Recent Developments in Corporation Income Taxes
BY NORMAN R. KERTH Partner, New Orleans Office
Presented before New Orleans Chapter of the National
Association of Accountants — January 1960
HE YEAR 1959 did not produce major income tax legislation such as
was produced in 1954 when the currently applicable Internal Revenue Code was adopted, or as was produced in 1958 under the Technical Amendments Act. However, there have been some important
and significant developments brought about by legislation and judicial decisions, and by the Treasury Department in the administrative
area of regulations, rulings, and other releases. This discussion will be limited to some of the 1959 developments that are believed to be of concern and application to corporations.
There were several developments in the legislative area that affected life insurance companies, state taxation of interstate commerce,
Subchapter S, and corporation income tax rates.
LIFE INSURANCE COMPANY INCOME TAX ACT
The Life Insurance Company Income Tax Act (PL 86-69) signed into law by the President on June 25, 1959, furnished a new formula for the taxation of life insurance companies, which is the culmination of seven years of temporary legislation. As the Act is of very limited interest, an analysis has not been considered as being within the scope of this discussion.
INTERSTATE INCOME LAW
The new Interstate Income Law (PL 86-272) signed by the President
on September 14, 1959 was emergency legislation to deal with the expanding problems brought about by attempts of various states to tax net income derived from interstate commerce. It is intended to lessen the impact of the United States Supreme Court's historic decision
in February 1959 in the cases of Northwestern States Portland Cement Co. v. Minnesota and Williams v. Stockham Valves & Fittings, Inc. (358 U. S. 450, 79 S. Ct. 357). The Northwestern-Stockham cases were concerned with the constitutionality of state net income tax laws