The following chart shows, by type of file, the record types to be used in the first two and the last three records written on a tape reel. Must contain "Number of Payees" and "Control Totals" summarizing a. Payee Records written for this Payer on this reel. 2 Must contain "Number of Payees" and "Control Totals" summarizing Payee Records written on this reel. "Number of Payees" and all "Control Total" fields must be zero filled. 26 CFR 601.105: Examination of returns and Rev. Proc. 67-32 1 Treasury Decision 6894, C.B. 1966–2, 362, published in the Federal Register for September 8, 1966, and Treasury Decision 6909, C.B. 1967-1, 240, published in the Federal Register for December 30, 1966, made final the regulations relating to consolidated returns for taxable years beginning after December 31, 1965. Where corporate declarations of estimated tax were made for taxable years beginning before August 1, 1966, under the regulations applicable to taxable years beginning before January 1, 1966, the penalties for underpayment of estimated tax under section 6655 of the Internal Revenue Code of 1954 for those years will be imposed only to the extent that such penalties would have been imposed under the regulations applicable to taxable years beginning before January 1, 1966. However, declarations of estimated tax, and the computation of penalties under section 6655, for taxable years beginning after July 31, 1966, must be made under the provisions of the regulations applicable to taxable years beginning after December 31, 1965. 26 CFR 601.105: Examination of returns and Rev. Proc. 67-33 2 The Internal Revenue Service sets forth general guidelines and procedures to facilitate proper accounting for amounts realized by taxpayers in settlement of civil suits for treble damages brought under section 4 of the Clayton Act. ECTION 1. PURPOSE. The purpose of this Revenue Procedure is to provide general guidenes and procedure to facilitate proper tax accounting for amounts alized by taxpayers in settlement of certain antitrust actions brought nder section 4 of the Clayton Act (15 U.S.C. 15). EC. 2. BACKGROUND. .01 The amounts in question were realized in settlement of civil its for treble damages instituted by a number of regulated public ilities under section 4 of the Clayton Act in the so-called "Electrical quipment Antitrust Cases." Section 4 of the Clayton Act provides follows: Any person who shall be injured in his business or property by reason of anying forbidden in the antitrust laws may sue therefor in any district court of e United States in the district in which the defendant resides or is found or s an agent, without respect to the amount in controversy, and shall recover reefold the damages by him sustained, and the cost of suit, including a reasonHe attorney's fee. Based on Technical Information Release 858, dated Oct. 6, 1966. Also released as Technical Information Release 919, dated July 31, 1967. 289-712-6846 .02 The facts and circumstances preceding the settlement of these civil suits for treble damages are similar to those described in Rev. Rul. 64-224, C.B. 1964-2, 52. As indicated therein, the underlying basis for the civil suits was the criminal prosecution of the defendants under section 1 of the Sherman Anti-Trust Act, 15 U.S.C. 1, for conspiracy to fix prices in restraint of trade. The defendants in these criminal actions were convicted of violating the Sherman Anti-Trust Act. Their pleas of guilty and nolo contendere resulted in the imposition of fines on the corporate defendants and both fines and prison terms on some of the individual defendants. .03 Subsequent to the criminal proceedings, the utility-taxpayers filed suits for damages under section 4 of the Clayton Act for injuries occasioned by the payment of higher prices for property to be used in their businesses than they would have had to pay in the absence of a price-fixing conspiracy. Many of these civil suits were settled prior to verdict or judgment by agreements providing for the payment of amounts aggregating less than the amount of actual damages alleged therein. A portion of the amounts realized in settlement was properly attributable to the legal fees and expenses incurred by the utilitytaxpayers in pursuing their damage claims, which expenses in many instances had been deducted by them in prior years as business expenses under section 162 (a) of the Internal Revenue Code of 1954. In some cases the portion of the settlement to be paid with respect to such legal expenses was separately stated in the settlement agreement entered into by the parties. SEC. 3. DISCUSSION OF GENERAL RULES. .01 The Internal Revenue Service recognizes the general rule that an amount realized in settlement of a legal action should be treated. for purposes of the Federal income tax, in accordance with the type of claim to which it is attributable. For example, to the extent that the amount realized represents redress for injury or loss with respect to property held by a taxpayer and used in his trade or business, it is considered to represent a restoration of capital to the extent of his capital interest. .02 Hence the Service accepts the principle that to determine whether a particular amount realized in settlement of a taxpayer's claim for damages under section 4 of the Clayton Act is to be included in gross income or is to be considered a return of capital, it must first be ascertained what the amount represents. .03 To the extent that an amount realized in settlement of an action brought under section 4 of the Clayton Act is attributable to a tax payer's claim for the trebling of actual damages which is provide for by that section, it does not represent a restoration of capital but will be included in the taxpayer's