Banks and individuals are exposed to the same tax treatment for municipal securities holdings under the Tax Reform Act of 1986.

Question

Quizplus · Accepted Answer

The Tax Reform Act of 1986 introduced different tax treatments for banks and individual investors regarding the interest income from municipal securities. Individuals generally receive tax-exempt interest income from these securities, while banks may have limitations on their ability to exclude this interest from taxable income, depending on certain investment thresholds and their reserve requirements.

Banks and Individuals Are Exposed to the Same Tax Treatment