eGrove (Univ. of Mississippi)

American Institute of Certified Public Accountants

Tax Adviser 
Volume 12 Issue 7 Article 8 
1981 
Author index, 12 months ended June 1981 
American Institute of Certified Public Accountants 
Follow this and additional works at: https://egrove.olemiss.edu/tax_adviser 
 Part of the Accounting Commons, and the Taxation Commons 
Recommended Citation 
American Institute of Certified Public Accountants (1981) "Author index, 12 months ended June 1981," 
Tax Adviser: Vol. 12: Iss. 7, Article 8. 
Available at: https://egrove.olemiss.edu/tax_adviser/vol12/iss7/8 
This Article is brought to you for free and open access by eGrove. It has been accepted for inclusion in Tax Adviser 
by an authorized editor of eGrove. For more information, please contact egrove@olemiss.edu. 
author index.
--------------
12 months ended
June 1981
Abbin, Byrle M.
Significant recent developments concerning estate planning
—1981. Part 1—81:202. Part 11—81:266. Part 111—81:336.
Adler, Michael
The
 allocation of interest and R&D under Regs. Sec. 1.861-  
8(e): questions from 
the
 entrails. 80:597.
Adney, John T.
Life insurance companies and the income tax: recent judicial
 
developments. 80:388.
Berenson, David A.
The Bankruptcy Tax Act of 1980. Part I—81:68. Part II—
 
81:147. Part 111—81:277.
Bishop, David G.
Recapture of excess housing deductions under the
 
Technical  
Corrections Act of 1979. 80:411.
Blank, Jacob M.
The Bankruptcy Tax Act of 1980. Part I—81:68. Part II—
 
81:147.
Boyd, James H.
Simplified employee pensions: the new-style IRA. 80:532.
Bush, Julian S.
Planning and tax considerations in the
 
use of revocable trusts.  
Part 1—80:654. Part 11—80:717. Part 111—81:14. Part IV—
 81:79.
Capron, Jeffery P.
Rev. Proc. 80-51 and 
the
 new IRS rules for changes in ac ­
counting methods. 81:132.
Carlson, David K.
Significant
 recent developments concerning estate planning  
—1981. Part 1—81:202. Part 11—81:266. Part 111—81:336.
Chapman, Benson J.
Sec. 83: new developments in executive compensation.
 
81:89.
Cheeks, 
James
 E.
The new tax cost of excessive compensation. 81:196.
Chiechi, Carolyn P.
Life insurance companies and 
the
 income tax: recent judicial  
developments. 80:388.
Colleran, Michael C.
An analysis of 
the
 Installment Sales Revision Act of 1980.  
81:4.
Crooks, Barbara
Simplified 
employee
 pensions: the new-style IRA. 80:532.
Davenport, Lou B.
Accounting for vacation pay: is it time to change your method?
 
80:676.
Davies, Jonathan J.
The IRS approach to the wrap-around mortgage: a
 
contradic ­
tion of tax fundamentals. 81:260.
Davison, Dale L.
Valuation methods in exchanges of stock for assets. 80:396.
Dickman, Marvin J.
A business approach to subchap. S. 80:463.
Diss, William T.
Tax contingency audit workpapers: current developments,
 
observations, and proposals. 81:104.
Dye, Alan P.
Grassroots lobbying and the new proposed regulations.
 
81:214.
Feinschreiber, Robert
The unitary method of state taxation after Mobil and Exxon.
 
80:708.
Goggans, Travis P.
Gifts to minors—alternative methods and their tax effects.
 
80:592.
Grattan, John B.
Repeal of carryover basis revives estate planning techniques.
 
80:402.
Hanson, Robert E.
Tax contingency audit workpapers: current developments,
 
observations, and proposals. 81:104.
Heironimus, M. Eddie
CPA
 
participation in Volunteer Income Tax Assistance (VITA)  
and Student Tax Clinics. 81:38.
Heller, Kenneth H.
Working with the at-risk rules: a practical approach. 80:644.
Honecker, Ernest
The Bankruptcy Tax Act of 1980. Part III—81:277.
Horvitz, Jerome S.
An examination of the IRS’s voluntary disclosure policy.
 
80:545.
Jensen, Herbert L.
Willfulness and 
th
 100% penalty. 80:664.
Johnson, Janice M.
Technical advice from Assistant Commissioner Portney.
 
80:746. Tax Division comments: proposed regs,
 
on tax shelter  
opinions. 81:42. AICPA suggestions for improvement of Social
 Security system. 81:300.
Kasischke, Louis W.
New procedures to obtain an IRS ruling. 80:580.
Kruger, Daniel F.
Sec. 83: new developments in executive compensation.
 
81:89.
Lamaute, Denise
The taxation of group-term life insurance: Sec. 79. 81:21.
Linett, Eugene S.
For Tax Trends column, see “at a glance” page of each issue.
Mancino, Douglas M.
Lobbying by public charities. 80:452.
444 THE TAX ADVISER, JULY 19811
: Author index, 12 months ended June 1981
Published by eGrove, 1981
Manning, Robert F.
For the Thumbtax column, see “at a glance” page of each
 
issue.
Mansfield, Edward
The IRS approach to the wrap-around mortgage: a contradic
­
tion of tax fundamentals. 81:260.
Maples, Lawrence
Storage facilities and the investment credit. 80:724.
McCormally, Timothy J.
The common paymaster rules of Secs. 3121(s) and 3306(p):
 
an analysis of the final regs. 80:516.
Nackenson, Caryl
The unitary method of state taxation after Mobil and Exxon.
 
80:708.
Nygaard, Terry R.
Accounting for vacation pay:
 
is it time to change your method?  
80:676.
Pehrson, Gordon O., Jr.
Life insurance companies and the income tax: recent judicial
 
developments. 80:388.
Porcano, Thomas M.
Planning for 
the
 transfer of a personal residence. 80:522.
Prescott, M. Keith
Like-kind exchanges of partnership interests. 80:739.
Rabin, Alan
Still more on income averaging. 81:348.
Reeder, Janis R.
Valuation methods in exchanges of stock for assets. 80:396.
Richard, W. Mason
Still more on income averaging. 81:348.
Robbins, Valerie C.
Sale and leaseback of real property after Frank Lyon Co.
 
80:476.
Rosenthal, Jeffery R.
An analysis of the Installment Sales Revision Act of 1980.
 
81:4.
Streer, Paul J.
Working with the at-risk rules: a practical approach. 80:644.
Strobel, Caroline D.
Tax advantages of partial gifts to charity. 81:140.
Stromsem, William R.
Kurtz discusses preparer penalties with Tax Division. 80:425.
 
AICPA Tax Recommendations to Aid Small Business. 80:551.
 IRS adopts guidelines for preparer negligence penalty.
 80:684. Recent LIFO developments. 81:173. Meeting with
 IRS: Compliance and Taxpayer Service and Returns
 
Process ­
ing issues. 81:232.
Tallichet, Henri L.
An examination of the IRS’s voluntary disclosure policy.
 
80:545.
Thomas, Kenneth F.
Kurtz discusses preparer penalties
 
with Tax Division. 80:425.  
Statement of tax policy on capital cost recovery. 80:485.
 AICPA Tax Recommendations to Aid Small Business. 80:551.
 New legislative proposals on capital cost recovery. 80:617.
 IRS adopts guidelines for preparer negligence penalty.
 80:684. Technical advice from Assistant Commissioner
 Portney. 80:746. Tax Division comments: proposed regs, on
 tax 
shelter
 opinions. 81:42. Recent LIFO developments.  
81:173. Meeting with IRS: Compliance and Taxpayer Service
 and Returns Processing issues. 81:232. AICPA suggestions
 for improvement of Social Security system. 81:300. Tax Divi
­sion testifies on Administration tax proposals. 81:367.
Webster, George D.
Grassroots lobbying and 
the
 new proposed regulations.  
81:214.
Winborne, S. Allen
ERISA plan amendments under ENCEP. 81:362.
Wolff, Laroy W., Jr.
LIFO layer valuations under the dollar-value index method.
 
81:161.
Zaritsky, Howard M.
Planning and tax considerations in 
the
 use of revocable trusts.  
Part 1—80:654. Part 11—80:717. Part 111—81:14. Part IV—
 81:79.
Zimmerman, Neal W.
Foreign investment in U.S. real 
estate
—a new set of rules.  
81:324.
Zimmermann, Peter F.
Statement of tax policy
 
on capital cost recovery. 80:485. New  
legislative proposals on capital cost recovery. 80:617. Tax
 Division testifies on Administration tax proposals. 81:367.
Zumpano, Leonard
The IRS approach to 
the
 wrap-around mortgage: a contradic ­
tion of tax fundamentals. 81:260.
Tax clinic editors
Broenen, Darwin Lerner, Herbert J.
Nov. 80:668. Aug. 80:468.
Diss, William T. O’Connell, Frank J., Jr.
Jan. 81:28. Sept. 80:538.
Elder, Peter Padwe, Gerald W.
Apr. 81:222. Mar. 81:152.
Ellentuck, Albert B. Power, James E.
Oct. 80:609. Dec. 80:730.
Hennessey, Kevin Tarantino, Dominic A.
June 81:352. July 80:414.
Josephs, Stuart R. Vollman, Stanton H.
May 81:286. Feb. 81:94.
Key to page references
Pages Issue Pages Issue Pages Issue
80:385-448 July 80 80:641-704 Nov. 80 81:129-192 March 81
80:449-512 Aug. 80 80:705-768 Dec. 80 81:193-256 April 81
80:513-576 Sept. 80 81:1-64 Jan. 81 81:257-320 May 81
80:577-640 Oct. 80 81:65-128 Feb. 81 81:321-384 June 81
THE TAX ADVISER, JULY 1981 445 2
Tax Adviser, Vol. 12 [1981], Iss. 7, Art. 8
https://egrove.olemiss.edu/tax_adviser/vol12/iss7/8


Author index, 12 months ended June 1981

Tax Adviser 
Volume 12 Issue 7 Article 9 
1981 
Subject index, 12 months ended June 1981 
American Institute of Certified Public Accountants 
Follow this and additional works at: https://egrove.olemiss.edu/tax_adviser 
 Part of the Accounting Commons, and the Taxation Commons 
Recommended Citation 
American Institute of Certified Public Accountants (1981) "Subject index, 12 months ended June 1981," 
Tax Adviser: Vol. 12: Iss. 7, Article 9. 
Available at: https://egrove.olemiss.edu/tax_adviser/vol12/iss7/9 
This Article is brought to you for free and open access by eGrove. It has been accepted for inclusion in Tax Adviser 
by an authorized editor of eGrove. For more information, please contact egrove@olemiss.edu. 
subject index
12 months ended
 
June 1981
Accounting methods and periods
Advanced rental payments. 80:491.
Accrual method and Sec. 1001(b). 81:28.
Bad debt reserves. 81:354.
Cash basis
“pay by phone” accounts. 81:187.
Change of method
new rules. 81:132.
Sec. 481 adjustment. 81:158.
Conformity rule. 80:674; 81:295.
Credit card fees, deferral of. 81:226.
Employment taxes. 80:631.
 
