BBC&B Tax Update

• For 1997, the IRS raised the standard mileage rate for business use of an automobile to 31.5 cents per mile, up from 31 cents per mile in 1996. Employers may use this rate to value employee personal use of a company provided vehicle in 1997.
• Damages received as a result of employment discrimination (such as race, gender, age, national origin) are now fully taxable, whereas before recent legislation and court decisions, these types of damages could be excluded from income.
• Legislation enacted in 1996 added a tax credit for qualified adoption expenses. Also, employer-paid adoption expenses are excludable from an employee’s income up to $5,000 for adoption, or in the case of a child with special needs, $6,000. There are income limitations and other restrictions on the credit and the exclusion.
• Electronic and on-line filing programs for individual returns using Form 1040 have been updated for 1997, and now all IRS Service Centers are equipped to receive and process electronic returns.
• The Social Security Administration announced that the contribution and benefit base for 1997 remuneration and self-employment income is $65,400, up from $62,700.