APPENDIX A TECHNICAL MEMORANDUM OF TREASURY POSITION ON H.R. 13270 (Submitted to the Committee on Finance September 30, 1969) September 30, 1969 Technical Memorandum on H.R. 13270, Tax Reform Act of 1969 Sec. 101--Private Foundations 1. Tax on Investment Income The House bill proposes a 7-1/2 percent tax on net investment income of private foundations. Treasury recommends that in lieu of this revenue-raising levy, a supervision tax be imposed to offset the cost of administering the audit program for foundations. It is estimated that 2 percent of net investment income would be sufficient for this purpose. 2. Computation of Investment Income The bill now allows the full amount of a capital loss to be deducted from gross investment income. This is inconsistent with the method of computing taxable income of other taxpayers. Treasury recommends that the deduction for capital losses be limited to the amount of capital gains, with a five-year carryforward, thus providing the same treatment given to corporations. |