gross income. Commissioner v. Glet shaw Glass Co., 348 U.S. 426 (1955), Ct. D. 1783, C.B. 1955–1, 207. .04 Similarly, since in the cases to which this Revenue Procedure applies legal expenses incurred in pursuing a claim for damages unde: section 4 of the Clayton Act, a special statutory action in the natur of an action in tort, are deductible expenses under section 162(a) of the Code, an amount later realized in settlement of such an action which is properly attributable to the recovery of such expenses generally de not represent a recovery of capital. SEC. 4. CONCLUSION. In the case of a regulated public utility realizing amounts in settlement of its claims for treble damages under section 4 of the Clayton Act for injuries sustained as the result of a price-fixing conspiracy referred to in section 2.02 above, the Internal Revenue Service will permit the taxpayer to account for such amounts in the following manner: .01 Where the taxpayer has reasonably established that the actual damages sustained as a result of the price-fixing conspiracy were in excess of the amounts realized in settlement of the action under section 4 of the Clayton Act, excluding therefrom amounts properly attributable to the recovery of the related legal expenses, it will be presumed, in the absence of substantial evidence of facts to the contrary, that no part of such recovery represents the taxpayer's claim for "punitive" or exemplary damages. Otherwise, the principle stated in section 3.03 above will be applied. .02 The taxpayer will be permitted to treat as a return of capital that portion of the amounts realized in settlement (1) which is properly attributable to the actual damages sustained and (2) which is not in excess of the adjusted bases of those assets used in the taxpayer's business which were involved in the suit for damages, but an appropriate adjustment to the bases of such assets in the taxable year of the settlement will be required. .03 That portion of the amounts realized in settlement of such an action which is properly attributable to a recovery of the taxpayer's costs of suit must be included in the gross income of the taxpayer, but only to the extent not excluded there from by the application of section 111 of the Code pursuant to the regulations thereunder. Where a portion of the settlement has been separately stated in the settlement agreement to be payable for such recoverable costs, the correctness of the amount designated will not be questioned unless it is unreasonable in the light of all the facts. 26 CFR 601.301: Imposition of taxes, qualification requirements, and regulations. (Also Part III-A, Sections 5053, 5055, 5062, 5214, 5362; 245.170, 252.21, 252.23, 240.670.) Rev. Proc. 67-34 The Union of Soviet Socialist Republics has been added to the list of countries to which has been extended the privilege of withdrawing alcohol, distilled spirits, beer, and wine free of tax or with benefit of drawback for use as supplies on aircraft. Revenue Procedure 66-36, C.B. 1966–2, 1237, superseded. SECTION 1. PURPOSE. The purpose of this Revenue Procedure is to announce the addition of the Union of Soviet Socialist Republics to the list of foreign countries to which the reciprocal privileges provided by section 309 of the Tariff Act of 1930, 19 U.S.C. 1309, as amended, may be extended. SEC. 2. BACKGROUND. Under the provisions of section 309 of the Tariff Act of 1930, as amended, and sections 5053 (a) and (d), 5055, 5062(b), 5214(a) (7), and 5362(c) (3) of the Internal Revenue Code of 1954, and applicable regulations of the Internal Revenue Service, alcohol, distilled spirits, beer, and wine may be withdrawn free of tax or with benefit of drawback for use as supplies on aircraft registered in foreign countries and actually engaged in foreign trade or trade between the United States and its possessions, or between Hawaii and any other part of the United States, or between Alaska and any other part of the United States where trade by foreign aircraft is permitted. Such privilege is extended in respect of aircraft registered in a foreign country only if the Secretary of Commerce has found that such foreign country allows, or will allow, substantially reciprocal privileges in respect of aircraft registered in the United States. SEC. 3. THE UNION OF SOVIET SOCIALIST REPUBLICS. In addition to those countries listed in Revenue Procedure 66-36, C.B. 1966–2, 1237, the Department of Commerce has found and has advised the Secretary of the Treasury that the Union of Soviet Socialist Republics extends to aircraft registered in the United States and engaged in foreign trade, privileges substantially reciprocal to those given aircraft registered in the Union of Soviet Socialist Republics and engaged in foreign trade. SEC. 4. COMPLETE LIST OF FOREIGN COUNTRIES. The complete list of foreign countries to which reciprocal privileges may be extended is as follows: SEC. 5. EFFECT ON OTHER DOCUMENTS. This Revenue Procedure supersedes Revenue Procedure 66-36, C.B. 1966–2, 1237. SEC. 6. INQUIRIES. Any inquiries concerning this Revenue Procedure should refer to its number and be addressed to the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax. 26 CFR 601.401: Employment taxes. (Also Part I, Sections 1402, 3121, 3306; 1.1402 (e) (1)−1, 31.3121 (b) (8)−2, 31.3121 (b) (10)−1, 31.3306 (c) (8)-1.) Rev. Proc. 67-35 Procedure for obtaining social security coverage for employees of an organization exempt from income tax as an organization described in section 501 (c) (3) of the Internal Revenue Code of 1954. Mimeograph 5019, C.B. 1940-1, 198, superseded. SECTION 1. PURPOSE, The purpose of this Revenue Procedure is to describe the general procedure to be followed in obtaining social security coverage for |