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86-88 Effect of the Tax Reform Act of 1986 on NASD Qualifications Examinations

TO: All NASD Members and Other Interested Persons

ATTN: REGISTRATION, TRAINING AND COMPLIANCE PERSONNEL AND BRANCH OFFICE MANAGERS

The recently enacted Tax Reform Act of 1986 (the "Act") will impact the subject matter of the qualification examinations administered by the NASD. Existing test items affected by these changes will be modified to reflect the new provisions of the Act on January 1, 1987. New questions on relevant areas of the Act will also be added to the appropriate examinations on January 1, 1987.

The attached chart lists the major substantive areas affected by the Act and identifies the specific examinations and related study outline sections impacted by these changes. Members are advised to ensure that training materials are updated to reflect the new tax law provisions for all representatives and principals who intend to sit for qualification examinations in 1987.

Questions regarding this notice should be directed to Carole Hartzog, NASD Qualifications Department, at (301) 738-6696.

Sincerely,

Frank J. McAuliffe
Vice President
Qualifications Department

TAX REFORM ACT OF 1986

Effect on NASD Qualification Examinations (Study Outline Sections)

Substantive Areas Affected by the Act

Test Series *

 

2

4

6

7

8

22

24

26

39

52

INDIVIDUAL TAXATION

                   

New Tax Rates

5.9

1.4

2.13

3.3

Alternative Minimum Tax

4.1.7

3.3

1.4

RETIREMENT PLANS

                   

Individual Retirement Account (IRAs)

5.7

2.1

3.3

12.4

2.3.2

3.1

2.3

Cash or Deferred Arrangements (401(k) Plans)

5.7

3.3

12.4

2.3

3.1

2.3

Employee Stock Ownership Plans (ESOPs)

5.7

3.3

12.4

2.3

3.1

2.3

BUSINESS TAXATION

                   

Accelerated Cost Recovery System

4.1.7

3.2

Investment Tax Credit

4.1.7

3.2

Research & Development Credit

3.3

TAXATION OF INVESTMENTS & TAX SHELTERS

                   

Municipal Securities

                   

After-Tax Yields

5.12

1.1.3

4.5

page 14

Interest Income

5.12

1.1.3

5.2

page 4

Capital Gains

2.2

1.6

2.1

4.1.7

3.3

1.4

page 4

       

5.2.2

         

page 14

Dividend Exclusion

2.1

5.2.1

Passive Loss Limitation

4.1.7

3.3

Low Income Housing Credit

4.1.7

3.2

At-Risk Rules for Real Estate

4.1.7

3.3

Construction Period Interest

4.1.7

3.2

1.4

First Year Expensing

4.1.7

3.2

Depreciation Recapture

4.1.7

3.2

Rehabilitation Tax Credit

4.1.7

3.2

Symbol

Company

Location

FFPR

First Federal Savings Bank

San Juan, Puerto Rico

FFBT

First Federal Savings Bank & Trust

Pontiac, MI

GGLF

Georgia Gulf Corporation

Atlanta, GA

KENT

Kent International, Inc.

Kearney, NJ

LAWR

Lawrence Insurance Group, Inc.

New York, NY

MBSX

MBS Textbook Exchange

Columbia, MO

MTCH

MTech Corp.

Irving, TX

MMSB

Mid Maine Mutual Savings Bank, F.S.B.

Auburn, ME

MFSL

Midland Financial Savings & Loan Association

Des Moines, IA

QUIK

Quiksilver, Inc.

Newport Beach, CA

REED

Reed Jewelers, Inc.

Wilmington, NC

SGSI

SAGE Software, Inc.

Rockville, MD

WBST

Webster Financial Corp.

Waterbury, CT

WASC

Western Auto Supply Company

Kansas City, MO

NASDAQ/NMS Interim Additions

Symbol*

Security

Date of Entry

NAHAK

North American Holding Corp. (Cl A Non-voting)

11/24/86

EDGC

Edgcomb Corporation

11/25/86

PCSI

PCS, Inc.

11/25/86

WSFS

Wilmington Savings Fund Society Federal Savings Bank

11/26/86

EBCO

Ehrlich Bober Financial Corporation

12/02/86

PHBK

Peoples Heritage Savings Bank

12/04/86

LPLI

LPL Investment Group, Inc.

12/05/86

UNMAA

Uni-Marts, Inc. (Cl A)

12/05/86

Special Note: Grove Hall Savings Bank (GROV) and The People's Savings Bank of New Britain (PBNB) did not enter NASDAQ/NMS on December 2, 1986, as previously announced. The firms' entrances into NASDAQ/NMS have been re-scheduled for January 6, 1987.

The following changes to the list of NASDAQ/NMS securities occurred since November 21, 1986:

NASDAQ/NMS Symbol* And/Or Name Changes

New/Old Symbol*

New/Old Security

Date of Change

NOVXW/NOVXW

Nova Pharmaceutical Corporation (Cl A 02/05/88 Wts)/Nova Pharmaceutical Corporation (Cl A 02/05/87 Wts)

11/26/86

ECON/ECON

Ecolab, Inc./Economics Laboratory, Inc.

12/01/86

MASB/MASB

MASSBANK Corporation/MASSBANK for Savings

12/02/86

SCIE/SCIE

Scicom Data Services, Ltd./ Scientific Computers, Inc.

12/05/86

ISBJ/ISBJ

Interchange Financial Services Corporation/Interchange State Bank

12/08/86

NASDAQ/NMS Deletions

Symbol*

Security

Date

AMSR

American Medical Services, Inc.

11/21/86

NHCC

National Health Corporation

11/21/86

STFL

Stifel Financial Corporation

11/24/86

JNAL

Jackson National Life Insurance Company

11/26/86

CBNJ

Commercial Bancshares, Inc.

12/01/86

PTCCW

Poly cast Technology Corporation (Wts)

12/01/86

INTS

Intelligent Systems Corporation

12/02/86

RBOK

Reebok International Ltd.

12/03/86

FRRI

Franklin Resources, Inc.

12/05/86

PRCLS

Property Investors of Colorado

12/05/86

Any questions regarding this notice should be directed to Kit Milholland, Senior Analyst, NASDAQ Operations, at (202) 728-8281. Questions pertaining to trade reporting rules should be directed to Leon Bastien, Assistant Director, Market Surveillance, at (202) 728-8192.

Sincerely,

Gordon S. Macklin
President


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