by inserting on page 351, after line 25, the following: Sec. 239. Exemption of certain live dramatic or musical performances from tax on admissions. (a) In General.-Section 4233(a) (relating to exemptions from the tax on admissions) is amended by adding at the end thereof the following new paragraph: "(12) Live dramatic or musical performances.-No tax shall be imposed under section 4231 in respect of any admission to a live dramatic or musical performance presented in a theater, or presented in any other place if the presentation of such performance is the principal activity being conducted in such place at the time of such admission." (b) Effective Date.-The amendment made by this subsection (a) shall apply only with respect to amounts paid, on or after the first day of the first month which begins more than ten days after the date of the entactment of this Act, for admissions on or after such first day. Pending debate, On motion by Mr. JAVITS, The yeas and nays, being desired by one-fifth of the Senators present, were ordered on the question of agreeing to the amendment. On motion by Mr. DOUGLAS, The yeas and nays, being desired by one-fifth of the Senators present, were ordered on the question of agreeing to the amendment. After debate, The question being taken on agreeing to the amendment proposed by Mr. DOUGLAS, as follows: At the end of the bill insert the following new section: Sec. Percentage depletion for oil and gas wells. (a) Graduated Rates.-Section 613 (relating to percentage depletion) is amended (1) by striking out in subsection (a), "specified in subsection (b)" and inserting in lieu thereof "specified in subsections (b) and (d)"; (2) by striking out paragraph (1) of subsection (b) and inserting in lieu thereof the following: "(1) Oil and gas wells.-The percentage applicable under subsection (d) (1)."; and (3) by redesignating subsection (d) as (e), and by inserting after subsection (c) the following new subsection: "(d) Oil and Gas Wells.— "(1) Percentage depletion rates.In the case of oil and gas wells, the percentage referred to in subsection (a) is as follows: "(A) 271⁄2 percent-to the extent that, for the taxable year, the taxpayer's gross income from the oil and gas well, when added to (i) the taxpayer's gross income from all other oil and gas wells, and (ii) the gross income from oil and gas wells of any taxpayer which controls the taxpayer and of all taxpayers controlled by or under common control with the taxpayer, does not exceed $1,000,000; "(B) 21 percent to the extent that, for the taxable year, the taxpayer's gross income from the oil and gas well, when added to (i) the taxpayer's gross income from all other oil and gas wells, and (ii) the gross income from oil and gas wells of any taxpayer which controls the taxpayer and of all taxpayers controlled by or under common control with the taxpayer, exceeds $1,000,000 but does not exceed $5,000,000; and "(C) 15 percent-to the extent that, for the taxable year, the taxpayer's gross income from the oil and gas well, when added to (i) the taxpayer's gross income from all other oil and gas wells, and (ii) the gross income from oil and gas wells of any taxpayer which controls the taxpayer and of all taxpayers controlled by or under common control with the taxpayer, exceeds $5,000,000. "(2) Control defined.-For purposes of paragraph (1), the term 'control' means "(A) with respect to any corporation, the ownership, directly or in directly, of stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or the power (from whatever source derived and by whatever means exercised) to elect a majority of the board of directors, and "(B) with respect to any taxpayer, the power (from whatever source derived and by whatever means exercised) to select the management or determine the business policies of the taxpayer. "(3) Constructive ownership of stock. The provisions of section 318 (a) (relating to constructive ownership of stock) shall apply in determining the ownership of stock for purposes of paragraph (2). "(4) Application under regulations. This subsection shall be applied under regulations prescribed by the Secretary or his delegate." (b) Effective Date.