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News & Views |Senate Panel to Consider Changing Section 357(c)Thursday, January 21, 1999 Deloitte & Touche OnLine The Senate Finance Committee plans to raise revenue through a proposal to alter Internal Revenue Code Section 357(c) as part of a bill making miscellaneous changes to trade policy that will be considered January 22. The distinction between the assumption of a liability and the acquisition of an asset subject to a liability under Internal Revenue Code Section 357(c) generally is eliminated under the provision for corporate reorganizations that occur on or after October 19, 1998. The Senate version of the trade bill last year did not include the Section 357(c) proposal or any other tax-related offset. Assuming the measure is approved January 22, this would be the first endorsement of the October 19 effective date by the Senate panel. There had been speculation that Senate Finance Committee Chairman Bill Roth, R-Del., was open to the possibility of changing the effective date, but the provision the Senate plans to consider is identical to the House’s bill. House Ways and Means Committee Chairman Bill Archer, R-Texas, also supports the October 19 effective date, which he endorsed in a bill (H.R. 18) introduced January 6. The House in the last Congress also endorsed the October 19 effective date in a trade
bill that died at the end of last session. House action on the trade bill has not been set
for this year, but it could occur this winter. |
More on Clinton’s Social Security Plan: Retirees must be protected if Social Security funds will be invested in the stock market, civil rights leader Jesse Jackson told the House Ways and Means Committee January 21. Presidential aspirant Jack Kemp disagreed, cautioning that participants in the program should be prepared to face added risk from market volatility. Poor people with no other retirement income would be harmed most if Social Security funds were invested in the stock market, and it declined sharply before they stopped working, Jackson said. Steps should be taken to protect these people, he added. Jackson and Kemp were testifying on President Clinton’s proposal to reserve 62 percent of the surplus to save Social Security, and to invest a portion of those funds in the stock market. "We would be willing to reserve 62 percent of the surplus until Social Security has been saved," as Clinton suggests, Archer said at the hearing. In contrast to Clinton, Archer said such a plan still would leave room for tax cuts. Roth's Retirement Bill Introduced: A bill (S. 263) to establish a five-year program of personal retirement accounts funded by the budget surplus and modeled after the federal employees' savings and investment plan was introduced January 20 by Roth, along with other tax-related bills offered by other senators. The program would deposit a minimum of $250 in accounts for workers who had earned the minimum for four quarters of Social Security coverage, plus an additional amount based on the worker's share of payroll taxes, according to Roth’s statement. Americans would have to wait 15 years for a tax cut under the proposals outlined in
Clinton’s State of the Union address, but would receive immediate relief under the
across-the-board tax cut offered by Senate Republicans, Roth said in a separate statement.
"If we were to enact [this] plan…Americans would have no significant tax relief
until at least the year 2015." |
R&D Credit and Subpart F Tax Exemptions to Expire: The research and experimentation tax credit, and the exceptions under subpart F for active financing income, are among the tax provisions set to expire on June 30, and December 31, 1999, respectively, according to a list of expiring provisions prepared by the staff of the Joint Committee on Taxation. Also expiring in 1999 are--
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