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ference substitute modifies the Sen- spect to foreign oil-related income rently all income of foreign subsidiate amendment and applies a strict should be recaptured against future aries of U.S. corporations which is limitation on the use of foreign tax oil-related income by limiting the for- deemed to be tax haven income under credits from foreign oil extraction in- eign tax credits available with respect the existing so-called subpart F rules come and foreign oil-related income. to such future income.
of the Code. An exception to this proThe substitute limits the amounts of The conference substitute is to ap- vision was made for agricultural compayments in the form of foreign taxes ply to taxable years ending after date modities not produced in commercially on foreign oil extraction income which of enactment.
marketable quantities in the United will be treated as creditable taxes to
States. Under the exception, these TAXATON OF EARNINGS AND PROFITS 52.8 percent of taxable income from
commodities grown (or raised) foreign oil extraction in taxable years
of CONTROLLED FOREIGN CORPORA
abroad are to be excluded from for
TIONS AND THEIR SHAREHOLDERS ending in 1975, 50.4 percent of such
eign base company sales income. taxable income in 1976, and 50 per- House bill.—No provision.
The conference agreement also recent of such taxable income in sub
Senate amendment.—The Senate
peals the exception from the subpart sequent taxable years. Any taxes paid amendment provides that U.S. per
F rules which presently permits a dein excess of that amount are to be
ferral of taxation in cases in which sons holding a one-percent or greater disregarded and not allowed as a de
the tax haven income is reinvested in interest in foreign corpora-tions duction. Any excess credits within the are to be taxed currently on their
less-developed countries. respective percentage limitations are
In addition, the conference agreeto be allowed to offset U.S. tax only proportionate share of the income from those corporations in cases where
ment repeals the rules of present law against foreign wil-related income.
which permits a deferral of U.S. tax Also, any payments to a foreign
more than 50 percent of the stock of
for shipping income received by a country in connection with the pur
foreign subsidiary of a U.S. corporachase and sale of oil or gas extracted persons.
tion. However, deferral of tax is to be In that country are not to be con
Conference substitute. The confer
continued to the extent that the profits idered as a tax if the taxpayer has no ence substitute provides for a number
of these corporations are reinvested in economic interest in the oil or gas to of specific measures which substan
shipping operations. vhich section 611(a) of the code ap
tially expand the extent to which forplies and either such purchase or such
Finally, the conferees agreed to eign subsidiaries of U.S. corporations ale is made at a price other than the are subject to current U.S. taxation modify the present rule in the subair market price of such oil or gas at on tax haven types of income under
part F provisions which permits cor
porations having less than 30 percent he time of such puchase or sale. The
the so-called subpart F rules of the
of their gross income in the form of narket price is to be determined
tax haven income to avoid the curwithout regard to any tax liabilities The conferees expressed their belief
rent taxation provisions of subpart o the country of extraction to which that the foreign tax provisions of pres
F. The conference substitute provides he oil or gas is subject upon pur- ent law relating to the deferral of
that such tax haven income will be hase. This provision, of course, is not foreign income should be further re
taxed currently under the subpart F o apply to fees or other types of in- viewed at the earliest possible date.
rules in any case where it equals or ome from the provision of services The conferees indicated that this re
exceeds 10 percent of gross income. vhich relate to the extraction of oil or view should include an examination of
These provisions are to apply to ras for another person. Any payments the adequacy of existing provisions
taxable years beginning after Decemcot allowed as taxes under this pro- dealing with the disclosure and report
ber 31, 1975. ision are to be allowed as deductions. ing of income (and related deducIn addition, the conferees agreed tions) of foreign subsidiaries of U.S.
ELIMINATION OF DOMESTIC INTERhat beginning in 1976 the per country corporations.
CORPORATION mitation on creditable foreign taxes The conference substitute repeals
TREATMENT FOR CERTAIN NATURAL - not to apply to foreign oil-related the minimum distribution exception
RESOURCES AND ENERGY PRODUCTS ncome. Instead, the amount of credit- to the subpart F rules which, under ble taxes with respect to such income present law, permits a deferral of House bill.—No provision.
to be calculated under the overall U.S. taxation on tax haven types of Senate amendment.—The Senate mitation. The conferees believe that income in cases where the foreign cor- amendment denies the benefits pronis change should be considered sig- poration (or various combinations of vided for domestic international sales Gificant in judging requests to revoke foreign-related corporations) distrib- corporations (DISC's) for the export onsolidated return elections.
utes certain minimum dividends to of natural resources and energy prodThe conferees also agreed that be- their U.S. shareholders. The effect of ucts (i.e., products  for which an inning in 1975 any losses with re- repealing this exception is to tax cur- allowance for cost depletion is provided) and for products subject to Senate amendment.--The Senate fits in any sense but are intended to export control under section 4(b) of amendment added a provision to the provide to the aged, blind, and disthe Export Administration Act of bill, under which a one-time special abled a payment comparable in nature 1969. The provision applies to sales payment of $100 is to be made by the to the tax rebates which the bill promade after March 18, 1975.
