June 29, 1989
TO: BOARD OF GOVERNORS NO. 39-89
MEMBERS - ONE PER COMPLEX NO. 21-89
TAX MEMBERS NO. 18-89
FEDERAL LEGISLATION COMMITTEE NO. 8-89
RE: HOUSE WAYS AND MEANS COMMITTEE VOTES TO
REPEAL SECTION 67(c)
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In closed session today, the House Ways and Means Committee
voted to repeal Section 67(c) - the so-called "phantom income"
provision - of the Internal Revenue Code. This action took place
during consideration of the Technical and Miscellaneous Revenue
Act of 1988 and as part of the Budget Reconciliation process.
In its deliberations, the Committee decided not to
reinstate Section 67(c) which was inadvertently repealed in last
year's tax legislation. Section 67(c) requires the Secretary of
the Treasury to prescribe regulations prohibiting the indirect
deduction through certain pass-through entities, including mutual
funds, of amounts that would not be deductible under the 2-
percent floor on miscellaneous itemized expenses if paid or
incurred directly by an individual.
Action on the Budget Reconciliation bill is expected to be
concluded by the Ways and Means Committee by late July. The
Senate Finance Committee is expected to begin consideration of
these matters in mid-July.
We will keep you advised of further developments.
Matthew P. Fink
Senior Vice President
and General Counsel