-The amendments made by subsection (a) shall apply only with respect to taxable years beginning after the date of the enactment of this Act. It was determined in Yeas______ 35 the negative‒‒‒‒‒ Nays------ 57 The yeas and nays having been heretofore ordered. Senators who voted in the affirmative So the amendment was not agreed to. On motion by Mr. MORTON to reconsider the vote disagreeing to the amendment, On motion by Mr. LONG of Louisiana, The motion to reconsider was laid on the table. The bill was further amended on the motion of Mr. MCCARTHY. On motion by Mr. KEATING (for himself, Mr. JAVITS, Mr. HRUSKA, and Mr. WILLIAMS of New Jersey) to further amend the bill by inserting at the proper place in the bill a new section as follows: Sec. Retailers excise tax on purses and handbags. (a) In General.-Section 4031 (relating to imposition of retailers excise tax on luggage, handbags, etc.) is amended by adding at the end thereof the following new sentence: “In applying the tax imposed by the preceding sentence with respect to any purse or handbag sold at retail, there shall be disregarded so much of the retail sales price of such purse or handbag as does not exceed $50." (b) Effective Date.-The amendment made by subsection (a) shall apply with respect to purses and handbags sold on or after the first day of the first month which begins more than 10 days after the date of enactment of this Act. On motion by Mr. KEATING, The yeas and nays, being desired by one-fifth of the Senators present, were ordered on the question of agreeing to the amendment. Pending debate, On motion by Mr. MANSFIELD, and by unanimous consent, Ordered, That effective on the adoption of this order, during the further consideration of the bill H.R. 8363, debate on an amendment intended to be proposed by Mr. GORE, relating to stock options, shall be limited to 80 minutes, and on amendment No. 407, intended to be proposed by Mr. MCCLELLAN, debate shall be limited to 100 minutes, the time in each case to be equally divided and controlled by the mover of the amendment and Mr. LONG of Louisiana; and that debate on any other amendment, motion, or appeal, except a motion to lay on the table, shall be limited to 30 minutes, to be equally divided and controlled by the mover of any such amendment or motion and Mr. LONG of Louisiana: Provided, That in the event Mr. LONG is in favor of any such amendment or motion, the time in opposition thereto, shall be controlled by the minority leader or some Senator designated by him: Provided further, That no amendment that is not germane to the provisions of the said bill shall be received. Ordered further, That on the question of the final passage of the said bill debate shall be limited to 1 hour, to be equally divided and controlled, respectively, by the majority and minority leaders: Provided, That the said leaders, or either of them, may, from the time under their control on the passage of the said bill, allot additional time to any Senator during the consideration of any amendment, motion, or appeal. On the question of agreeing to the amendment proposed by Mr. KEATING (for himself and others), So the amendment was not agreed to. On motion by Mr. WILLIAMS of Delaware to further amend the bill by striking out all on line 3, page 100, down to and including line 5, page 101, as follows: "SEC. 217. INTEREST ON INDEBTEDNESS IN CURRED OR CONTINUED TO "(a) APPLICATION WITH RESPECT ΤΟ CERTAIN FINANCIAL INSTITUTIONS.-Section 265 (relating to expenses and interest relating to tax-exempt income) is amended by adding at the end of paragraph (2) the following new sentence: 'In applying the preceding sentence to a financial institution (other than a bank) which is subject to the banking laws of the State in which such institution is incorporated, interest on face-amount certificates (as defined in section 2(a) (15) of the Investment Company Act of 1940 (15 U.S.C. 80a-2)) issued by such institution, and interest on amounts received for the purchase of such certificates to be issued by such institution, shall not be considered as interest on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by this subtitle, to the extent that the average amount of such obligations held by such institution during the taxable year (as determined under regulations prescribed by the Secretary or his delegate) does not exceed 25 percent of the average of the total assets held by such institution during the taxable year (as so determined).' "(b) EFFECTIVE DATE.