Installment sales
boot received in reorg. 81:230.
principal residence. 80:766.
Revision Act of 1980. 81:4, 94, 
153.
LIFO, see “inventories.”
Prepaid income, deferral of. 81:294.
Vacation pay. 80:676.
Wrap-around mortgages, IRS approach to.
 
81:260.
Affiliated corporations
See "Consolidated returns.”
Amortization
Bond premiums. 81:295.
Annuities
Class-year thrift plan distributions. 80:736.
Banks
Loss
 
carryback and bad debt reserve. 80:470.
Basis
Liquidation of sub.’s sub. 81:227.
Sec. 2035 property. 81:32.
Sec. 2036 trust assets. 80:735.
Capital gains and losses
Condominium conversion. 80:609.
Contract of sale terms binding on parties.
 
80:542.
Converting short-term gain to long-term.
 
80:732.
Discounted bonds. 80:627.
Reconveyance of property to mortgagee.
 
80:757.
Sale of subdivided property. 80:504.
Sec. 1244 stock. 80:435.
Charitable contributions
Bibles purchased at “wholesale.” 80:757.
Gems purchased at “wholesale.” 80:441.
Ordinary income property. 80:414.
Tax-exempt bonds. 81:360.
U.S. corp, operating foreign school. 81
:247.
The contents of TTA from 
the
 date of  
inception (Jan. 1970) are indexed in the
 Accountants’ Index, a publication of the
 American Institute of Certified Public
 Accountants.
Consolidated returns
Excess loss accounts. 81:356.
Regs., validity of. 81:35.
Sale of sub.’s stock within group. 81
:356.
Corporate divisions
See "Reorganizations and corporate divi
­
sions.”
Corporations
Acquisitions. 81:120.
Collapsible. 80:668.
Controlled
brother-sister group regs. 80:753; 81:189.
Sec. 351, oil and gas lease as property.
81:35.
DISC assets. 81:370.
DISC owned by exporter’s children. 81
:37.
Dividends received deduction. 80:540.
Reasonable compensation. 80:544.
Restricted stock compensation. 81:288.
Sec. 
311
 distributions. 80:765.
State taxation 
of.
 80:671, 708.
Stock vs. indebtedness,
 
Sec.  385 regs. 81:100.
Subchapter S, see “Subchapter S corpora
­tions.”
Credits against tax
Foreign taxes paid
Sec. 902 credit. 80:418, 732.
Investment
billboards. 80:560.
dock facilities. 80:674.
recapture for mass assets. 81:37.
storage facilities. 80:724.
New jobs credit. 80:610; 81:288, 358.
Deferred compensation plans
"Active participant” defined. 81:314, 359.
Annual additions. 81:297.
Annuity distribution. 81:53.
Contributions after year-end. 80:673.
Distributions. 81:157.
Employee contributions. 81:353.
Funding with employer stock. 81:160.
Highlighted. 80:556; 81:238, 359.
Investing in precious metals. 80:616.
IRA rollovers. 80:474.
Lump sum distributions. 80:671, 734; 81:222.
Noncash contributions. 80:731.
Partnerships of professional corporations.
 
81:352.
Plan examination by IRS. 81:362.
Puerto Rican
 
residents’ U.S.  pensions, taxation  
of. 81:223.
Reporting requirements. 81:298.
Simplified employee pensions. 80:532.
Tax credit ESOPs. 81:34.
Depletion
Cement mining. 81:53, 376.
Termination clause in lease, effect 
of.
 80:497.
Windfall profit tax, effect of. 80:541.
Depreciation
ADR
averaging conventions. 81:298.
class life checklist. 81:32.
dual purpose assets. 80:735.
Capital cost recovery proposals. 80:485, 
617.
Low-income housing. 80:564.
Retained estate for years. 80:695.
Employees* plana and trusts
See “Deferred compensation plans.”
Employment taxes
FICA
AICPA suggestions for improvement of sys
­
tem. 81:300.
meals for employees. 80:471; 81:355.
Related corporations treated as
 
one  emptoyer.  
80:516.
Self-employment income. 81:370.
Withholding
Form W-4 filing requirements. 80:473.
 
penalty for failure to withhold. 80:664.
 reporting rules. 80:669; 81:36.
ERISA
See “Deferred compensation plans.”
Estate planning
Carryover basis repeal revives planning tech
­
niques. 80:402.
Charitable lead trusts. 81:361.
Clifford trust
for college tuition. 81:95.
for oil and gas property. 81:36.
Complex trusts,
 
step-up in basis for beneficiary.  
81:158, 224.
Freezing asset values. 80:615; 81:30.
Gifts to charity. 81:140.
Gifts to minors. 80:592.
Income in respect of a decedent. 80:670.
Irrevocable trusts. 81
:292.
Life insurance, assignment of. 81:156.
Long-term capital gains of estates. 80:543.
Personal residence, transfer of. 80:522.
Private annuities. 81:155.
Recent developments. 81
:202,
 266, 336.  
Revocable trusts. 80:654, 717; 81:14, 
79.Sec. 644 transfers. 81
:293.
Estate tax
Charitable contributions
by nonresident alien's estate. 80:614.
within three years of death. 80:419.
Disclaimers, use 
of.
 81:287.
Forms, see “Forms in use."
Gift-splitting and Sec. 2035. 81:97.
Reassignment of group policy and Sec. 2035.
 
81:55.
Sec. 2035
reassignment of group insurance policy.
 
81:55.
stock dividend to transferee. 81:182.
Estates and trusts
See “Estate planning.”
Exempt organizations
Avoiding debt financed income. 80:471.
Homeowner associations. 81:358.
Hospital laundry services.
 
80:567,615; 81:188,  
313.
Lobbying by public charities. 80:452; 81:58.
Request for extended advance ruling period.
 
80:470.
Unrelated business income. 81:122.
446 THE TAX ADVISER, JULY 1981 1
: Subject index, 12 months ended June 1981
Published by eGrove, 1981
Expenses
Business
 
allocation of, under Sec. 861. 80:597.
 auto accident, cost of. 80:438.
 auto leases. 81:29.
 educational. 80:437, 557.
 foreign conventions. 81:359.
 gift-leaseback. 81:249.
professional blood donor. 81:51.
 
punitive damages. 80:702.
reasonable compensation. 80:544; 81:196.
rental property. 81:121.
travel by salesman. 81:48, 357.
 
travel for summer
 
job. 81:244.  
work clothes. 81:116.
Interest, see “Interest income 
&
 expense."  
Lobbying. 81:214.
Medical. 81:380.
Property taxes
 
rental property. 80:440.
Foreign Income and taxpayers
Controlled corps,
 
dividends received from. 80:417.
 investment in U.S. property. 80:417.
Foreign investors in U.S. real estate. 81
:286, 
324.
Housing expenses deduction, recapture of
 
ex ­
cess. 80:411, 416.
Nonresident aliens, trust distributions to.
 
81:294.
Resident aliens, tax planning for. 80:538, 614.
Foreign taxes
Credit for, see “Credits against tax."
Forms 
In
 use
709-A—80:691; 5306-SEP—80:432.
Freedom of Information Act
See “Internal Revenue Service.”
Gains and losses
Capital gains and losses, see “Capital gains
 
and losses.”
Disaster loss, revoking election. 80:699.
Goodwill abandonment losses. 80:670.
Involuntary conversions of property
 
proceeds from sale of damaged property.
 80:632.
Losses of subsidiaries. 80:469.
Sale of residence. 81:157.
Sec. 267
 
family hostility, effect 
of.
 81:118.
Sec. 351. 80:697.
Stock for asset transfers. 80:396.
Swapping mortgage portfolios to recognize
 
losses. 80:542.
Tax-free exchanges
 
like-kind exchange
 delayed. 81:94.
 four party. 80:624.
 partnership interests. 80:739.
Gifts
See “Charitable contributions.”
Gift tax
Annual exclusions. 81:293.
Death benefit paid by employer. 81:320.
Options, gifts 
of.
 80:756.
Gross Income
Alimony vs. periodic payments. 81:243.
 
Cancellation of debt. 80:701; 81:296.
 Constructive dividends. 80:703.
Excessive compensation. 81:196.
Gift tax paid by donee. 81:311.
Group-term insurance. 81:33.
Interest-free loans. 80:635.
Medical reimbursement plans. 81:360.
Parsonage allowance. 81:96.
Sec.
 83
new developments. 81:89.
 stock transfers. 81:124, 
248. 
Sec.
 121 exclusion. 80:539, 559. 
Stock dividends. 80:419.
Insurance
Company
recent
 
judicial developments. 80:388.
Group-term life. 81:21, 
33.
Interest income and expense
Deductibility by banks on state deposits.
 
