Starting in 1998, the holding period for long-term capital gains is reduced to 12 months from 18 months for most assets.

The IRS will be restructured to changed the present three-tier geographic structure to one that features operating units serving particular groups of taxpayers. The IRS will also be revising its mission statement to place greater emphasis on serving the public.

Starting in 1998, taxpayers with dependent children under age 17 will receive a $400 tax credit ($500 in 1999) for each qualifying child.

Starting in 1998, there is a new type of IRA available. Contributions to a Roth IRA will be nondeductible while distributions will be tax free. Like the old (traditional) IRAs there are both contribution and adjusted gross income (AGI) limits associated with the new Roth IRA contributions.

Starting in 1998, the unified credit is increased form $192,800 to $202,500. The credit continues to increase until the year 2006 when it reaches $345,800. The unified credit is available to offset estate and gift transfer taxes. The nontaxable amount of a decedent's estate which can be transferred tax free will increase form $600,000 in 1997 to $1,000,000 by the year 2006

The 10% penalty will not be assessed taxpayers who withdraw IRA money prior to reaching age 59½ when the proceeds are used for a first-time homebuyer for qualified home acquisition costs.

The 10% penalty does not apply to IRA distributions if the taxpayer uses the money to pay for "qualified higher educational expenses".

Starting in 1998, the standard mileage rate for computing the charitable deduction is increased from 12 to 14 cents per mile.

For tax years starting after 1998, the home office deduction rules established in the Soliman court case will be relaxed. The new rules will allow office-in-home deductions where the home office is used only for administrative or management activities.

Starting in 1998, taxpayers subject to the Department of Transportation service limitations will get an increase from 50% to 80% (over a 10 year period) in the amount allowable as a deduction for food or beverage consumed while traveling on business away form home.

For tax years beginning after December 31, 1997, the corporate AMT for small business corporations (under $5,000,000 in sales) is repealed.

Starting in 1998, payments of $600 or more made to attorneys for legal services from a trade or business will need to be reported on Form 1099-MISC. The exemption from reporting requirements for payments to corporations doesn't apply to attorney's fees.

Starting in 1998, two new educational tax credits will be available.

The "Hope Scholarship" credit is available for expenses paid after December 31, 1997. It covers costs for tuition and fees incurred during the first two years of post-secondary education.

The "Lifetime Learning" credit is available for expenses paid after June 30, 1998. It is 20% of the first $5,000 of tuition and fees to a maximum total credit of $1,000.

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.