The Taxpayer Relief Act of 1997, signed into law on August 5, 1997, contains numerous changes that affect your 1997 tax return. Following are some of the significant changes. There are many more changes that will affect your 1998 and beyond returns which are not covered here.

Effective for sales of residences after May 6, 1997, gain of up to $500,000 (married filing jointly) or $250,000 (other returns) will be excluded from tax. Taxpayers are eligible to take the gain exclusion only once every 2 years.

Starting in 1997, couples with a non-working spouse will each be able to make a $2,000 IRA contribution. Prior to the change, non-working spouses were limited to a maximum combined contribution of $2,250.

Starting for sales after May 6, 1997, the tax rate for sales of capital assets is reduced. The rules are quite complicated and create three holding periods and five potential rates.

Starting in 1997, self-employed taxpayers may deduct 40% of their health insurance premium, up from 30%. This limit is gradually increased until the year 2005 to a maximum of 80%

Business will be able to expense more qualifying depreciable equipment purchases. The old limit of $17,500 increases to $18,000 in 1997 and then stair-steps up to $25,000 by the year 2005.

Employees covered by high deductible health plans will become eligible for a new Medical Savings Account. Participants will be able to claim more favorable tax deductions for medical insurance deductibles paid out of the Medical Savings Account.

Previously, taxpayers were required to start taking minimum pension distributions once they reached a certain age. Starting in 1997, required distributions must begin no later than April 1 ^st of the year you reach 70 1/2 or the calendar year you retire, whichever is later.

Adopting parents may receive credits up to $5,000 t cover their adoption expenses beginning in 1997. The benefits will be phased out for high-income taxpayers starting at an AGI of $75,000 and is completely phased out at $115,000.

Starting in 1997, you will be able to treat a portion of your long-term care expenses and long-term care premiums as medical expenses for itemized deductions.

Starting in 1997, a new simplified retirement plan is available. It is designed for employers with no more than 100 employees and may be set up as an IRA or 401(k) plan.

All information provided is general in nature and intended to create awareness, not to address the specific circumstances or concerns of any individual or entity. Although we try to provide correct and timely information, we cannot guarantee the accuracy of any information or that such information will continue to be accurate in the future due to the changing nature of the tax laws. Before acting on any of the information provided here, you should consult with a professional advisor who knows all of the unique facts and circumstances pertinent to your particular situation.