-The amendment made by subsection (a) shall apply with respect to taxable years ending after the date of the enactment of this Act." Gruening Jackson Pell Prouty Proxmire Jordan, Idaho Ribicoff Keating Cooper Kennedy Cotton Dodd Kuchel Mechem are Aiken Dominick Morse Tower Allott Hartke Jackson Mundt Pastore Williams, N.J. Young, Ohio Pearson Cotton Dominick Douglas Magnuson McCarthy Fong Gore McClellan Senators who voted in the negative are Anderson Bartlett Bayh Bennett Bible Brewster Burdick Byrd, Va. Byrd, W. Va. Cannon Carlson Church Clark Hartke Holland Humphrey Inouye Johnston Jordan, N.C. McGee McGovern McIntyre McNamara Metcalf Miller Monroney Nelson Pearson Pell Prouty Proxmire Scott Simpson Lausche McClellan McGovern Mechem Monroney Morse Smith Tower Morton Walters Williams, Del. Yarborough So the amendment was not agreed to. On motion by Mr. PROXMIRE to further amend the bill, as follows: On page 33, beginning with the word "repeal" on line 10, strike out all through the word "provisions” on line 12, as follows: "REPEAL OF REQUIREMENT THAT BASIS OF SECTION 38 PROPERTY BE REDUCED BY 7 PERCENT; OTHER PROVISIONS" On page 33, line 14, strike out all through line 2, page 36, as amended, as follows: "(a) REPEAL OF REQUIREMENT THAT BASIS BE REDUCED.— "(1) IN GENERAL.-Subsection (g) of section 48 (requiring that the basis of section 38 property be reduced by 7 percent of the qualified investment) is hereby repealed. "(2) INCREASE IN BASIS OF PROPERTY PLACED IN SERVICE BEFORE JANUARY 1, 1964. "(A) The basis of any section 38 property (as defined in section 48(a) of the Internal Revenue Code of 1954) placed in service before January 1, 1964, shall be increased, under regulations prescribed by the Secretary of the Treasury or his delegate, by an amount equal to 7 percent of the qualified investment with respect to such property under section 46(c) of the Internal Revenue Code of 1954. If there has been any increase with respect to such property under section 48(g) (2) of such Code, the increase under the preceding sentence shall be appropriately reduced therefor. "(B) If a lessor made the election provided by section 48(d) of the Internal Revenue Code of 1954 with respect to property placed in service before January 1, 1964— "(i) subparagraph (A) shall not apply with respect to such property, but “(ii) under regulations prescribed by the Secretary of the Treasury or his delegate, the deductions otherwise allowable under section 162 of such Code to the lessee for amounts paid to the lessor under the lease (or, if such lessee has purchased such property, the basis of such property) shall be adjusted in a manner consistent with subparagraph (A). "(C) The adjustments under this paragraph shall be made as of the first day of the taxpayer's first taxable year which begins after December 31, 1963. "(3) CONFORMING AMENDMENTS. "(A) The last sentence of section 48 (d) (relating to certain leased property) is hereby repealed. "(B) Section 181 (relating to deduction for certain unused investment credit) is hereby repealed. 99-100-S J-88-2-6 "(C) Section 1016(a) (19) (relating to adjustments to basis) is amended to read as follows: "(19) to the extent provided in section 48(g) and in section 203(a) (2) of the Revenue Act of 1964, in the case of property which is or has been section 38 property (as defined in section 48(a));' "(D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the following: ''Sec. 181. Deduction for certain unused investment credit.' "(4) EFFECTIVE DATE.-Paragraphs (1) and (3) of this subsection shall apply "(A) in the case of property placed in service after December 31, 1963, with respect to taxable years ending after such date, and "(B) in the case of property placed in service before January 1, 1964, with respect to taxable years beginning after December 31, 1963." On page 38, line 10, strike out the words "and it is the intent of the Congress in repealing the reduction in basis required by section 48 (g) of such Code,". On motion by Mr. PROXMIRE, The yeas and nays, being desired by one-fifth of the Senators present, were ordered on the question of agreeing to the amendment. After debate, Pending debate, On motion by Mr. SMATHERS, and by unanimous consent, Ordered, That routine morning business on tomorrow be dispensed with and that the Senate immediately resume the consideration of the pending bill. ADJOURNMENT On motion by Mr. SMATHERS, at 10 o'clock and 15 minutes p.m., The Senate, under its order of today, adjourned until 10 o'clock a.m. tomorrow. FRIDAY, FEBRUARY 7, 1964 Mr. LEE METCALF, from the State of Montana, called the Senate to order at 10 o'clock a.m., and the Chaplain offered prayer. APPOINTMENT OF ACTING PRESIDENT PRO TEMPORE The Secretary read the following communication from the President pro tempore: U.S. SENATE, PRESIDENT PRO TEMPORE, Washington, D.C., February 7, 1964. To the Senate: Being temporarily absent from the Senate, I appoint Hon. LEE METCALF, a Senator from the State of Montana, to perform the duties