayers with a certain amount of specified tax preferences. Provides for a direct Federal subsidy, in lieu of a tax exclusion, for interest on certain governmental obligations. Limits the deductions for mortgage interest and individual investment interest. Limits the accounting methods used for depreciation deductions for transferred realty and expands the class of property covered by the special rules for such deductions. Limits the special deductions attributable to farming. Disqualifies from treatment as a corporate reorganization, any transaction in which the shareholders of any corporation end up with less than 25 percent of the total resulting voting power. Repeals the special treatment of bad debt reserves by banks and savings and loan institutions. Limits the aggregate allowance for depletion for any property to the adjusted basis of the property as determined without regard to depletion deductions. Repeals the "fresh start" adjustment for carryover property passing at death which receives a carryover basis. Provides for the inclusion in gross income of the taxpayer's pro rata share of profits made by certain controlled foreign corporations, with special rules for adjustments to basis, the elimination of double taxation, accounting and record requirements, and coordination with other tax provisions.

Title II: Tax Relief Amendments - Reduces the individual marginal income tax rates by one percent. Allows individuals a $250 income tax credit in lieu of each personal exemption.