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7343314
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President Signs H.R. 12490, Tax Treatment of ConRail Transfer [Signing Statements and Announcements]
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7343314
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document
title
President Signs H.R. 12490, Tax Treatment of ConRail Transfer [Signing Statements and Announcements]
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White House Press Releases (Ford Administration)
Press Releases
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U.S. House of Representatives. (03/04/1789 - )
Legislation
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7343314
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1
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1976-04-01
month
4
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1976
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nara-archive
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0377e34163aaf009
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Digitized from Box 23 of the White House Press Releases at the Gerald R. Ford Presidential Library
April 1, 1976
Office of the White House Press Secretary
NOTICE TO THE PRESS
The President has signed H.R. 12490 - Tax Treatment of ConRail Transfer.
The purpose of this bill clarifies the tax treatment of transfers of certain
railroad properties into the Consolidated Railroad Corporation under the
Regional Rail Reorganization Act of 1973.
The Regional Rail Reorganization Act of 1973 (P. L. 93-236), as amended by
the Railroad Revitalization and Regulatory Reform Act of 1976 (P. L. 94-210),
provided for the reorganization of bankrupt railroads in the Northeast and
Midwest. It established the U.S. Railway Association (USRA), a nonprofit
government corporation, to design a new rail system for the region. It also
provided for the establishment of a new for-profit private corporation called
the Consolidated Rail Corporation (ConRail) to acquire and operate the new
system. The transfer of properties from the bankrupt railroads to ConRail
is scheduled to take place on April 1. H.R. 12490 will clarify the tax treatment
of any such property transfers.
H.R. 12490 will provide that, for tax purposes, the transfer of properties to
Con Rail is not to result in the recognition of gain or loss to the transferor
companies, or generally to their shareholders and security holders, as long
as the property is exchanged solely for stocks and securities of ConRail and
USRA certificates of value. This provision will apply whether the transferors
are railroad corporations or engaged in other businesses, and whether they are
solvent or insolvent.
The bill will also provide that the basis to ConRail of property received would
be the same as the transferors' basis in the same assets (generally referred
to as a "carryover basis"). This provision is important to ConRail because,
in most cases, the properties being transferred to ConRail have a higher basis
than their current fair market values, thus resulting in an advantage for de-
preciation purposes.
H.R. 12490 will specifically prohibit any net operating losses of a transferor
from being carried over to ConRail. Existing law would be used to determine
whether those net operating losses would be retained as carryovers to the
transferor for future tax years. If it is determined that these losses are
retained by the transferor, the bill will provide special treatment for them.
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