of the Chair during my absence. CARL HAYDEN, Mr. METCALF thereupon took the chair. THE JOURNAL On motion by Mr. MANSFIELD, and by unanimous consent, The reading of the Journal of the proceedings of Thursday, February 6, 1964, was dispensed with. DESIGNATION OF SENATOR METCALF AS ACTING PRESIDENT PRO TEMPORE Mr. MANSFIELD, by unanimous consent, submitted the following resolution (S. Res. 296): Resolved, That notwithstanding the provisions of paragraph 3 of rule I of the Standing Rules of the Senate, the Senator from Montana [Mr. METCALF] be, and he is hereby, authorized to perform the duties of the Chair as Acting President pro tempore until otherwise ordered by the Senate. The Senate proceeded, by unanimous consent, to consider the said resolution; and Resolved, That the Senate agree thereto. REVENUE ACT OF 1964 Under the authority of the order of yesterday, the Senate resumed the consideration of its unfinished business, viz, the bill (H.R. 8363) to amend the Internal Revenue Code of 1954 to reduce individual and corporate income taxes, to make certain structural changes with respect to the income tax, and for other purposes. The question being on agreeing to the amendments yesterday proposed by Mr. GORE, in various places in the bill striking out certain words and inserting others relating to stock options, On motion by Mr. LONG of Lousiana, and by unanimous consent, Ordered, That the pending amendments be temporarily laid aside and that the Senate proceed to the consideration of other amendments. The bill was further amended on the motion of Mr. LONG of Louisiana, the motion of Mr. WILLIAMS of Delaware, the motion of Mr. SMATHERS, the motion of Mr. KUCHEL, and the motion of Mr. WILLIAMS of Delaware (for Mr. MILLER). The question recurring on agreeing to the amendments yesterday proposed by Mr. GORE, in various places in the bill striking out certain words and inserting others, relating to stock options, On motion by Mr. LONG of Louisana, The yeas and nays, being desired by one-fifth of the Senators present, were ordered on the question of agreeing to the amendments. Sec. 401. Repeal of the Tax Imposed With Respect to Amounts Paid by Patrons of Cabarets, Roof Gardens, or Other Similar Places. (a) In General.-Section 4231(6) (relating to tax on amounts paid by patrons of cabarets, roof gardens, or other similar places) is repealed. (b) Conforming Changes.-Section 4232 (b) (relating to definition of roof garden, cabaret, or other similar place) and section 4232(e) (relating to performances for profit) are repealed. (c) Effective Date.-This section shall apply only with respect to amounts paid, on or after 10 o'clock antemeridian of the first day of the first month which begins more than ten days after the date of the enactment of this Act, for admission, refreshment, service, or merchandise on or after such time. Engle Ervin Hickenlooper Hill Hruska Humphrey Johnston Jordan, N.C. Jordan, Idaho Kennedy Lausche Long, Mo. Long, La. Magnuson McCarthy McClellan McGee McGovern McIntyre Miller Moss Mundt Muskie Pastore Prouty Fulbright On motion by Mr. MORTON to reconsider the vote disagreeing to the amendment, On motion by Mr. ANDERSON, The motion to reconsider was laid on the table. UNITED NATIONS COMMITTEE ON PEACEFUL USES OF OUTER SPACE The PRESIDING OFFICER (Mr. BAYH in the chair) announced that the President pro tempore had appointed Mr. EDMONDSON and Mr. KEATING as advisers to the U.S. representatives to the United Nations Committee on the Peaceful Uses of Outer Space for the balance of 1964. REVENUE ACT OF 1964 The Senate resumed the consideration of its unfinished business, viz, the bill (H.R. 8363) to amend the Internal Revenue Code of 1954 to reduce individual and corporate income taxes, to make certain structural changes with respect to the income tax, and for other purposes. The question being on agreeing to the amendments proposed by Mr. GORE, as follows: On page 121, line 23, strike out all down to and including line 23, page 128, as amended, as follows: "SEC. 422. QUALIFIED STOCK OPTIONS. "(a) IN GENERAL.-Subject to the provisions of subsection (c) (1), section 421 (a) shall apply with respect to the transfer of a share of stock to an individual pursuant to his exercise of a qualified stock option if— "(1) no disposition of such share is made by such individual within the 3-year period beginning on the day after the day of the transfer of such share, and "(2) at all times during the period beginning with the date of the granting of the option and ending on the day 3 months before the date of such exercise, such individual was an em ployee of either the corporation granting such option, a parent or subsidiary corporation of such corporation, or a corporation or a parent or subsidiary corporation of such corporation issuing or assuming a stock option in a transaction to which section 425(a) applies. "(b) QUALIFIED STOCK OPTION.