Secretary of the Treasury to each in- vides to those who are working. These Conference substitute.-The confer- dividual who, for March, 1975, was payments, therefore, should be clearly ence substitute follows the Senate entitled to monthly insurance benefits identifiable as Treasury Department amendment.
under title II of the Social Security payments and not be included in or
Act, to monthly pension or annuity confused with social security benefit INVESTMENT TAX CREDIT ON
benefits under the Railroad Retire- checks. FOREIGN DRILLING Rigs
ment Acts, or to supplemental security House bill.-No provision.
income benefits. An individual could DYEING OF CERTAIN HEATING OIL Senate amendment.—The Senate receive only one such $100 special pay
House bill.-No provision. amendment denies the investment tax ment, even though he was entitled,
Senate amendment. The Senate credit for foreign situs drilling rigs for March, 1975, to benefits under 2 or used outside of the northern half of more of the above-mentioned pro
amendment requires that certain the Western Hemisphere. The provi- grams.
heating fuel oil be colored with an sion applies to property placed in serv- The Secretary of Health, Education,
oil soluble dye, so that such nontaxed ice after March 18, 1975, unless such
fuel oil may be distinguishable from and Welfare and the Railroad Re
taxable diesel fuel oil for highway use. property is covered by a binding con- tirement Board are to provide the tract which was in effect on April 1, Treasury with such data and informa
The Administrator of the Federal 1974.
Energy Administration is to determine tion as may be necessary to determine Conference substitute.-The confer- who is entitled to these special pay
the appropriate soluble dye and the
point of the petroleum distribution ence substitute follows the Senate
system to add the dye; and he may Receipt of the special payment by
enter the premises (during business EXTENSION OF UNEMPLOYMENT
an individual is not to affect his eligi- hours) to inspect for violations. ViolaCOMPENSATION Act of 1974 bility for, or the amount of, the aid or
tors are to be subject to a fine of not assistance which he or his  family House bill.-No provision.
more than $25,000, or imprisonment of would otherwise be entitled to receive Senate amendment.—The Senate
not more than 5 years, or both. under a welfare-type program. Fedamendment extends the benefits of eral financial participation in any
The provision is to be effective on the Emergency Unemployment ComState (or local) welfare-type pro
the date of enactment. pensation Act of 1974 for an addi
gram is to cease if that program vio- Conference substitute.--The confertional 13 weeks to those who have
lates the “disregard” requirement de- ence substitute does not contain this exhausted 52 weeks of benefits. This is
scribed in the preceding sentence. provision. The conferees deferred conavailable only for the period ending June 30, 1975. The provision states
Conference substitute.-The confer
sideration of this because the subject that the Secretary of Labor shall, at ence substitute generally follows the
would be reviewed during the Ways the earliest practicable date after the
and Means Committee consideration Senate amendment, except that the enactment, propose to each State with amount of the special payment is to
of the energy bill. which he has in effect an agreement
be $50 per qualified recipient. In addiunder section 102 of the 1974 Act a tion, the conference substitute restricts
AL ULLMAN, modification of such agreement deit to residents of the United States
JAMES A. BURKE, signed to cause payments of emergency who have applied for benefits under
Dan ROSTENKOWSKI, compensation as provided in the one of the three programs prior to
PHIL LANDRUM, Senate amendment. April 1, 1975, and who actually re
CHARLES A. VANIK, Conference substitute.-The confer- ceive a benefit for the month of March Managers on the Part of the House ence substitute follows the Senate
1975 which is paid by August 31,
1975. The conference agreement inamendment.
RUSSELL B. LONG, cludes the requirement that these pay
HERMAN TALMADGE, SPECIAL PAYMENTS TO PEOPLE Rements be disregarded in determining
VANCE HARTKE, CEIVING BENEFITS UNDER SOCIAL eligibility under other programs and
ABRAHAM RIBICOFF, SECURITY, RAILROAD RETIREMENT clarifies their non-taxable nature for
W. D. HATHAWAY, OR SUPPLEMENTAL SECURITY income tax purposes.
Floyd K. HASKELL,
payments are not social security bene- Managers on the Part of the Senate.
