4. The committee referred to the Treasury and joint committee staffs the Long amendment No. 333. This amendment would allow taxpayers to carry expropriation losses forward and deduct them over a 10year period following the year of loss. The amendment also provides rules for taxing recoveries on expropriation losses. In addition, the staffs were requested to investigate the treatment of nonbusiness losses of individuals in the case of expropriation. The report was to be made early next year.

5. Senator Gore asked the Treasury and joint committee staffs to report on the stock options issued by the Chrysler Corp. on which there had been recent newspaper stories.

6. The staffs are to report back to the committee on Dirksen amendment No. 359. This amendment increases the annual dollar limitation on the amount of capital losses which may be deducted from ordinary income from $1,000 at present to (a) $2,000 in 1964, (b) $3,000 in 1965, (c) $4,000 in 1966, and (d) $5,000 in 1967 and thereafter.

7. The Treasury staff was asked to report back to the committee on Senator Carlson's bill S. 110. This bill provides a deduction for capital improvements for the repair, maintenance, alteration, or additions to the personal residence of a taxpayer to the extent of 3 percent of his adjusted gross income but in no event over $2,000.

8. The committee, when it adjourned, was considering the Smather's amendment No. 351. This amendment repeals the provision enacted by the Revenue Act of 1962 which requires the allocation of travel expenses in the case of certain trips combining business and personal purposes. This amendment also would delete travel expenses from the recordkeeping requirements provided by the Revenue Act of 1962. However, this latter provision has been withdrawn and the committee is considering the travel-allocation rule only.

Press Release No. 6

DECEMBER 19, 1963.

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON REVENUE ACT OF 1963 (H.R. 8363)

1. The committee adopted the Smathers amendment No. 351 relating to the travel-allocation rule. (The Smathers amendment was modified so as not to apply to the travel substantiation rules. Previously discussed press release No. 5.)

2. The committee approved the amendment previously discussed (press release No. 4) offered by Senator Talmadge which would grant corporations a 100 percent intercorporate dividend deduction where the dividend was paid by one corporation to another in the same 80 percent commonly controlled group. This 100-percent deduction is not available to corporations claiming more than one surtax exemption. The committee provided that corporations claiming the 100percent deduction will receive only one $100,000 exemption for the group for unreasonably accumulated earnings and only one $100,000

exclusion for the group from the speedup of the corporation tax payments. Other modifications were also made.

3. The committee approved the Dirksen amendment No. 371 which makes a clerical amendment to allow fire and casualty insurance companies a deduction for contributions to pension, profitsharing, or stock-bonus plans.

4. The committee approved the Dirksen amendment No. 361 which makes it possible for domestic corporations to include U.S. citizens employed abroad by subsidiary corporations in the parent's qualified pension plan where they are also covered for social security purposes. The committee modified the amendment so that the deduction for the contributions may be claimed by the subsidiary rather than the domestic parent. The amendment was also limited to apply only to pension plans.

The committee will resume consideration of the tax bill on Wednesday, January 8, 1964.

Press Release No. 7

JANUARY 8, 1964.

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON REVENUE ACT OF 1963 (H.R. 8363)

1. Section 1. Declaration by Congress.-Senator Dirksen offered a substitute for this provision which in general would have indicated that it was the sense of Congress, barring unforeseen emergencies, that congressional appropriations and spending during the transition period should not exceed the amounts appropriated and spent in the fiscal year 1964. This substitute was rejected by a 9 to 2 vote. Then the committee, by voice vote, deleted section 1 from the bill.

2. Section 2. Short title.-The committee amended the title of the bill so that it is to be cited as the "Revenue Act of 1964."

3. Section 111. Reduction of tax on individuals.-The committee considered a substitute rate schedule coupled with other provisions which was offered by Senator Douglas. This rate schedule would range from approximately 10 to 50 percent. His motion would also have denied all personal deductions except those for charitable contributions (not including the unlimited deduction), would have denied the 10 percent standard deduction (but not the minimum standard deduction in the bill), would include all capital gains in the tax base as ordinary income, would tax presently tax-exempt interest, would include pension income in the tax base as the amounts accrued to the benefit of the employee, would deny the excess of percentage over cost depletion, would deny the dividend and retirement income credits, would deny extra personal exemptions for the aged or blind, and would tax unrealized capital gains at death. In addition, excess of percentage over cost depletion would be denied as a deduction to corporations and presently tax-exempt interest would be included in their tax base. This amendment was rejected by a vote of 11 to 1. The section on individual income tax rates was then passed over by the committee for consideration at a later date.

4. Section 112. Minimum standard deduction.-Under the House bill the minimum standard deduction subject to the overall limitation of $1,000 is to amount to $100 for each exemption plus $200. Senator Douglas offered an amendment to increase the $200 referred to here to $400. Senator Douglas coupled with this increase in the minimum standard deduction a smaller reduction in the corporate rate than provided by the House bill. He would have reduced the corporate rate in 1964 to 51 percent (instead of 50 percent) and in 1965 would have reduced the rate to 50 percent (rather than 48 percent). Senator Douglas' amendment was rejected by a vote of 12 to 1. The committee then approved the section of the House bill.

5. Section 113. Related amendments.-This section related to the retirement income credit and tax on nonresident alien individuals, was approved subject to the understanding that the rates referred to in this section would be conformed with any individual income tax rates ultimately adopted.

