Tax bill's impact on investment -- for individuals, businesses

Last year, Congress aimed to encourage business investment by ripping away confining layers of taxation. This year, in an effort to reduce huge deficits, Congress is tacking a few of those layers back on.

The Tax Equity and Fiscal Responsibility Act of 1982, while leaving much of last year's gain for business intact, will complicate many investment decisions for both corporations and individuals, according to tax experts.

''This will make planning for investments much more difficult,'' says Arnold Koonin, a tax partner with Coopers & Lybrand.

''There's a whole range of economic activity that's going to be affected,'' adds David Kautter, tax partner at Arthur Young & Co.

Individuals. For individuals, the impact will be limited to those perched in the top tax brackets.

The restructured alternative minimum tax (AMT) on individuals will make it more difficult to calculate the potential return of an investment, say accountants. The AMT, which will reduce the value of certain tax breaks, aims to make sure wealthy individuals pay at least some tax.

Those subject to the AMT should probably reconsider most tax shelter investments, or move them forward into 1982, say accountants. In particular, executives should exercise any stock options this year, rather than wait for 1983.

Up until last year, accountants urged wealthy individuals to convert investment income into earned income, if possible, since investment income tax rates were higher.

But last year's tax cut evened taxation on the two types of income. Combined with this year's newly structured AMT, the change has ''swung the pendulum back, making it more attractive to convert what could be earned income into investment income,'' says Mr. Koonin.

Sophisticated investors will also face new restrictions on fancy types of bonds. For instance, those who ''strip'' bonds - rip off and keep dividend coupons, while selling the body of the bond at a tax loss - will find the tax advantage to their action eliminated.

Business. Last year, Congress gave business a brand new tax toy - accelerated depreciation for new plants and equipment. This year's bill makes that toy less attractive.

Beginning in 1983, for most assets depreciated under the accelerated schedule , investment tax credits will be watered down, a move Congress estimates will raise $4.3 billion over the next three years. Further liberalization of depreciation rules, scheduled to take effect in 1985 and '86, will now never take place - saving the Treasury an estimated $30 billion through 1987.

For most businesses, the depreciation changes take back only a small piece of last year's new benefits, say tax experts.

''But some industries, such as high-technology, that didn't get a whole lot from last year's depreciation changes, will now be worse off than if there hadn't been any bill at all,'' says David Kautter of Arthur Young.

''Safe harbor'' leasing, another business benefit from last year's bill, will also be scaled back. Among other things, companies will be prohibited from reducing tax liability by more than 50 percent through such leases. Aimed at eliminating much-publicized abuses, the changes will substantially reduce safe-harbor leasing activity, according to a Coopers & Lybrand tax publication.

The changes are also highly complex: ''Last year, our tax booklet covered safe-harbor leasing in two pages,'' sighs Don Wiese of Touche Ross. ''This year the section is 10 times as long.''

But provisions restricting the tax advantages of corporate mergers and acquisitions will likely prove the biggest morass of the new tax bill.

''A sheer horror story,'' says one accountant. ''Monstrosity,'' says another.

Among other complexities, the changes include an apparent mistake that would allow corporations selling subsidiaries to be retroactively stuck with major tax liabilities they weren't expecting, according to accountants at Peat, Marwick, Mitchell.

Other wide-ranging business provisions in the new tax bill:

Corporations will now be forced to pay taxes faster, a change Congress estimates will gather in an extra $5.3 billion by 1985.

In an effort to ensure corporations pay a minimum tax, the value of certain tax breaks will be reduced by 15 percent.

Next: How the new tax bill helps the IRS enforce tax laws.