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Corporate planning flexibility will be restricted, although not completely, by two changes in the new law. Congress, taking a cue from a recent Revenue Ruling indicating a shift in the Service's position, has limited Morris Trust-type transactions in which a tax-free spinoff is followed by an acquisition at the distributing or spun-off corporation. In addition, certain types of "nonqualified" preferred stock will not count as stock for purposes of determining the tax status of an incorporation or reorganization. Nevertheless, taxpayers may be able to plan around the new restrictions.

The proposed legislation effectively ending the use of Morris Trust transactions should be rethought. The bill would prohibit the tax-free spin-off IRC s. 355 treatment traditionally applicable when 50% or more of a controlled or distributing corporation's stock is acquired under an acquisition plan. The House's plan ending spin-off treatment for affiliated corporations' intragroup distributions is similarly flawed. Congress should be providing corporations with ways to efficiently restructure without incurring unnecessary tax burdens.

Some changes should be made to the IRS's proposed regulations for IRC section 1001 covering the modification of debt instruments. Specific areas needing amendment are the definition of modification, determination of the significance of a modification and effects on other parts of the Internal Revenue Code. There are 14 main suggestions by the Committee on Taxation of Corporations of the Assn of the Bar of the City of New York.

Presents letters to the editor referencing topics and articles published in the previous issues. Criticism of the oppressive and totalitarian industrial policy that German dictator Adolf Hitler adopted to do away with the unemployment; Appraisal of Consumers' Cooperatives which were effective in holding down retail food and commodity prices; Criticizes the U.S. government for giving more importance to the questions of war that those related to social security, programs and relief.