jection

132(b) 151(a)

734(b)

901

901

902(b)

1014

183

Section 751 (a) should be expanded to include section 306 stock. Otherwise a loophole exists since if section 306 stock is placed in a partnership and the partnership interest is sold, a capital gain results. If the individual acquiring the partnership interest then liquidates the partnership, the section 306 stock will take on the new basis and will lose its character as section 306 stock.

184

The right to the adjustment should be available where a partnership buys out the interest of an estate or where the partners buy out the estate with partnership money distributed to them. As it now stands, there would be little if any gain recognized to the estate because of the valuation of the partnership interest as of the date of death of the deceased partner.

185

The foreign tax credit should be carried back and forward.

186

The statute of limitations should be extended to cover a change from a foreign tax credit to a deduction in order to allow for changes in the income of a particular year by reason of carrybacks from later years.

187

Section 902(b) should also apply to all subsidiaries and all sub-subsidiaries if there is an unbroken chain of 95% or greater ownership.

188

The estate tax value of stock options, on death of the employee, should be added to the cost basis of stock

Section

acquired upon exercise of the option. This will remove the discrimination between optionees who exercise op tions before death and those who did not exercise be fore death.

1014(b)(9)

1014(b)(9)

1033(a)

189

It should be made clear that donees of donees are in cluded.

190

Basis should not be reduced by prior depreciation when the deceased would have been allowed that same de preciation and the estate tax basis would be allowed the beneficiary undiminished by that prior depreciation.

191

An involuntary conversion should not receive less favor able treatment than a voluntary exchange. Gain should not be recognized where the new property is "property of a like kind" under section 1031.

192

1091(a)

1201

1201

The wash-sale provision should apply to security traders (but not to dealers) whether or not incorporated.

193

The alternative tax should not be in excess of 25% of the amount of the net taxable income.

194

Where a capital gain is taxed at the alternative rate, the amount of such gain should not form a part of the income base upon which the various limitations of other items are calculated, except for the dividend credit or deduction.

ection

195

A 2-year carryback for capital losses should be allowed just as in the case of net operating losses.

196

Long-term losses should not be given the advantage of being made short-term when carried over.

197

The exclusion of accounts or notes receivable should be broadened to cover receivables from rentals and royalties, collection of which would give rise to ordinary income.

1222

1232

1232(c)

198

A short-term gain can now be made long-term by buying stock in regulated investment companies just before the ex-dividend date and selling just afterwards. The loss would be an offset to a short-term gain and what would be left is only the long-term-gain dividend. As a remedy, where the investment is held less than 30 days, the long-term-gain dividend and the short-term loss should be offset against each other.

199

It should be made clear that an installment obligation arising from the sale of property on the installment basis is not (as to the seller) an evidence of indebtedness subject to the original issue discount provisions.

200

Gain on the sale of bonds should be ordinary income to the extent of any discount attributable to any interest coupons missing at the time of purchase.

Section

1233

1233

1237

201

A short sale where there is a corresponding long positi should always be regarded as a liquidation of the lo position.

202

A capital loss can be converted to an ordinary deductio by selling stocks short just before the ex-dividend dat and covering the short sale just after the ex-dividen date for a short-term capital gain which can offset a existing long-term capital loss. Making good on th dividend on the short stock then gives an ordinary d duction. As a remedy, where the short position is main tained for less than 30 days, the short dividend shoul be applied against the capital gain on the transaction.

203

It should be made clear that no inference of noncapital asset status should attach to holdings of real property fo less than five years.

In any event, section 1237 should include corporation generally.

204

1237(b)(1)

The sale of the first five lots should be regarded as sale of capital assets, regardless of when the sale of the sixth lot takes place.

205

1237(b)(3)(c)

In view of the economic facts and the other condition attached to "necessary improvements," the waiving o basis appears to be too high a price to pay for the relie granted. This requirement should be repealed.

ction

206

38

101

312

The provisions relating to amortization in excess of depreciation should be made to apply to all facilities with respect to which 5-year amortization is taken, such as grain storage facilities.

207

The percentage limitation on deductions for contributions should not be affected by the workings of the spreadback provisions. Otherwise, planning of charity giving is impeded and strange results develop in the year of collection and the years of backward allocation.

208

The inconsistency provisions should be broadened to take care of inconsistency between income, gift, and estate taxes for the same item.

313(c)

1321

209

Partners and the spouse of a partner should be included in the concept of related taxpayers. At present, in a partnership between a father and a married son, if the government taxes everything to the father, who later wins his case, the government can proceed against the son but not against the wife of the son.

210

The rules for involuntary liquidation of LIFO inventories should be permanently extended to cover circumstances and conditions beyond the reasonable control of the taxpayer, such as strikes, fire, floods, etc., which prevent the acquisition of inventory, directly or indirectly.