81:185.
Investment interest
exclusion from gross income. 81:154.
Series E bonds. 81:29.
Mutual fund dividends. 81:177.
Sec. 163 deduction. 81:228.
Sec. 483
patent exception. 80:500.
safe harbor rates. 81:299.
Internal Revenue Service
See also “Procedure and administration.”
AICPA meeting with ass’t. commissioners.
 
81:232.
Freedom of Information Act. 81:371.
Personnel.
 
80:432,490,556,691,745;  81 :238, 
304
Regulations
final, see particular subject.
highlighted. 80:432,490,556,622,691,745;
81:47, 
103,
 172, 238, 304, 370.
Rulings, procedures, IRs, etc. 80:431, 489,
 555, 556, 622, 690, 745; 81:46, 
103,
 172,  
237, 238, 303, 369
Inventories
Full absorption method. 81:353.
LIFO
BLS indexes, prop. regs. 81
:292. 
conformity requirement. 81:355.
 cost-component method. 80:737.
 dollar-value index method. 81:14.
foreign sub.’s E&P. 80:737.
liquidating distributions of inventories.
 
80:613.
pre-election planning. 80:610.
recent developments. 81:173.
Sales-service fee included in. 80:506.
Valuation in liquidation. 81:96.
Writedowns, percentage of excess. 80:420,
 
675; 81:31.
Involuntary conversion of property
See “Gains and losses."
Legislation
Bankruptcy Tax Act. 80:730; 81:68, 
147,
 277.
Proposed. 80:431, 489, 617, 622, 690, 745;
 81:46, 
103,
 172, 23 , 303, 367, 369.
Revenue Act of 78, see particular subject area.
Tax reform, see “Tax reform."
Windfall Profit Tax Act. 81:354.
Liquidation of corporation
Debt forgiveness. 81:179.
Sec. 334
bootstrap acquisitions. 80:540.
inventory valuation. 81:96.
supersedes Kimbell-Diamond rule. 80:493.
Sec. 337
application to “C" reorg. 80:495.
Sec. 346 vs. 334(b)(2). 80:733.
Losses, deductibility
See "Gains and losses.”
Maximum and minimum tax
Minimum
 
retroactive amendments. 81:175.
Partners and partnerships
Adoption of fiscal year. 80:474.
At-risk rules. 80:644.
Death of partner. 81:56, 229.
Guaranteed payments, year
 
to report. 81:159.
Liquidation problems. 80:733.
Partner's outside earnings. 81:230.
Pensions
See “Deferred compensation plans.
”
Personal holding company
Affiliated group status, avoiding. 80:672.
Avoiding consolidated status. 81:97.
Rent from sister corp,
 
not PHC income. 80:501.
Sec. 1248 gain as PHC income. 80:674.
Procedure and administration
See also "Forms in use,” “Internal Revenue
 
Service” and “Returns.”
Attorney’s fees paid by gov’t. 80:445.
Carbon copies of checks as proof of payment.
 
81:360.
Deficiency notices. 80:562; 81:375.
Estimated NOL can postpone prior year’s tax.
 
81:357.
Estimated tax
large corps., rules for. 81:225.
IRS access to
 
tax accrual workpapers. 80:733;
81:104.
Private rulings, how to obtain. 80:580.
Sec. 367 transactions, declaratory judgments.
 
80:421.
Summons. 80:433, 629; 81:239.
TCMP audits. 81:183, 318.
Valuation disputes, T.C. urges pre-trial settle
­
ment. 81:287.
Voluntary disclosure of fraud, IRS policy.
 
80:545.
Real estate investment trusts
Stock pairing arrangements. 80:468; 81:225.
Redemptions of stock
Sec. 302
charitable contributions of stock, role of.
80:612. '
waiver of Sec. 318 attribution rules. 81:306.
Sec. 304
avoiding through use of new holding com
­
pany. 80:470.
Reorganization and corporate divisions
B
 type
cash purchase in prior transaction. 80:442,
 473.
Business purpose test. 80:472; 81
:227.
Contingent stock arrangements. 80:673.
Ftype. 81:226.
Recapitalization of close corp. 81:224.
Sec. 302. 81:98.
Sec. 351. 80:613, 760; 81:297.
Sec. 355. 80:611, 612, 761.
Sec. 367. 80:540.
Returns
See also “Forms in use,” “Proc, and admin.”
Automatic extensions. 81:30.
Consolidated returns, see “Consolidated re
­
turns.”
Extensions for Form 90-22. 81:156.
Income averaging. 81
:348.
Year-end divorce to avoid “marriage penalty.”
 80:692.
Social Security (FICA)
See “Employment taxes.”
Stock
Dividends. 81:228.
Options
nonqualified. 81:95, 154.
personal service corp., use of. 81:34.
Redemptions, see “Redemptions of stock.”
Subchapter 
S
 corporations
Business planning for. 80:463.
Liquidating distributions. 81:181.
Termination of election. 80:634.
Tax-free exchanges
See “Gains and losses.”
Tax planning
Nonresident aliens. 81.99.
Techniques during 
a
 recession. 80:736.
Tax practice
IRS volunteer programs. 81:38.
THE TAX ADVISER, JULY 1981 447 2
Tax Adviser, Vol. 12 [1981], Iss. 7, Art. 9
https://egrove.olemiss.edu/tax_adviser/vol12/iss7/9
Return preparers
penalties imposed on. 80:425, 
684.
Technical advice from IRS Asst. Commr.
 80:746.
Tax reform
AICPA recommendations to aid small busi
­
ness. 80:551.
Tax shatters
Advice on, Sec. 212 deductions. 31:316, 379.
IRS vs. abusive tax shelters. 81:186.
Opinions by practitioners, proposed regs.
 
81:42.
Sale and leaseback of real property. 80:476.
Tax treaties
U.S.-Canada. 80:691.
U.S.-Denmark. 80:490.
U.S.-France. 80:691.
U.S.-Jamaica. 80:490.
U.S.-U.K. 80:422.
Trusts and estates
See "Estate planning.”
Who is the taxpayer?
Income of personal service corp, taxable to sole
 
shareholder. 80:497.
Withholding tax
See “Employment taxes."
Abbreviations Commonly Used in TTA
TTA The Tax Adviser IRB Internal Revenue Bulletin
AFTR2d American Federal Tax P.L Public Law
Reports, second series
 
(Prentice-Hall) Regs. Treasury Regulations
Ann. IRS Announcement Rev. Proc. Revenue Procedure
BTA Board of Tax Appeals Rev. Rul. Revenue Ruling
CB Cumulative Bulletin Sec. Section (refers to Internal
 
Revenue Code of 1954 unless
Cir. Court of Appeals otherwise indicated)
Cong. Rec. Congressional Record S. Rep. Senate Finance Committee
Ct. Cl. Court of Claims Report
DC District Court
Sup. Ct. Supreme Court
F2d Federal Reports, second series
TC
Tax Court (regular decision)
F Supp Federal Supplement TC Memo Tax Court (memorandum
 decision)H. Rep. House Ways and Means
 
Committee Report TD
Treasury Decision
Internal Revenue News Release USTC United States Tax CasesIR (Commerce Clearing House)
448 THE TAX ADVISER, JULY 1981 3
: Subject index, 12 months ended June 1981
Published by eGrove, 1981


Subject index, 12 months ended June 1981

Manning, Robert F.

Tax Adviser 
Volume 12 Issue 8 Article 7 
1981 
thumbtax 
Robert F. Manning 
Follow this and additional works at: https://egrove.olemiss.edu/tax_adviser 
 Part of the Accounting Commons, and the Taxation Commons 
Recommended Citation 
Manning, Robert F. (1981) "thumbtax," Tax Adviser: Vol. 12: Iss. 8, Article 7. 
Available at: https://egrove.olemiss.edu/tax_adviser/vol12/iss8/7 
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thumbtax
___________
Editor: ROBERT
 
F. MANNING, J.D.
Legislation
•
 
Travel expenses. Sen. John Melcher (D.-  
Mont.) has introduced legislation (S. 1342) that
 would allow construction workers to deduct travel
 expenses for the first two years of employment at
 any job site more than 15 
miles
 from home. Thus,  
the bill would treat such employment as “tempor
­ary” for the purposes of 
Sec.
 162. The current IRS  
position is that “an employment or stay of antici
­pated or actual duration of a year or more at a
 particular location” strongly tends “to indicate pres
­ence there beyond a temporary period.” Rev. Rul.
 60-189. Cf. L. R. Frederick, 604 F2d 21 (8th Cir.
 1979) (three-year period of employment held to be
 “temporary”). The IRS won’t follow Frederick in
 other 
than
 the Eighth Circuit. Rev. Rul. 80-333.
•
 
Jobs credit. Sen. John Heinz (R.-Pa.) has  
introduced a bill (S. 1347) that would extend the
 targeted jobs tax credit provisions for one year—
 until Dec. 31, 1982. The bill was cosponsored by
 Sens. Robert Dole (R.-Kan.) and Russell Long (D.-
 La.)
IRS rulings, etc.
•
 
Refund claims. In 1977, the Supreme Court in  
Kowalski, 434 US 77, held that cash meal allow
­
ance
 payments received by a state trooper are in ­
cludible in gross income. Subsequently, Congress
 enacted P.L. 95-427, which provided that state
 police officers who didn’t report subsistence allow
­ances during the years 1970-1977 need not do so.
 Also, officers who had paid 
tax
 on allowances for  
1977 were entitled to a refund. However, the law
didn’t provide for a refund if officers had reported the
 
allowances in income without any offsetting deduc
­tions for 1974-1976. More recently, P.L. 95-427
 was amended by P.L. 96-605 to provide 
the
 allow ­
ances received by officers from 1974-1976 should
 not be included in gross income. The IRS 
points
 out  
in IR 81-61 that officers entitled to 
refunds
 for  
1974-1976 
have
 until Dec. 28, 1981, to file refund  
claims. In addition, the period for claiming refunds
 for 1977 has been extended to Dec. 28, 1981. Re
­fund claims should be filed on Form 1040X,
 Amended U.S. Individual Income Tax Return. New
 Rev. Proc. 81-26, which modifies Rev. Proc. 79-13,
 provides guidance for officers on taking advantage
 of the new law.
•
 
