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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-[70]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
the corporations is controlled by U.S.

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
Code.

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.

NATIONAL Sales

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 [71] 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

ments. amendment.

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 [72] 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,
INCOME PROGRAMS
The conferees emphasize that these

ROBERT DOLE,
House bill.No provision.

payments are not social security bene- Managers on the Part of the Senate.

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CONTENTS

Art Advisory Panel of the Commissioner of

Internal Revenue Notice of Renewal 759 Chief Counsel's Advisory Committee

on Rules of Professional Conduct 635
Delegation Order No. 35 (Rev. 6) 635
Delegation Order No. 42 (Rev. 6) 635
Delegation Order No. 73 (Revocation

Notice) 636
Delegation Order No. 77 (Rev. 7) 636
Delegation Order No. 77 (Rev. 8) 636
Delegation Order No. 96 (Rev. 2) 637
Delegation Order No. 97 (Rev. 12) 637
Delegation Order No. 112 (Rev. 1) 638
Delegation Order No. 113 (Rev. 2) 639
Delegation Order No. 113 (Rev. 3) 640
Delegation Order No. 127 (Rev. 1)

(Revocation Notice) 640
Delegation Order No. 139 (Rev. 1) 641
Delegation Order No. 149 641
Executive Order 11822 641
Executive Order 11859 642
Revenue Procedure 75-1 642
Revenue Procedure 75-2 642
Revenue Procedure 75-3 643
Revenue Procedure 75-4 644
Revenue Procedure 75-5 645
Revenue Procedure 75-6 646
Revenue Procedure 75-7 648
Revenue Procedure 75-8 648
Revenue Procedure 75-9 649

Revenue Procedure 75-10 651
Revenue Procedure 75-11 652
Revenue Procedure 75-12 653
Revenue Procedure 75-13 662
Revenue Procedure 75-14 662
Revenue Procedure 75-15 671
Revenue Procedure 75-16 676
Revenue Procedure 75-17 677
Revenue Procedure 75-18 687
Revenue Procedure 75-19 687
Revenue Procedure 75-20 688
Revenue Procedure 75-21 715
Revenue Procedure 75-22 717
Revenue Procedure 75-23 719
Revenue Procedure 75-24 719
Revenue Procedure 75-25 720
Revenue Procedure 75-26 722
Revenue Procedure 75-27 725
Revenue Procedure 75-28 752
Revenue Procedure 75-29 754
Revenue Procedure 75-30 756
Small Business Advisory Committee

to the Commissioner of Internal

Revenue 757
Treasury Department Order No. 107

(Rev. 18) 757
Treasury Department Order No. 150-55

Rescission 758 Treasury Department Order No. 221-3 758 Disbarments and Suspensions List 759

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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

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