-For purposes of this part, the term 'qualified stock option' means an option granted to an individual after December 31, 1963 (other than a restricted stock option granted pursuant to a contract described in section 424 (c) (3) (A)), for any reason connected with his employment by a corporation, if granted by the employer corporation or its parent or subsidiary corporation, to purchase stock of any of such corporations, but only if "(1) the option is granted pursuant to a plan which includes the aggregate number of shares which may be issued under options, and the employees (or class of employees) eligible to receive options, and which is approved by the stockholders of the granting corporation within 12 months before or after the date such plan is adopted; "(2) such option is granted within 10 years from the date such plan is adopted, or the date such plan is approved by the stockholders, whichever is earlier; "(3) such option by its terms is not exercisable after the expiration of 5 years from the date such option is granted; "(4) except as provided in subsection (c) (1), the option price is not less than the fair market value of the stock at the time such option is granted; "(5) such option by its terms is not exercisable while there is outstanding (within the meaning of subsection (c) (2)) any qualified stock option (or restricted stock option) which was granted, before the granting of such option, to such individual to purchase stock in his employer corporation or in a corporation which (at the time of the granting of such option) is a parent or subsidiary corporation of the employer corporation, or in a predecessor corporation of any of such corporations; "(6) such option by its terms is not transferable by such individual otherwise than by will or the laws of descent and distribution, and is exercisable, during his lifetime, only by him; and "(7) such individual, immediately after such option is granted, does not own stock possessing more than 5 percent of the total combined voting power or value of all classes of stock of the employer corporation or of its parent or subsidiary corporation; except that if the equity capital of such corporation or corporations (determined at the time the option is granted) is less than $2,000,000, then, for purposes of applying the limitation of this paragraph, there shall be added to such 5 percent the percentage (not higher than 5 percent) which bears the same ratio to 5 percent as the dif ference between such equity capital and $2,000,000 bears to $1,000,000. "(C) SPECIAL RULES. "(1) EXERCISE OF OPTION WHEN PRICE IS LESS THAN VALUE OF STOCK.-If a share of stock is transferred pursuant to the exercise by an individual of an option which fails to qualify as a qualified stock option shall be included as compensation (and not as gain upon the sale or exchange of a capital asset) in his gross income for the taxable year in which such option is exercised, an amount equal to the lesser of "(A) 150 percent of the difference between the option price and the fair market value of the share at the time the option was granted, "(A) any restricted stock option which is not terminated before January 1, 1965, and "(B) any qualified stock option granted after December 31, 1963, shall be treated as outstanding until such option is exercised in full or expires by reason of the lapse of time. For purposes of the preceding sentence, a restricted stock option granted before January 1, 1964, shall not be treated as outstanding for any period before the first day on which (under the terms of such option) it may be exercised. "(3) OPTIONS GRANTED ΤΟ CERTAIN SHAREHOLDERS.