Investment credit. In Aaron Rents, Inc., 462 F  
Supp 65 (N.D. Ga. 1978), the Court held that the
 taxpayer wasn’t entitled to the investment credit
 with respect to furniture leased to owners or
 operators of apartment houses or other types of
 lodging facilities. The taxpayer was, however, enti
­tled to the credit for furniture leased directly to ten
­ants of those facilities. In Rev. Rul. 78-438, the IRS
 maintained that furniture leased to tenants wasn’t
 eligible for the credit. Now, however, the IRS has
 revoked that ruling and has ruled that an investment
 credit can be taken for furniture leased directly to
 tenants. (Rev. Rul. 81-133.)
•
 
Business expenses. The taxpayer in B. L.  
Yeomans, 30 TC 757 (1958), was employed as a
 fashion coordinator. In the course of her employ
­ment, she was expected to wear clothing of the
 most advanced styles and fashion, all of which was
 purchased at her own expense. For 
her
 personal, 
as distinguished 
from
 business, wear the taxpayer
492 THE TAX ADVISER, AUGUST 1981
1
Manning: thumbtax
Published by eGrove, 1981
preferred 
a
 plainer and more conservative style of  
dress. The Tax Court 
held
 that the expenditures for  
the high-fashion clothing were deductible as ordi
­
nary
 and necessary business expenses. In 1959,  
the IRS acquiesced in Yeomans. Now, however, it
 has withdrawn that acquiescence and substituted
 its nonacquiescence. The withdrawal 
is
 not surpris ­
ing in light of the Fifth Circuit’s decision in B. D.
 Pevsner, 628 F2d 467 (1980), rev'g TC Memo
 79-311 (reported at TTA, Feb. 81, p. 116). On facts
 similar to those in Yeomans, the Court denied a
 deduction for clothing that the taxpayer chose to
 wear only at work because it didn’t conform to her
 lifestyle. The Court stated that an objective, rather
 than subjective, approach to the issue should be
 taken. Under an objective test, a person’s personal
 taste or lifestyle doesn’t matter. “Instead, adaptabil
­ity for personal or general use depends upon what is
 generally accepted for ordinary street wear.” The
 Second and Tenth Circuits also have come out in
 favor of the objective approach.
•
 
Capital gains. T transferred unimproved real  
property subject to an outstanding mortgage of
 $10,000 to 
a
 charitable organization. The fair mar ­
ket value of the property was $25,000, and T 's ad ­
justed basis was $15,000. T had held the property
 for more than one year, and it was a capital asset in
 his hands. Thus, under the provisions of 
Sec.
 170, T  
made a charitable contribution of $15,000 ($25,000
 FMV less $10,000 mortgage). Recently published
 Rev. Rul. 81-163 illustrates how T should compute
 his gain on the bargain sale. 
Sec.
 1011(b) and  
Regs. Sec. 1.1011-2(b) provide that, if 
a
 charitable  
contribution deduction is allowable under 
Sec.
 170  
by reason of a sale, the adjusted basis for determin
­ing the gain from the sale is the portion of the ad
­justed basis of the entire property that bears the
 same ratio to the adjusted basis as the amount
 realized bears to the FMV of the entire property.
 Regs. 
Sec.
 1.1011-2(a)(3) provides that, if the  
property is transferred subject to an indebtedness,
 the amount of the indebtedness must be treated as
 an amount realized for the purposes of determining
 whether there is 
a
 sale or exchange to which Sec.  
1011(b) and Regs. Sec. 1.1011-2 apply, even
 though the transferee doesn’t agree to assume or
 pay the indebtedness. Because the outstanding
 mortgage of $10,000 is treated as an amount real
­ized, T
'
s adjusted basis for determining gain on the  
bargain sale is $6,000 ($15,000 adjusted basis of  
the entire property x $10,000 amount realized ÷
 $25,000 FMV). Therefore, T recognizes long-term
 capital gain of $4,000 ($10,000 realized less $6,000
 adjusted basis).
•
 
Estate administration expenses. D died on  
Aug. 1, 1978. Due to the executor’s willful neglect,
 the federal estate tax return was filed more than four
 months after the time for filing had passed and the
 federal estate tax was paid at that time. Therefore,
 late filing and late payment penalties were as
­sessed in accordance with 
Sec.
 6651. In addition,  
interest was assessed in accordance with Sec.
 6601. The IRS has ruled (Rev. Rul. 81-154) that the
 penalties aren’t deductible as 
a
 necessary ad ­
ministration expense under Sec. 2053 even if the
 expense is allowable under local law. However, the
 interest incurred because of a late payment is de
­ductible under 
Sec.
 2053(a)(2) to the extent it’s  
allowable under local law. According to the ruling,
 the willful failure to file the return is a breach of the
 executor’s fiduciary duty, and the resulting penalty
 isn’t an expense necessarily incurred in the ad
­ministration of the estate. However, the interest,
 which is  charge for the use of money rather than a  
penalty, is a necessary administration expense.
Regulations
•
 
Fringe benefits. The Treasury Department  
has announced (Treas. News Rel., June 17, 1981)
 that 
it
 will issue no regulations or rulings changing  
the tax treatment of fringe benefits before July 1,
 1982. The Congressional ban on the issuances of
 new fringe benefit rules expired on June 1.
Treaties
•
 
New model treaty. The Treasury Department  
has issued a new proposed model income tax treaty
 that would replace the 1977 model treaty as the
 basic U.S. negotiating position in bilateral income
 tax treaty negotiations.
•
 
U.S.-Argentina. Representatives of the U.S.  
and Argentina have signed a new income tax treaty.
 The treaty, which is the first between the U.S. and a
 South American country, must now be ratified by
 
bot
h countries.
Meetings
•
 
Utah CPAs. The 6th Annual Utah Association  
of CPAs Tax Symposium 
will
 be held on November  
5 and 6 in Salt Lake City. For details contact Jeanine
 Patton, Executive Director, UACPA, 660 South 200
 East, Salt Lake City, Utah 84111; (801) 359-3533.
THE TAX ADVISER, AUGUST 1961 493
2
Tax Adviser, Vol. 12 [1981], Iss. 8, Art. 7
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thumbtax

Tax Adviser 
Volume 12 Issue 8 Article 9 
1981 
Author index, 12 months ended July 1981 
American Institute of Certified Public Accountants 
Follow this and additional works at: https://egrove.olemiss.edu/tax_adviser 
 Part of the Accounting Commons, and the Taxation Commons 
Recommended Citation 
American Institute of Certified Public Accountants (1981) "Author index, 12 months ended July 1981," Tax 
Adviser: Vol. 12: Iss. 8, Article 9. 
Available at: https://egrove.olemiss.edu/tax_adviser/vol12/iss8/9 
This Article is brought to you for free and open access by eGrove. It has been accepted for inclusion in Tax Adviser 
by an authorized editor of eGrove. For more information, please contact egrove@olemiss.edu. 
author index
12 months ended
July 1981
Abbin, Byrle M.
Significant recent developments concerning estate planning
 
—1981. Part I—81:202. Part 
II
—81:266. Part III—81:336.
Adler, Michael
The allocation of interest and R&D under Regs. Sec. 1.861-
 
8(e): questions from the entrails. 80:597.
Barnett, Bernard
Estate planning after death. Part 1—81:397.
Berenson, David A.
The Bankruptcy Tax Act of 1980. Part I—81:68. Part II—
 
81:147. Part III—81:277.
Blank, Jacob M.
The Bankruptcy Tax Act of 1980. Part I—81:68. Part II—
 
81:147.
Boyd, James H.
Simplified employee pensions: the new-style IRA. 80:532.
Bush, Julian S.
Planning and tax considerations 
in
 the use of revocable trusts.  
Part I—80:654. Part II—80:717. Part III—81:14. Part IV—
 81:79.
Capron, Jeffery P.
Rev. Proc. 80-51 and the new IRS rules for changes in ac
­
counting methods. 81:132.
Carlson, David K.
Significant recent developments concerning estate planning
 
—1981. Part I—81:202. Part II—81:266. Part III—81:336.
Chapman, Benson J.
Sec. 83: new developments in executive compensation.
 
81:89.
Cheeks, James E.
The new tax cost of excessive compensation. 81:196.
 
 
Colleran, Michael C.
An analysis of the Installment Sales Revision Act of 1980.
 
81:4.
Crooks, Barbara
Simplified employee pensions: the new-style IRA. 80:532.
Davenport, Lou B.
Accounting for vacation pay: is it time to change your method?
 
80:676.
Davies, Jonathan J.
The IRS approach to the wrap-around mortgage: a contradic
­
tion of tax fundamentals. 81:260.
Dickman, Marvin J.
A business approach to subchap. S. 80:463.
Diss, William T.
Tax contingency audit workpapers: current developments,
 
observations, and proposals. 81:104.
Dye, Alan P.
Grassroots lobbying and the new proposed regulations.
 
81:214.
Feinschreiber, Robert
The unitary method of state taxation after Mobil and Exxon.
 
80:708.
Hinn, Ronald E.
Divisive and nondivisive “D” reorganizations vs. Sec. 355
 
transactions. 81:388.
Goggans, Travis P.
Gifts to minors—alternative methods and their tax effects.
 
80:592.
Hanson, Robert E.
Tax contingency audit workpapers: current developments,
 
observations, and proposals. 81:104.
Heironimus, 
M.
 Eddie
CPA participation in Volunteer Income Tax Assistance (VITA)
 and Student Tax Clinics. 81:38.
Heller, Kenneth H.
Working with the at-risk rules: a practical approach. 80:644.
Honecker, Ernest
The Bankruptcy Tax Act of 1980. Part III—81:277.
Horvitz, Jerome S.
An examination of the IRS
’s
 voluntary disclosure policy.  
80:545.
Jensen, Herbert L
Willfulness and the 100% penalty. 80:664.
Johnson, Janice M.
Technical advice from Assistant Commissioner Portney.
 