6. Section 121. Reduction of tax on corporations.-Senator Douglas offered an amendment which would have provided the same corporate rate reduction as his amendment described immediately above. With this amendment, he coupled the repeal of the following excise taxes: general telephone service, electric light bulbs, matches, fountain and ballpoint pens and mechanical pencils, cabarets and roofgardens, transportation of persons by air, and the 10-percent tax on jewelry to the extent it now covers silver-plated flatware. This amendment was rejected by a vote of 11 to 2. The Sparkman amendment No. 365 which would have increased the surtax-exemption from $25,000 to $50,000 was rejected by a voice vote. Following this the corporate rate changes provided by the House bill were approved.

Press Release No. 8

JANUARY 9, 1964 (Morning).

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON
REVENUE ACT OF 1963 (H.R. 8363)

1. Section 122. Current tax payments for corporations.-The committee adopted the House provision without change.

2. Section 123. Related amendments.-The committee adopted the House provision without change. These are conforming amendments relating to mutual insurance companies other than life and relating to minimum distributions by domestic corporations from foreign subsidiaries. The conforming amendments are related to the corporate rate changes previously adopted by the committee.

3. Sections 131 and 132. Effective dates, general rule, and fiscal year taxpayers. The committee adopted the House provisions without change.

4. Section 201. Dividends received by individuals.-A motion offered by Senator Morton for Senator Dirksen would have deleted this provision and restored existing law. This motion was defeated. This

provision was not formally adopted, however, but rather was left open for the consideration of further amendments.

5. Section 202. Investment credit. This provision was passed over. 6. Section 203. Group-term insurance purchased for employees.Senator Ribicoff offered a motion to delete this provision from the bill. This motion was adopted.

7. Section 204. Reimbursed medical expenses in excess of expenses incurred. The committee adopted this provision of the House bill without change.

8. Section 205. Wage continuation payments (sick pay).—A motion by Senator Ribicoff to delete this provision was defeated. A motion by Senator Douglas to make the sick pay exclusion available where the individual is absent from work more than 14 days was defeated.

9. Section 206. Exclusion from income of gain on sale of residence of individual age 65 or over. The committee adopted this provision of the House bill without change.

10. Section 207. Denial of deduction for certain State, local, and foreign taxes.-Senator Williams offered an amendment to restore the deductibility of State and local gasoline taxes and automobile registration fees (the latter includes auto tages and drivers' licenses). This amendment was adopted. This amendment was initially suggested by Senator Byrd. The committee then adopted the provision as amended.

Press Release No. 9

JANUARY 9, 1964 (Afternoon).

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON REVENUE ACT OF 1963 (H.R. 8363)

1. Section 208. Personal casualty and theft losses.-The committee adopted the House provision without change.

2. Section 209. Charitable, etc., contributions and gifts.-The committee adopted the House provision increasing from 20 to 30 percent the allowable charitable contribution deductions for amounts going to substantially all charities except private foundations. The committee also adopted the House provision providing a 5-year carryover for contributions of corporations in excess of the 5-percent limitation. However, in this case the House provision was amended by the adoption of the Smathers amendment numbered 355. This amendment in effect makes the 5-year carryforward available for contributions made in 1962 and 1963 as well as those made in subsequent years. The committee substantially modified the House provision relating to gifts of future interest (such as pictures and paintings where the individual retains the painting or picture for his own life but provides that on his death the painting or art object will go to a museum). The House provision would have denied a current deduction for charitable contributions where a life interest was reserved in anyone other than the donor or his wife. The committee modified this provision to provide that in any case where a life interest is reserved, the charitable contribution will not be available (whether reserved for the donor's life or anyone else's life).

JANUARY 10, 1964.

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON REVENUE ACT (H.R. 8363)

1. Section 204. Reimbursed medical expenses in excess of expenses incurred. The committee reconsidered its action of January 9, and deleted this provision of the House bill.

2. Section 209. Charitable, etc., contributions and gifts.-The committee modified its action of January 9 with respect to the charitable contribution deductions to provide that individuals making charitable contributions in excess of the 30-percent limitation may carry these excess contributions over for a period of up to 5 years. This carryover is available only with respect to contributions that qualify in the 30-percent category (as amended by the House bill and as approved by the Committee on Finance).

3. The committee unanimously directed the chairman of the committee to send a letter to the Secretary of the Treasury requesting that he make a study of possible abuses of private foundations under the internal revenue laws and report back to the committee on this by the end of the year if possible.

The committee will resume consideration of the tax bill on Monday, January 13, 1964.

Press Release No. 11

JANUARY 13, 1964 (Revised).

TENTATIVE DECISIONS BY SENATE COMMITTEE ON FINANCE ON REVENUE ACT OF 1963 (H.R. 8363)

1. Section 202. Investment credit.-The committee adopted the House bill provision with only minor technical changes. The House provision repeals the requirement of existing law that the basis of property eligible for the investment credit be reduced by the amount of the credit increases the basis on which the investment credit is to be computed where property is leased by a wholesaler rather than by the manufacturer, provides that elevators and escalators are to be eligible for the investment credit, and specifies the treatment to be accorded the investment credit for Federal regulatory agencies in determining their rate schedules, etc.

2. Amendment No. 370. Unlimited charitable contribution deduction. The committee rejected this amendment which would remove the provision in present law which permits an unlimited charitable contribution deduction in those cases where the contributions and taxes of the individual involved in 8 out of the last 10 years represent 90 percent of his income. The committee also considered a variation of this amendment which would limit this "unlimited charitable contribution deduction" to charitable organizations other than private foundations. The staffs were instructed to prepare a draft of this amendment for consideration of the committee at a subsequent meeting.