-For purposes of subsection (b) (7) — "(A) the term 'equity capital' means "(i) in the case of one corporation, the sum of its money and other property (in an amount equal to the adjusted basis of such property for determining gain), less the amount of its indebtedness (other than indebtedness to shareholders), and "(ii) in the case of a group of corporations consisting of a parent and its subsidiary corporations, the sum of the equity capital of each of such corporations adjusted, under regulations prescribed by the Secretary or his delegate, to eliminate the effect of intercorporate ownership and transactions among such corporations; "(B) the rules of section 425(d) shall apply in determining the stock ownership of the individual; and "(C) stock which the individual may purchase under outstanding options shall be treated as stock owned by such individual. If an individual is granted an option which permits him to purchase stock in excess of the limitation of subsection (b) (7) (determined by applying the rules of this paragraph), such option shall be treated as meeting the requirement of subsection (b) (7) to the extent that such individual could, if the option were fully exercised at the time of grant, purchase stock under such option without exceeding such limitation. The portion of such option which is treated as meeting the requirement of subsection (b) (7) shall be deemed to be that portion of the option which is first exercised. "(4) CERTAIN DISQUALIFYING DISPOSITIONS WHERE AMOUNT REALIZED IS LESS THAN VALUE AT EXERCISE.-If— "(A) an individual who has acquired a share of stock by the exercise of a qualified stock option makes a disposition of such share within the 3-year period described in subsection (a) (1), and "(B) such disposition is a sale or exchange with respect to which a loss (if sustained) would be recognized to such individual, then the amount which is includible in the gross income of such individual, and the amount which is deductible from the income of his employer corporation, as compensation attributable to the exercise of such option shall not exceed the excess (if any) of the amount realized on such sale or exchange over the adjusted basis of such share. "(5) CERTAIN TRANSFERS BY INSOLVENT INDIVIDUALS.-If an insolvent individual holds a share of stock acquired pursuant to his exercise of a qualified stock option, and if such share is transferred to a trustee, receiver, or other similar fiduciary, in any proceeding under the Bankruptcy Act or any other similar insolvency proceeding, neither such transfer, nor any other transfer of such share for the benefit of his creditors in such proceeding, shall constitute (a) 'disposition of such share' for purposes of subsection (a)(1). "(6) EXCEPTION TO APPLICATION OF SUBSECTION (b) (5).-Paragraph (5) of subsection (b) shall not apply if— "(A) the option being granted and all outstanding qualified (or restricted) stock options referred to in subsection (b) (5) are to purchase stock of the same class in the same corporation, and "(B) the price payable under each such outstanding option (as of the date of grant of the option being granted) is not more than the option price of the option being granted." On page 129, line 1, strike out "423" and insert 422 On page 135, line 1, strike out "424" and insert 423 On page 140, line 16, strike out "425" and insert 424 On page 140, line 19, strike out "425" and insert 424 On page 142, line 20, strike out “422(b) (7), 423 (b) (3), and 424(b) (3)" and insert 422 (b) (3) and 423(b) (3) On page 144, line 3, strike out "422(a) (2), 423 (a) (2), and 424(a) (2)" and insert 422 (a) (2) and 423 (a) (2) On page 144, line 8, strike out "425" and insert 424 On page 144, line 16, strike out "423 AND 424" and insert 422 AND 423 On page 144, line 20, strike out "423 or 424" and insert 422 or 423 On page 146, line 9, strike out "422 (b) (6), 423(b) (9), and 424(b)" and insert 422(b) (9) and 423(b) On page 147, line 19, strike out "423" and insert 422 On page 147, line 25, strike out "424" and insert 423 On page 149, in the material following line 3, strike out "(1) The term 'qualified stock option', see section 422(b)." On page 152, line 4, strike out "425" and substitute 424 On page 153, lines 9 and 10, strike out "paragraphs (2) and (3)" and substitute paragraph (2) On page 153, line 18, strike out all on line 18, down to and including line 2, page 154, as follows: "(3) In the case of an option granted after December 31, 1963, and before January 1, 1965 "(A) paragraphs (1) and (2) of section 422 (b) of the Internal Revenue Code of 1954 (as added by subsection (a)) shall not apply, and "(B) paragraph (1) of section 425 (h) of such Code (as added by subsection (a)) shall not apply to any change in the terms of such option made before January 1, 1965, to permit such option to qualify under paragraphs (3), (4), and (5) of such section 422(b).” After debate, The question being taken on agreeing to the amendments, It was determined in (Yeas___. 39 the negative‒‒‒‒‒‒‒‒ Nays______ 57 The yeas and nays having been heretofore ordered. Senators who voted in the affirmative |