80:746. Tax Division comments: proposed regs. on tax shelter
 opinions. 81
:42.
 AICPA suggestions for improvement of Social  
Security system. 81:300.
Kasischke, Louis W.
New procedures to obtain an IRS ruling. 80:580.
Kruger, Daniel F.
Sec. 83: new developments in executive compensation.
 
81:89.
Lamaute, Denise
The taxation of group-term life insurance: Sec. 79. 81:21.
Linett, Eugene S.
For Tax Trends column, see “at a glance” page of each issue.
Mancino, Douglas M.
Lobbying by public charities. 80:452.
508 THE TAX ADVISER, AUGUST 1981
1
: Author index, 12 months ended July 1981
Published by eGrove, 1981
Manning, Robert F.
For the Thumbtax column, see “at a glance’’ page of each
 
issue.
Mansfield, Edward
The IRS approach to the wrap-around mortgage: a contradic
­
tion of tax fundamentals. 81:260.
Maples, Lawrence
Storage facilities and the investment credit. 80:724.
McCormally, Timothy J.
The common paymaster rules of Secs. 3121(s) and 3306(p):
 
an analysis of the final regs. 80:516.
Nackenson, Caryl
The unitary method of state taxation after Mobil and Exxon.
 
80:708.
Nygaard, Terry R.
Accounting for vacation pay: is it time to change your method?
 
80:676.
Parker, Anthony W.
Special allocations in real estate partnerships in light of the 76
 
Act. 81:404.
Porcano, Thomas M.
Planning for the transfer of 
a
 personal residence. 80:522.
Prescott, M. Keith
Like-kind exchanges of partnership interests. 80:739.
Rabin, Alan
Still more on income averaging. 81:348.
Richard, W. Mason
Still more on income averaging. 81:348.
Robbins, Valerie C.
Sale and leaseback of real property after Frank Lyon Co.
 
80:476.
Rosenthal, Jeffery R.
An analysis of the Installment Sales Revision Act of 1980.
 
81:4
.
Streer, Paul J.
Working with the at-risk rules: 
a
 practical approach. 80:644.
Strobel, Caroline D.
Tax advantages of partial gifts to charity. 81:140.
Stromsem, William R.
AICPA
 
Tax Recommendations to Aid Small Business. 80:551.
IRS adopts guidelines for preparer negligence penalty.
 80:684. Recent LIFO developments. 81:173. Meeting with
 IRS: Compliance and Taxpayer Service and Returns Process
­ing issues. 81:232.
Tallichet, Henri L.
An examination of the IRS’s voluntary disclosure policy.
 
80:545.
Thomas, Kenneth F.
Statement of tax policy on capital cost recovery. 80:485.
 
AICPA Tax Recommendations to Aid Small Business. 80:551.
 New legislative proposals on capital cost recovery. 80:617.
 IRS adopts guidelines for preparer negligence penalty.
 80:684. Technical advice from Assistant Commissioner Port-
 ney. 80:746. Tax Division comments: proposed regs. on tax
 shelter opinions. 81:42. Recent LIFO developments. 81:173.
 Meeting with IRS: Compliance and Taxpayer Service and
 Returns Processing issues. 81
:232.
 AICPA suggestions for  
improvement of Social Security system. 81:300. Tax Division
 testifies on Administration tax proposals. 81:367. Tax Division
 backs indexing. 81:428.
Webster, George D.
Grassroots lobbying and the new proposed regulations.
 
81:214.
Winborne, S. Allen
ERISA plan amendments under ENCEP. 81:362.
Wolff, Laroy W., Jr.
LIFO layer valuations under the dollar-value index method.
 
81:161.
Zaritsky, Howard M.
Planning and tax considerations in the use of revocable trusts.
 
Part 1—80:654. Part 11—80:717. Part 111—81:14. Part IV—
 81:79.
Zimmerman, Neal W.
Foreign investment in U.S. real estate—a new set of rules.
 
31:324.
Zimmermann, Peter F.
Statement of tax policy on capital cost recovery. 80:485. New
 
legislative proposals on capital cost recovery. 80:617. Tax
 Division testifies on Administration tax proposals. 81:367. Tax
 Division backs indexing. 81:428.
Zumpano, Leonard
The 
IRS
 approach to the wrap-around mortgage: a contradic ­
tion of tax fundamentals. 81:260.
Tax clinic editors
Broenen, Darwin Lerner, Herbert J.
Nov. 80:668. Aug. 80:468.
Diss, William T. Nad, Leon M.
Jan 31:28. July 81:415.
Elder, Peter O’Connell, Frank J., Jr.
Apr. 81:222. Sept. 80:538.
Ellentuck, Albert B. Padwe, Gerald W.
Oct. 80:609. Mar. 81:152.
Hennessey, Kevin Power, James E.
June 81:352. Dec. 80:730.
Josephs, Stuart R. Vollman, Stanton H.
May 81:286. Feb. 81:94.
Key to page references
Pages Issue Pages Issue Pages Issue
80:449-512 Aug. 80 80:705-768 Dec. 80 11:193-256 April 81
80:513-576 Sept. 80 81:1-64 Jan. 81 81:257-320 May 81
80:577-640 Oct . 80 81:65-128 Feb. 81 81:321-384 June 81
80:641-704 Nov. 80 81:129-192 March 81 81:385-448 July 81
THE TAX ADVISER, AUGUST 1981 509 2
Tax Adviser, Vol. 12 [1981], Iss. 8, Art. 9
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Author index, 12 months ended July 1981

Thomas, Kenneth F.

Clayton, Robert E.

American Institute of Certified Public Accountants. Federal Tax Division

Tax Adviser 
Volume 13 Issue 6 Article 5 
1982 
Washington Report: Tax Division comments on Taxpayer 
Compliance Improvement Act of 1982 
Kenneth F. Thomas 
Robert E. Clayton 
American Institute of Certified Public Accountants. Federal Tax Division 
Follow this and additional works at: https://egrove.olemiss.edu/tax_adviser 
 Part of the Accounting Commons, and the Taxation Commons 
Recommended Citation 
Thomas, Kenneth F.; Clayton, Robert E.; and American Institute of Certified Public Accountants. Federal 
Tax Division (1982) "Washington Report: Tax Division comments on Taxpayer Compliance Improvement 
Act of 1982," Tax Adviser: Vol. 13: Iss. 6, Article 5. 
Available at: https://egrove.olemiss.edu/tax_adviser/vol13/iss6/5 
This Article is brought to you for free and open access by eGrove. It has been accepted for inclusion in Tax Adviser 
by an authorized editor of eGrove. For more information, please contact egrove@olemiss.edu. 
Washington report
by KENNETH F. THOMAS, CPA
ROBERT E. CLAYTON, CPA
Tax Division comments on
 
Taxpayer Compliance Improvement Act of 1982
Background
On
 March 11, 1982, Senator Robert Dole (R.-  
Kan.), chairman of the Committee on Finance, in
­troduced the “Taxpayer Compliance Improvement
 Act of 1982” (S. 2198). On March 15, 1982, Rep.
 Barber Conable (R.-N.Y.) introduced an identical
 bill (H.R. 5829) in the House. Hearings on the Sen
­ate 
bill
 were held on March 22, 1982, before the  
Finance Oversight Subcommittee, chaired by Sen
­ator Charles Grassley (R.-lowa), a co-sponsor of S.
 2198. House hearings on H.R. 5829 have not yet
 been announced. The following is a summary of the
 
bill
 and the AICPA Tax Division’s comments on the  
bill, submitted at the Senate hearings.
Summary of major provisions of bill
Section 101(a) of 
the
 bill—reporting of interest on  
U.S. and corporate bearer obligations. The bill ex
­pands the information reporting requirement of
 present law to include interest on all corporate obli
­gations, including bearer obligations and interest on
 obligations of the U.S. under regulations to be pre
­scribed by the IRS.
Section 101(b)—returns of brokers. The 
bill
 would  
require the IRS to issue regulations to require com
­modities and securities brokers to make returns
 which would include information acquired in the
 course of the broker’s business.
Section 103—reporting of charged tips. The bill
 
would require that any employer (other than a small
 employer) who pays over to an employee more 
than $600 of charge tips in any taxable year be required
 to report those tips to the IRS.
Section 104—information returns. The bill would
 
require that returns be in a form to permit prompt
 and efficient processing, including the filing in
 machine readable form or magnetic media (in the
 case of persons required to file multiple returns).
Section 111 —interest compounded semiannually.
 
All interest payable under the Code would be com
­pounded semiannually.
Section 112—semiannual interest rate. Interest
 
rates would be determined semiannually, based on
 the average adjusted prime rate charged by com
­mercial banks during the six-month periods ending
 September 30 and March 31.
Section 113(a)—interest on delinquent returns. No
 
interest would be paid on overpayments shown on
 late returns for any day before the date on which 
the return is filed.
Section 113(b)—return not in processable form.
 
For purposes of the payment of interest on over
­payments, a return would not be treated as filed until
 filed in processable form.
Section 101(c)—penalty for failure to file returns.
 
The bill would include 
Sec.
 6045 returns (brokers)  
within the penalty provisions of Sec. 6652.
Section 102—state and local income tax refunds.
 