Art Advisory Panel of the Commissioner of
Internal Revenue Notice of Renewal 759 Chief Counsel's Advisory Committee
on Rules of Professional Conduct 635
(Revocation Notice) 640
Revenue Procedure 75-10 651
to the Commissioner of Internal
(Rev. 18) 757
Rescission 758 Treasury Department Order No. 221-3 758 Disbarments and Suspensions List 759
Chief Counsel's Advisory
a satisfactory reference for raising and to the Commissioner of Internal ReveCommittee on Rules of
answering questions concerning the nue and District Directors by 26 CFR Professional Conduct
propriety of a proposed course of 301.7701-9 and 26 CFR 1.1313(a) -4, Pursuant to the Federal Advisory conduct or for processing complaints the authority to enter ir.to agreements Committee Act of October 6, 1972 of alleged improper conduct.
pursuant to section 1313(a) (4), In(Pub. L. 92-463, 86 Stat. 770-776, 5
It is in the public interest to insure ternal Revenue Code of 1954, relating U.S.C. App. I, Supp. II) the Office
that the highest ethical standards are to agreements treated as determinaof Chief Counsel, Internal Revenue
observed in the course of taxpayer tions, is hereby delegated to the folService, announces the establishment
representation in order to avoid im- lowing officials: of the following advisory committee: propriety or the appearance of impro
a. Assistant Regional Commissioners Title: The Chief Counsel's Advipriety. The advice and recommenda
(Employee Plans and Exempt Orgations of the Committee are indispens- nizations), sory Committee on Rules of Professional Conduct. able to accomplish this goal since
b. Assistant Regional Commissioners Purpose: The Committee will study there is no other source within the De
(Appellate), the various rules of conduct currently
partment of the Treasury or other applicable to practitioners representAdvisory Committee that is capable of
c. Chiefs and Assistant Chiefs of
Appellate Branch Offices, ing taxpayers before the Internal rendering the necessary assistance. Revenue Service and the courts and
d. Director of International Oper
The membership of the Committee make specific recommendations with
will be fairly balanced in terms of the ations, respect to recurring problems, includpoints of view represented and the
e. Assistant District Directors, ing, but not limited to, those that functions to be performed. Towards
f. Chiefs of Audit Divisions, and develop as a result of taxpayer repre
this end, the Committee will consist g. Chiefs of Employee Plans and sentation by former Internal Revenue
of at least one former government Exempt Organizations Divisions. Service or Chief Counsel employees attorney, one recognized scholar on 2. This authority may be redeleor by others with whom such former the rules of professional conduct, and gated only by District Directors and
the Director of International Operaemployees are associated in profes- several practitioners from diverse geosional practice. The Committee will graphical areas that are associated tions, who may redelegate to the Chief also review Treasury Department with various sizes of firms.
of Review Staff (or to the Chief of Circular 230 [1966-2 C.B. 1171];
Authority for this Committee will Technical Branch where that position
has been established); Chief of Con1967-1 C.B. 433; 1970-2 C.B. 644) expire two years from the date the governing practice before the Treasury
Committee's charter is approved by ference Staff; to Revenue Agents and Department and recommend whether
signature of the Assistant Secretary Tax Law Specialists (Reviewers or und in what respects its provisions
of the Treasury for Administration Conferees) not lower than GS-11 for nay need modification. The Commit
unless the Chief Counsel formally field audit cases; and to Revenue ee will consider and make recom
determines that continuance is in the Agents and Tax Technicians (Reviewaendations toward establishment of a public interest.
ers or Conferees) not lower than GS-9
for office audit cases. niform policy on proper professional Dated: November 25, 1974. onduct in the representation of tax
3. This Order supersedes Delega
MEADE WHITAKER, ayers before the Internal Revenue
tion Order No. 35 (Rev. 5) (1971-1
Chief Counsel, ervice and the courts.
C.B. 654], issued November 23, 1970.
Internal Revenue Service. Statement of Public Interest: Vari.
Donald C. ALEXANDER, is rules of professional conduct (Filed by the Office of the Federal Register
Commissioner. vern individuals representing tax
on November 27, 1974, 8:45 a.m., and
published in the issue of the Federal ayers before the Internal Revenue
Register for November 29, 1974, 39
(Filed by the Office of the Federal Register ervice or the courts. The
on January 20, 1975; 8:45 a.m., and scope
F.R. 41555) and
published in the Federal Register for terrelation of these rules, and their
January 21, 1975, 40 F.R. 3319) plication to specific situations, is not
Delegation Order No. 35 (Rev. 6) ways clear. Recurring problems arise (Effective January 13, 1975) which clarification and guides are
Delegation Order No. 42 (Rev. 6)
(Effective January 13, 1975) eded. Moreover, Treasury Depart- Agreements as Determinations Under zat Circular 230, specifically govern
Section 1313(a) (4) of the Internal Authority to Execute Consents Fixing practice before the Internal Reve- Revenue Code of 1954
the Period of Limitations on Assesse Service, does not always provide 1. Pursuant to the authority granted ment or Collection Under Provi