CONTENTS II. DESCRIPTION OF THE BILLS....... 1. S. 1332 (Senator Mitchell): Investment tax credit for certain vessels acquired with funds with- drawn from a capital construction fund.......... 2. S. 146 (Senators Mitchell, Cohen, Mathias, Heflin, and Sarbanes): Permanent exemption from FUTA tax for wages of certain fishing boat crew 3. S. 1809 (Senator Baucus): Exemption for regulated investment companies from definition of person- 4. S. 1857 (Senators Durenberger, Moynihan, Brad- ley, Matsunaga, Lugar, Packwood, and Tsongas): Conform charitable deduction rules for private nonoperating foundations and public charities; amendments to foundation excise tax provisions. 5. S. 1758 (Senators Bentsen, Wallop, Symms, Brad- ley, Grassley, Mitchell, Durenberger, Baucus, (III) Page INTRODUCTION The bills described in this pamphlet have been scheduled for a public hearing on November 17, 1983, before the Senate Finance Subcommittee on Taxation and Debt Management. The five bills scheduled for the hearing, in the order in which the bills are listed in the press release announcing the hearing, are S. 1332 (relating to investment tax credit for certain vessels acquired with funds withdrawn from a capital construction fund); S. 146 (permanent exemption from FUTA tax for wages of certain fishing boat crew members); S. 1809 (exception for regulated investment companies from definition of personal holding company); S. 1857 (conform charitable deduction rules for private nonoperating foundations and public charities; amendments to foundation excise tax provisions); and S. 1758 (simplified cost recovery system for personal property). The first part of the pamphlet is a summary of the bills. This is followed in the second part by a more detailed description of the bills, including present law, explanation of provisions, and effective dates. I. SUMMARY 1. S. 1332-Senator Mitchell Investment Tax Credit for Certain Vessels Acquired With Funds Withdrawn from a Capital Construction Fund Present law provides that taxable income is reduced by amounts equal to certain amounts deposited in a capital construction fund established under section 21 of the Merchant Marine Act of 1970 (46 U.S.C. sec. 1177(d)). When withdrawn from the fund, such amounts are generally taxable unless used to acquire, construct, or reconstruct a qualified vessel. If used to acquire, construct, or reconstruct a qualified vessel, such amounts are not taxable; however, the taxpayer's basis in the vessel is reduced to reflect the fact that the taxpayer had previously deducted those amounts. Present law also generally provides that the amount of investment tax credit allowable with respect to new property eligible for the credit is determined with reference to the basis in such property. For investment credit purposes, the basis of a qualified vessel financed in whole or in part with previously deducted funds withdrawn from a capital construction fund is not to be reduced by more than 50 percent of the amount of previously deducted funds so withdrawn (Code sec. 46(g)). The bill would provide that for investment credit purposes, the basis of a qualified vessel financed in whole or in part with previously deducted funds withdrawn from a capital construction fund is not to be reduced by any portion of the previously deducted funds so withdrawn. Thus, no investment credit otherwise available would be lost. The bill would be effective for taxable years beginning after 1982. 2. S. 146-Senators Mitchell, Cohen, Mathias, Heflin, and Sarbanes Permanent Exemption from FUTA Tax for Wages of Certain Fishing Boat Crew Members Prior to the Economic Recovery Tax Act of 1981, remuneration paid to fishing boat crew members who were considered self-employed for social security tax purposes, and whose remuneration therefore was exempt from the tax imposed by the Federal Insurance Contributions Act (FICA) and from income tax withholding, was not exempt from tax under the Federal Unemployment Tax Act (FUTA) if the services performed were related to catching halibut or salmon for commercial purposes or if the services were performed on a vessel of more than ten net tons. The Economic Recovery Tax Act of 1981, as amended by the Miscellaneous Revenue Act of 1982, amended the definition of employ |