The bill would require that information returns for
 state and local tax refunds of $10 or more be filed
 with the IRS and taxpayers.
Section 113(c)—interest on refunds caused by
 
carrybacks. No interest would be paid on overpay
­ments resulting from NOL carryback or credit carry
­back prior to the date a claim is filed for 
such
 over ­
payment.
Section 121 —fraud penalty on corporate directors,
 
etc. The bill would impose a new civil fraud penalty
364 THE TAX ADVISER, JUNE 1982
1
Thomas et al.: Washington Report
Published by eGrove, 1982
on corporate directors, officers, employees, or
 
agents who knowingly participate in fraud that re
­sults in an underpayment of tax by the corporation.
 Such individuals would be jointly and severally li
­able for a penalty equal to 50% of the part of the
 corporate underpayment due to fraud, but the
 amount that could be collected from any one indi
­vidual 
will
 not exceed $100,000.
Section 122—minimum penalty for extended fail
­
ure to file. The bill adds a new minimum penalty for
 the extended failure to file an income tax return—a
 minimum of $100 if the tax return is not filed within
 60 
days
 of the date prescribed, including exten ­
sions. The penalty would not be imposed if the
 failure to file is due to reasonable cause.
Section 123—relief from criminal penalty for failure
 
to file estimated tax. The bill provides that any per
­son who fails to make any estimated tax payment
 would not be subject to the criminal penalty for 
such failure if the person is not subject to the penalties
 under Sec. 6654 (civil penalty).
Section 124(a)—minimum penalty for failure to file
 
information returns. The bill increases the penalty
 for failure to file certain information returns from $5
 to $50 per failure, with 
a
 yearly maximum of  
$50,000. A minimum penalty would be imposed 
if the failures are due to intentional disregard of the
 filing requirements.
Section 124(b)—civil penalty on failure to supply
 
identifying numbers. The bill increases the penalty
 for a person who fails 
to:
 (1) include his TIN in a  
return, (2) furnish his TIN to another person, or (3)
 include, in any return or statement made with re
­spect to another person, the TIN of such other per
­son, from $5 to $50 per failure with a yearly limit of
 $50,000. If a failure of type (3) is intentionally made,
 the penalty 
is
 $100 per failure with no limit.
Section 124(c)—withholding. The bill provides for
 
withholding at the source at 
a
 rate of 15% if a tax ­
payer fails to supply a TIN or supplies an incorrect
 TIN to another person who must file 
a
 return with  
respect to payments to the taxpayer. Withholding
 would generally continue as long as the taxpayer
 failed to supply or correct his 
TIN.
Section 125—penalty for substantial understate
­
ment. The bill adds to the Code a new penalty on the
 taxpayer for substantial underpayment of tax aris
­
ing
 from items not disclosed on the tax return. The  
penalty is 10% of that part of any underpayment of
 tax arising from an undisclosed item. An underpay
­ment of tax is substantial 
if
 it exceeds the greater of  
10% of the tax required to be shown on the return or
$5,000 for individuals and $10,000 for corporations.
 
The penalty may apply in addition to the negligence
 penalty but not the fraud penalty. An item is consid
­ered disclosed only 
if
 information in the return, or an  
attachment to the return, 
is
 adequate to apprise the  
IRS of the nature and amount of the item.
Section 131(a)—withholding on certain deferred
 
income. In the case of 
a
 qualified plan, tax may  
generally be withheld on a voluntary basis from
 taxable benefit payments (typically, annuity pay
­ments) as if those payments were wages paid by
 the plan. In the case of certain total distribution of
 benefits, however, tax would be withheld under
 special rules designed to reflect the 10-year forward
 income averaging and capital gains treatment pro
­vided for lump-sum distributions. In the case of a
 tax-sheltered annuity program, the bill provides that
 tax would be withheld on taxable payments on a
 voluntary basis, as if those payments were wages.
 No tax would be withheld from benefit payments
 (other than total distributions from qualified plans) 
if the recipient elects not to have the withholding tax
 apply. In the case of 
a
 total distribution from a qual ­
ified plan, the withholding tax would 
not
 apply if the  
recipient provides notice that the distribution will be
 rolled over, tax-free, to another qualified plan or to
 an IRA.
Sections 201 and 202—time for prescribing rules
 
and regulations, etc. The Paperwork Reduction Act
 of 1980 would not apply to any rule or regulation
 promulgated under the Code or to any information
 collection request that the IRS determines to be
 authorized by the Code or any rule or regulation.
 Furthermore, the bill would require the IRS to report
 annually to the Congress concerning any delay in
 issuing regulations required by changes in the
 Code, and the reasons therefor.
Section 203—report on forms. The IRS is required
 
to study and report to the Congress no later than
 March 31,1983, methods of modifying the design of
 the forms used by the Service to achieve greater
 accuracy in the reporting of income and the match
­
ing
 of information reports and returns with the actual  
tax returns.
Tax Division comments
The Federal Tax Division generally concurs with
 
the desired objectives and agrees with the concept
 of most provisions of the bill. The following com
­ments, presented to the Senate Finance Subcom
­mittee on Oversight of the Internal Revenue Ser
­vice, reflect opinions on certain specific provisions
 of the bill that the Tax Division objects to or believes
 require further study.
THE TAX ADVISER, JUNE 1982 365
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https://egrove.olemiss.edu/tax_adviser/vol13/iss6/5
Section 102—state and local income tax refunds.
 
Consideration should be given to increasing the
 
level
 of refunds requiring reporting from $10 to  
$100. This increased limit would reduce the paper
­work burden on state governments and the IRS
 without affecting the purpose of this section.
Section 113(a)—interest on delinquent returns.
 
Enactment of this provision would codify a severe
 inequity against taxpayers. Except for the 45-day
 rule of 
Sec.
 6611(e), the date from which interest  
runs should be the same date whether the late
 return entitles the taxpayer to a refund or results in
 an additional tax liability.
Section 113(c)—interest on refunds caused by
 
carrybacks. Enactment of this provision would
 codify a severe inequity against taxpayers. Except
 for the 45-day rule of Sec. 6611(e), the date from
 which interest runs should be the same date
 whether an adjustment to a prior taxable year en
­titles the taxpayer to a refund or results in an addi
­tional tax liability. If abuses 
are
 perceived to exist in  
this area, the changes proposed in Section 112 of
 the bill should alleviate those problems.
Section 121—fraud penalty on corporate direc
­
tors, etc. The $100,000 maximum penalty seems to
 be 
a
 case of legislative overkill and does not reflect  
the liable person’s ability to pay. Further study is
 necessary in determining the appropriate penalty.
 This provision should clearly differentiate corporate
 agents from tax return preparers, since penalty pro
­visions already exist for the latter. Sec. 6694 as
­sesses income tax preparers with a 
civil
 penalty for  
certain negligent or willful attempts to understate a
 taxpayer’s liability, while 
Sec.
 7206 provides for  
criminal penalties. Section 121 also does not 
deal with the potential doubling up of penalties in the
 closely held corporation when the officer is also a
 shareholder and, thus, affected by corporate-level
 penalties.
Section 124(a) and 124(b)—penalty provisions.
 
Further study is necessary to determine the appro
­priate amount of the penalties.
Section 124(c)—withholding. There is 
little
 doubt  
that withholding encourages compliance. However,
 further study should be made of the appropriate rate
 of withholding. Use of a 
15%
 withholding rate may  
well encourage an unacceptable degree of 
non- compliance by taxpayers whose marginal tax rates
 exceed 15%.
Withholding at the source should be required only
 
if a taxpayer fails to supply a TIN to another person
 who must file a return with respect to payments to
 the taxpayer. It seems unlikely, if not impossible, for
a
 person to realize that the taxpayer has supplied an  
incorrect TIN.
Section 125—penalty for substantial understate
­
ment. A taxpayer should not be allowed to play the
 audit lottery by taking unsupportable positions that
 would be disallowed if discovered on audit, but
 which are so artfully concealed that they 
are
 not apt  
to be discovered. However, this particular approach
 may have the opposite effect on this perceived prob
­lem.
Requiring disclosure may encourage only tax
­
payers with supportable positions to consider dis
­closures of assertive positions on their return, in
­crease the cost of tax return preparation, and ex
­ceed the IRS’s ability to audit the detail being pro
­vided. While the additional disclosure might in
­crease the intellectual quality of tax controversies, it
 will not increase tax revenue. Enactment of the
 provisions as drafted would probably encourage
 taxpayers who have taken unsupportable positions
 in the past to continue to conceal those positions
 and rely on the audit lottery to avoid discovery. They
 would be even less likely to be audited as the IRS
 struggled to audit the tax returns with disclosure. In
 addition, existing provisions that impose market in
­terest rates on assessed deficiencies should al
­ready discourage much of the perceived abuse.
When the preparer penalty provisions were en
­
acted in the Tax Reform Act of 1976, 
it
 was intended  
that such penalty apply generally to every negligent
 or intentional disregard of the federal tax laws, rul
­
ings,
 and regulations, except that a good faith dis ­
pute by an income tax preparer about the interpreta
­tion of a statute (expressed in regulations or rulings)
 was not to be considered a negligent or intentional
 disregard of rulings and regulations. By enacting
 Section 125 of this bill, Congress would sharply limit
 the taxpayer’s right to such 
a
 good faith dispute  
about the interpretation of a statute, regulation, or
 ruling.
In addition, the provision upsets the long
­
standing relationship among the IRS, the prac
­titioner, and the taxpayer. Due diligence in prepar
­ing a return would require a conscientious preparer
 to identify to the taxpayer any situation to which
 Section 125 would apply. 
A
 conscientious prac ­
titioner would thus be placed in a position where he
 might be perceived by his or her client as an advo
­cate of the IRS and an adversary of the taxpayer. 
A premium will be placed on uninformed and less
 conscientious practitioners.
The implications of this provision are too impor
­
tant and far-reaching to enact into 
law
 in haste. It is  
imperative that further study and consideration be
 given to the instances in which abuses exist and to
 effective approaches of discouraging those 
abuses.
366 THE TAX ADVISER, JUNE 1982
3
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Washington Report: Tax Division comments on Taxpayer Compliance Improvement Act of 1982

Bravenec, Lorence L.

Nixon, Clair J.

