CONTENTS Page 1. S. 2775 (Senators Bentsen, Talmadge, Moynihan, Baucus, Dole, Chafee, and Wallop): Nonqualified deferred com- pensation plans for nonresident aliens.. 2. S. 2805 (Senator Nelson): Deferred appli- cation of Revenue Procedure 80-5 and Revenue Ruling 80-60 relating to in- 3. S. 2818 (Senators Talmadge, Baucus, and Pryor): Tax treatment of mutual or cooperative telephone and electric com- 4. S. 2904 (Senators Talmadge, Glenn, and Dole): Adjustment in excise tax on B. Certain Sections of House-Passed Bill, H.R. 7171. 1. Income tax exclusion for certain Federal scholarship grants (section 1 of H.R. 2. Tax treatment for members of an affiliated group which included a transferor rail- INTRODUCTION The bills described in this pamphlet have been scheduled for a public hearing on August 4, 1980, by the Senate Finance Subcommittee on Taxation and Debt Management Generally. The are four Senate bills and three sections of a House-passed bill (H.R. 7171) described in the pamphlet. The first part of the pamphlet is a summary of the bills presented in bill numerical order for Senate bills and then for the sections of the House-passed bill. This is followed by a more detailed description of the bills, setting forth present law, the issues involved, an explanation of the bills, the effective dates, and the estimated revenue effects. (1) I. SUMMARY OF BILLS A. SENATE BILLS 1. S. 2775-Senators Bentsen, Talmadge, Moynihan, Baucus, Dole, Chafee, and Wallop Nonqualified Deferred Compensation Plans for Nonresident Aliens The bill would provide special rules for nonqualified plans of deferred compensation primarily for the benefit of persons substantially all of whom are nonresident aliens. These provisions would govern the allowability of deductions with respect to the plans and the effect of the plans on a corporation's earnings and profits. Also, trusts under the plans would be exempted from certain rules relating to foreign trusts with U.S. beneficiaries. 2. S. 2805-Senator Nelson Deferred Application of Revenue Procedure 80-5 and Revenue Revenue Procedure 80-5 and Revenue Ruling 80-60 require taxpayers to conform their method of inventory accounting to that method of inventory accounting approved by the Supreme Court in Thor Power Tool Co. v. Commissioner, 439 U.S. 522 (1979). For taxpayers with excess inventories (inventories in excess of foreseeable demand) that have been erroneously written down for tax purposes, these pronouncements require that the writedowns be taken back into income. The Internal Revenue Service pronouncements were issued on February 8, 1980, and are applicable to 1979 taxable years. Taxpayers contend that by waiting until 1980 to release the pronouncements, the IRS has prevented them from being able to comply in 1979 with certain Treasury regulations that would have mitigated the income recapture required under the Thor Power decision. This bill would delay the implementation of Revenue Procedure 80-5 and Revenue Ruling 80-60 to taxable years beginning after 1979 and would give taxpayers the opportunity to take mitigating action under the Treasury regulations. (3) |