Agenda - Council - 08/24/1982 - Laserfiche WebLink

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WEEK IN REVIEW-823'; July 30, 1952 I I I House Ways and Means Committee Chairman Dan Rostenkowski indicated that targets for change in the Senate bill include provisions on safe harbor leasing, life insurance, industrial development bonds, and the completed contract method of accounting. Other disputed matters include the proposed 50% disallowance of certain business entertainment expenses, and the 6-month min- imum holding period for long-term capital gains treatment. The first meeting of the Conference Committee is tentatively set for Tuesday, August 3. STRICT RULES FOR DEDUCTION OF FOREIGN CONVENTION EXPENSES I I I Expenses incurred while attending a business or professional meeting held outside "the North American area" will not be deductible (even though the meeting is directly related to the active conduct of the taxpayer's business), unless it is as reasonable for the meeting to be held outside such area as within it. For these purposes, the North American area includes the United States and ils possessions, the Trust Territory of the Pacific Islands, Canada, Mexico, and Jamaica. The purpose of the rules is to prevent deductions for trips that are actually foreign vacations. Factors to be taken into account under the reasonableness standard are: · The purpose of the meeting, its activities and those of the sponsoring groups · The residences of active members of the sponsoring group, places where other meetings have been or will be held, and other relevant facts. I I I I I I I I I The deductibility of expenses of conventions held on cruise ships is strictly prohibited. (A bill passed by the House Ways and Means Committee would exempt conventions on domestic cruise ships.) As is illustrated by a recent IRS private letter ruling, the fact that a particular group's convention has traditionally been held at a foreign location is not sufficient to justify a deduction for the expenses of attending it. The ruling involved the expenses of a physician attending a medical con- vention. The I RS ruled that the expenses were not deductible because the activities of the medical convention did not require it to be held outside the North American area. No reason other than tradition was given to the IRS to justify its foreign location. IRS WANTS INDIVIDUALS TO DEPOSIT ESTIMATED TAXES WITH BANKS The IRS recently proposed regulations that would require individual taxpayers to deposit their esti- mated income tax and self-employment tax payments with a bank or other authorized depos- itary institution, instead of mailing them to an Internal Revenue Service Center. These payment procedures are similar to those already used by corporate taxpayers, and ~vould be effective for taxable years.beginning in 1983. The new requirements could be satisfied by sending tax payments to the authorized depositary by mail postmarked at least 2 days prior to the due date of the tax. Individuals never before re- quired to make estimated tax payments, or those required to make them for the first time in over 1 year, would forward the first installment directly to their Service Center. Presumably, the Ser- vice Center would then provide the taxpayer with the necessary forms and instructions to make subsequent payments under the new rules. Taxpayers residing outside the U.S. would also be exempt from the new rules. These regulations are in proposed form at present. Public comments on the proposal are invited; they should be submitted to the IRS by September 20.