Tax Adviser 
Volume 13 Issue 10 Article 3 
1982 
Contract research under the new research credit 
Lorence L. Bravenec 
Clair J. Nixon 
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Adviser: Vol. 13: Iss. 10, Article 3. 
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LORENCE L. BRAVENEC, Esq., CPA,
 
professor of accounting,
 College of Business Administration,
 Texas A&M University,
 College Station, Tex.
CLAIR J. NIXON, Ph.D.,
 
assistant professor of accounting,
 College of Business Administration,
 Texas A&M University,
 College Station, Tex.
Contract research under
 
the new research credit
In response to a perceived decline in expendi
­
tures for research and experimentation, Congress
 enacted three new research tax incentive provi
­sions as part of 
the
 Economic Recovery Tax Act of  
1981 (ERTA). One of the new provisions, Sec. 44F,
 allows a credit for increases in research expendi
­tures. The mechanics of this new credit have been
 discussed in The Tax Adviser? this article will focus
 on the treatment of contract research, research
 performed for the taxpayer by a third 
party,
 under  
the new credit.
Computation
To
 appreciate the potential tax benefits from con ­
tract 
research
 payments, practitioners must first  
understand how the credit is computed. The credit
 equals 
25%
 of the increase in research expenses  
incurred while carrying on any trade or business of
the taxpayer. The credit supplements, rather than
 
replaces, the existing deduction for research and
 experimentation under 
Sec.
 174. Thus, the credit is  
available even if expenditures cannot be currently
 deducted.
The amount of the credit is determined by sub
­
tracting average base period research expenses
 from qualifying current expenses.2 Because only
 those expenditures incurred after June 30, 1981,
 and before Jan. 1, 1986, qualify for the credit, 
the computation of the average base period expenses
 will vary, depending on the taxpayer’s taxable year.
 Under transitional rules, the average 
base
 for the  
first taxable year ending after June 30, 1981, is
 determined by the research expenditures in the
 prior tax year. For calendar-year taxpayers with
 research expenses in the 1981 tax year, the prior
 taxable year is 1980. For the second year after 
June 30, 1981, the average 
base
 is determined by the  
two preceding taxable years, 1980 and 1981. For
1 Feinschreiber, “The new tax credit for increasing research
activities,” TTA, Sept. 82, pp. 548-52. 2 Sec. 44F(a).
THE TAX ADVISER, OCTOBER 1982 599
1
Bravenec and Nixon: Contract research under the new research credit
Published by eGrove, 1982
the third taxable year after June 30,1981, and all
 
succeeding years, the base period consists of the
 three immediately preceding taxable years. The
 credit applies to qualifying amounts that are paid by
 cash method businesses, and amounts that are
 incurred by accrual method businesses.
The following example, drawn from the legislative
 
history of ERTA,3 illustrates how the credit is com
­puted. (Assume a calendar-year taxpayer.)
3 Joint Committee 
on
 Taxation Staff’s General Explanation of
ERTA, p. 132 (hereinafter referred to as General Explanation).
4 Under Sec. 174, research and experimentation expenditures
 
include research and development costs of an experimental or
 laboratory nature, such as costs incurred to develop 
an
 ex ­
perimental or pilot model, a plant process, 
a
 product, a formu ­
la, or similar property, to improve on an existing property of the
 foregoing types, and for attorney’s fees involved in 
a
 patent  
application. The term does not include expenditures for the
 ordinary testing or inspection of materials or products, for
 quality control, or for efficiency surveys, management studies,
 consumer surveys, advertising, or promotions.
5 Sec. 44F(b)(3)(B).
Date
 
Expenditures
Jan. 1, 1980-Dec. 31, 1980
 
$ 70,000
Jan. 1,1981-June 30, 1981
 
60,000
July 1,1981-Dec. 31,1981
 
50,000
Jan. 1, 1982-Dec. 31,1982
 
130,000
Because the credit began July 1,1981, the last six
 months of expenditures in 1981 ($50,000) would
 qualify for the credit. To determine the base period
 amount, however, the $70,000 of 1980 expendi
­tures must be multiplied by 6/12, because only the
 last six months of 1981 expenditures qualify for the
 credit. The base period amount therefore equals
 $35,000 for 
1981,
 and the 1981 credit would be  
based on the difference between $50,000 (current
 expenditures) and $35,000 (average base period
 amount) or $15,000. For 1982, the credit equals the
 difference between $130,000 (1982 qualifying cur
­rent expenditures) and $90,000 (the average of
 1980 ($70,000) and 1981 ($110,000) expendi
­tures), or $40,000.
For businesses that were not in existence during
 
a base-period year, the first year of business is still
 considered a base-period year with research ex
­penditures of zero. If research expenditures for the
 current year are more than double the average of
 the base period, however, the base period amount
 will increase to one-half of current year expenses.
 For example, if the Jan. 1, 1982-Dec. 31, 1982
 expenditures in the example above had been
 $200,000, instead of $130,000, the average base
 period expenditures for 1980 and 1981 would have
 been increased to $100,000 (from $90,000) and the
 credit would have been based on the difference
 between $200,000 (1982 expenditures) and
 $100,000 (average base period expenditures, as
 increased). This minimum base period rule may
 limit the use of the credit by taxpayers whose re
­search expenses increase significantly in any tax
 year.
In-house vs. contract research
Sec. 44F(d) defines qualified research under the
 
credit in the same way as the terms “research”
 and “experimentation” are defined for the deduc-
tion under Sec. 174.4 The term “qualified research
 
expenses” consists of two components, however,
 in-house research and contract research, and dif
­ferent guidelines govern the types of expenditures
 that qualify in each category. The in-house compo
­nent consists of the following qualifying costs:
•
 
Wages paid (or incurred) to employees en ­
gaged in research, in the supervision of research,
 and 
in
 the direct support of research. Overhead,  
and general administrative, or indirect wage ex
­penditures are excluded;
•
 
Supplies used directly in conducting research.  
Land, improvements to land, and depreciable prop
­erty are excluded; and,
•
 
Charges paid for the right to use personal  
property in the conduct of research, such as com
­puter time. In this category, expenses for intracom
­pany charges, depreciation, capital expenditures,
 and rentals under a “safe harbor lease” are ex
­cluded.
Contract research forms the second category of
 
qualified research expenses. In this category, 65%
 of all amounts paid or incurred by the taxpayer for
 qualified research is eligible for the credit. Prepaid
 amounts are treated as paid or incurred only during
 the period in which the research is conducted.5 The
 65% rule is designed to approximate the amounts of
 qualifying wages, supplies, and charges that are
 attributable to contract research. The language of
 Sec. 44F suggests that the base for the 65%
 rule may include payments and accruals for all
 kinds of wages and supplies, for improvements to
 land, and for acquisition or use of equipment.
Although research expenditures must generally
 
be paid or incurred in carrying on the taxpayer’s
 trade or business to qualify for the credit, this re
­quirement apparently does not extend to one type of
 contract research, “basic research” by corpora
­tions. Sec. 44F(e) defines basic research as any
 original investigation for the advancement of scien
­tific knowledge, that does not have a specific com
­mercial objective. There are two limitations on this
 definition, however; the research must be con
­ducted in the United States, and must not be in a
 field of the social sciences or the humanities, includ
­ing the arts. When research falls within this defini
­tion, it is treated as contract research, and 65% of
600 THE TAX ADVISER, OCTOBER 1982 2
Tax Adviser, Vol. 13 [1982], Iss. 10, Art. 3
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Research expenses
Year
(1)
 
In-house
 research
 expenditures
(2)
Basic
 
research
 expenditures
(3)
 
65%
 basic
 research
(4)
Total
(5)
 
Moving
 average
 base
(6)
Excess
1980 $1,000,000 $1,000,000
1981 1,000,000 $100,000 $ 65,000 1,065,000 NO
1982 1,500,000 200,000 130,000 1,630,000 $1,032,500 $ 597,500
1983 2,000,000 300,000 195,000 2,195,000 1,231,667 963,333
1984 2,500,000 400,000 260,000 2,760,000 1,630,000 1,130,000
certain amounts paid or incurred by 
a
 corporation to  
a qualifying organization (e.g., a college, university,
 or tax-exempt scientific organization), or through 
a qualified fund, is eligible for the credit.6 This rule
 apparently includes grants and charitable contribu
­tions, whether or not there 
is
 a specific commercial  
objective and whether or not the taxpayer has a
 proprietary interest in the research results.
6 Sec. 44F(e).
7 Sec. 44F(e)(2). Among other things, the organization cannot
 
be a private foundation.
8 Sec. 44F(e)(4). Among other things, the fund must elect to 
be 
treated as a private foundation, except for purposes of Sec.
 4940, which imposes an excise tax on investment income.
 This requirement apparently is designed to ensure that the
 fund makes annual grants at least equal to its “minimum
 investment return.” General Explanation, note 3, at 131.
9 Sec. 44F(e)(4)(B)(iii).
10 Sec. 44F(e)(1) and Sec. 170(e)(4)(D).
11 General Explanation, note 3, at 129.
13 See Black and Boyd, “Research Expenditures Take on New
12 Sec. 44F(e)(3).
Impetus under Provisions in the 1981 Act,” 55J. Taxation 348
(Dec. 1981), at 350.
The operation of this provision is illustrated in the
 
above example, in which 65% of basic research
 expenditures (col. 3) is combined with the in-house
 expenditures (col. 1) in arriving at the qualifying
 costs 
(col.
 4); the moving average base (col. 5) is  
determined from col. 4; and the difference (or ex
­cess) between the total qualifying costs (col. 4) and
 the moving average base (col. 5) yields the base for
 the credit 
(col.
 6).
The basic research rule applies only 
if
 the corpo ­
rate expenditures are paid or incurred pursuant to a
 written research agreement between the corpora
­tion and a college, university, tax-exempt scientific
 organization (organized and operated primarily to
 conduct scientific research),7 or a qualified fund
 (organized and operated exclusively for the pur
­pose of making grants).8 Qualified funds must also
 make disbursements to colleges and universities
 pursuant to a written research agreement.9 How
­ever, the basic research rule does not apply to
 research expenditures by subchap. S corporations,
 personal holding companies, and certain service
 organizations.10
Although the legislative intent underlying the
basic research rule is not entirely clear, the provi
­
sion is apparently designed to permit corporate
 payments in the nature of grants or contributions to
 qualify for the credit, thereby encouraging their
 use.11 For example, a manufacturing corporation
 could provide funds for cancer treatment research
 and arguably qualify for the Sec. 44F credit, using
 the basic research rule, even though the research
 would have no specific commercial value to the
 corporation. Neither the statute nor the legislative
 history explicitly requires that basic research be
 conducted in carrying on a trade or business. It is
 suggested that this absence of a trade or business
 requirement is appropriate for several reasons:
 First, such a requirement would conflict with the
 definition of basic research as “original investiga
­tion for the advancement of scientific knowledge not
 having a specific commercial objective.”12 Second,
 a sufficient business nexus already exists, because
 the provision can only be used by certain kinds of
 corporations. Finally, it would be difficult to adminis
­ter and enforce a trade or business requirement for
 basic research. For example, which industries
 would satisfy a trade or business requirement, if
 funds were provided for cancer research—a chemi
­cal company whose workers show a higher inci
­dence of certain forms of cancer, or a tobacco com
­pany whose product has been linked with certain
 forms of cancer in scientific studies?
In computing the credit for basic research ex
­
penses, some commentators have suggested that
 expenditures for basic research should not be in
­cluded in the average base.13 Under this approach,
 the average base for 1983 in the example above
 would be only $1,170,000, rather than $1,231,667,
 because the $195,000 (65% x $300,000) for 1981
 and 1982 would not be considered. Although this
 view 
is
 supported by language in the House re-
THE TAX ADVISER, OCTOBER 1982 601
3
Bravenec and Nixon: Contract research under the new research credit
Published by eGrove, 1982
port,14 which dealt with a provision that excluded
 
basic research from the average base,15 the exclu
­sion was not adopted by Congress. Moreover, the
 General Explanation clearly indicates that contract
 basic research 
is
 included in determining the aver ­
age base.16
17 Sec. 168(f)(8). Note that section 209 of the recently enacted
 
Tax Equity and Fiscal Responsibility Act of 1982 (H.R. 4961)
 places new limitations on safe harbor leasing.
Planning opportunities
The contract research provisions of Sec. 44F can
 
be combined with other tax provisions in planning
 the total research expenditures of taxpayers.
Businesses should consider whether to perform
 
research activities in-house, or through organiza
­tions such as universities. For example, 
will
pro ­
jected in-house expenditures produce qualified re
­search costs that equal 65% of total budgeted ex
­penditures? If not, perhaps contract research could
 be a better alternative.
Buy vs. lease. The new research credit will also
 
enter into a decision to buy or lease equipment,
 because certain forms of acquisition would qualify
 for the research credit, the investment credit, or
 possibly both. The following table compares the tax
 credits available to 
a
 corporation for research  
equipment acquisitions using contract versus in
­house research:
14 H. Rep. No. 97-201, 97th Cong., 1st Sess., 120 (1981).
15 
Sec.
 44F(d)(2), as found in H. Rep. No. 97-201, id., at 326.
16 General Explanation, note 3, at 
129
 and 130.
Form of acquisition Research credit Investment credit
Contract research:
Corporation purchases
 
equipment and leases to
 research organization
Increased com
­
pensation to
 research organi
­zation (to
 cover rentals)
 arguably qual
­ifies
Cost generally
 
may qualify
Research organization Increased con- Increased con
­
tract price argu- tract price does
 ably qualifies as not qualify be-
 research is con- cause corpora-
 ducted
 
tion did not make
purchase
purchases equipment
and includes cost in
the contract price
In-house research:
Lease of equipment Rentals may
 
qualify
Cost may qualify  
if lessor and les
­see elect to treat
 lessee 
as
 owner
Purchase of equipment Depreciation
 doesn
’
t qualify
Cost may qualify
Timing. Businesses should time research ex
­
penditures to maximize the potential tax credit; for
 example, if planned research expenditures for a
 year will be less than the moving average base, the
 expenditures should be accelerated to occur in an
 earlier year when planned spending will be greater
 than the moving average base amount. This ap
­proach will allow the taxpayer to increase the total
 credit, without increasing the overall budgeted ex
­penditures. The reverse strategy can also be used.
For businesses that wish to increase research
 
expenditures during the short run (perhaps to take
 advantage of the credit), without increasing re
­search capacity, contract research with a qualified
 organization may provide the solution. Contract re
­search would allow program managers to expand
 research activities without increasing their budget.
Sate
 of the investment credit. Excess credits  
may provide another planning opportunity. The
 credit for increased research is applied against a
 business’s tax liability after the investment credit
 (and most other credits). Consequently, if a busi
­ness projects excess investment credits and re
­search credits, it should consider selling all or part
 of its investment credit through “safe harbor leas
­ing,” to obtain the immediate full benefits of 
the research credit.17 The research credit is nonrefund-
 able, but the normal three-year carryback and 15-
 year carryforward rules do apply to any unused
 credits.
Conclusion
The new research credit offers taxpayers 
a
 gen ­
eral incentive to expand and increase research
 activities. The special contract research rules 
pro­vide a more specific incentive: they encourage cor
­porations to contribute to research-oriented institu
­tions. To take advantage of credit, however, tax
­payers must increase qualifying research expendi
­tures over the average base period amount; tax
­payers who merely maintain the present level of
 research activities will not realize any tax benefit
 from the new credit. Accordingly, businesses
 should carefully plan their research expenditures
 between now and Jan. 1, 1986, to maximize the
 potential benefits from Sec. 44F.
($$$$$$$$$$)
602 THE TAX ADVISER, OCTOBER 1982
4
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Tax Adviser 
Volume 11 Issue 3 Article 7 
1980 
Spotlight 
Robert F. Manning 
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spotlight
Editor: ROBERT F. MANNING, J.D.
Legislation
•
 
Heads of households. Sen. Bob Packwood  
(R.-Ore.) has introduced a bill (S. 2226) that would
 increase the zero bracket amount for heads of
 households from $2,300 to $3,400—the same
 amount available for married persons filing joint
 returns. The bill was cosponsored by five other
 members of the Senate Finance Committee.
IRS rulings, etc.
•
 
Withholding taxes. In Hotel Conquistador,  
Inc., 597 F2d 1348 (Ct. Cl. 1979), the Court of
 Claims held that certain free meals provided by the
 hotel to its employees were not “remuneration”
 and, therefore, not “wages” subject to FICA and
 FUTA taxes. 
On
 Jan. 14,1980, the Supreme Court  
denied certiorari in Hotel Conquistador. Now, in
 Rev. Rui. 80-41, the IRS has announced that it
 won’t follow the Court of Claims’s decision in the
 case, and employers must continue to treat the
 value of free meals furnished to their employees as
 wages under Secs. 3121(a) and 3306(b). The rul
­ing states that it’s the long-standing position of the
 IRS that the value of free meals furnished, for
 example, to hotel or restaurant employees, or to
 seamen or other employees aboard vessels, con
­stitutes wages under Secs. 2131(a) and 3306(b).
Regulations
•
 
Corporate liquidations. The IRS has issued  
proposed regulations under Sec. 337(e) relating to
 the election to extend the 12-month period for cer
­tain corporate liquidations where there is an 
in­voluntary conversion. The regs, reflect a 1978
 amendment (made by P.L. 95-628) to Sec. 337.
A
liquidating corporation that qualifies under Sec.
 
337(a) may elect under Sec. 337(e) to treat the
 disposition of involuntarily converted property, that
 occurred within 60 days preceding the date 
a
 plan  
of liquidation is adopted, as a sale or exchange
 occurring within the 12-month period beginning on
 that date. If the election is made, no gain or loss
 from any involuntary conversion during the 60-day
 period is recognized. Under Regs. 
Sec.
 1.337-6, a  
liquidating corporation must attach to its return cer
­tain statements relating to the liquidation and to the
 sale and retention of assets. The proposed regs.
 (1.337-6(c)) provide that a corporation may elect
 the application of 
Sec.
 337(e) by adding a sen ­
tence on the presently required statements ex
­pressly electing to apply 
Sec.
 337(e).
•
 
Quick refunds. The IRS has issued tempo ­
rary regulations (T.D. 7672) under 
Sec.
 6411(d),  
which prescribe the method of applying for a tenta
­tive (“quick”) refund under a claim of right adjust
­ment and the information that must be contained in
 the application.
•
 
Political contributions. The IRS has pub ­
lished final regulations (T.D. 
7671)
 under Secs. 84  
and 2501 relating to the treatment of certain trans
­fers of appreciated property to political organiza
­tions. Such transfers are sales for income tax pur
­poses. The final regs, are identical to those pro
­
pose
d last July.
Pensions, etc.
•
 
1980 COLA rates. The IRS has announced  
the 1980 cost-of-living adjustments to dollar lim
­itations on benefits and contributions under qual
­ified pension, profit-sharing, and stock bonus
 
plan
s. The new maximum limitation for the annual  
benefit under defined benefit plans is $110,625 (up
 from $98,100 for 1979). The maximum limitation
 for the annual addition to defined contribution
 plans is $36,875 (up from $32,700 for 1979). An
­nual COLAs are provided for by Sec. 415(d).
People
•
 
Ombudsman post filled. Harold M. Browning  
has been appointed to fill the new ombudsman po
­sition in the IRS National Office. As an assistant to
 the Commissioner, the ombudsman is in charge of
 the IRS’s Problem Resolution Program and serves
 generally as a taxpayers’ advocate. Mr. Browning,
 a CPA who has been with the IRS since 1960,
 most recently was Assistant District Director of the
 Nashville 
District.
 ED
THE TAX ADVISER, MARCH 1980 183
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