A LOCAL-CONTENT BILL ... designed to curtail job loss from the growing acceptance of import automobiles in the U.S. by encouraging import firms to invest in American automobile and auto parts production has recently passed the House of Representatives by a narrow margin. Under the provisions of the bill, manufacturers selling more than 100,000 cars in the U.S. would be required to use specific levels of American-produced content, including advertising, insurance, jobs, and materials. Content requirements would range to 30 percent for the 1985 model year, 60 percent for 1986, and 90 percent for 1987 and beyond. Although the proposed legislation has the support of the United Auto Workers, it may not fare as well when considered by the Senate.

THE IRS HAS PRIVATELY RULED ... that a husband and wife self-employed in separate businesses and owning cars separately can figure their standard mileage deductions separately on a joint return. According to the IRS, the standard mileage rate for cars used in business in 1983 will be 20.5 cents a mile - up from 20 cents in 1982. The rate is for the first 15,000 miles of business use of a car that is not fully depreciated. Above 15,000 miles, and for all mileage of fully depreciated cars, the rate will remain at 11 cents a mile, unchanged from 1982. Husbands and wives in separate businesses with separate cars can claim the first 15,000 business miles at the higher rate, according to the private IRS ruling.

GM SAYS IT DID NOT VIOLATE ANY LAWS ... in developing and marketing its X-body cars, despite Justice Department claims of a cover-up on the part of General Motors. GM was sued last summer by the Justice Department, which demanded the recall of 1.1 million 1980-model X-cars because of brakes that safety officials said had a tendency to lock up and throw the cars into spins. The lawsuit also asks the court to penalize GM $4 million fro allegedly covering up a design flaw which it contends GM knew about before producing X-cars, which include the Oldsmobile Omega, Chevrolet Citation, Pontiac Phoenix, and Buick Skylark. The Justice Department's allegation stems from documents subpoenaed from GM which it says proves design flaws were known before the cars were produced. According to reports, GM chairman Roger B. Smith said GM did nothing wrong in developing and marketing its X-cars, and GM would not consider an out-of-court settlement of Justice Department charges that it covered up the design flaw in X-cars' brakes unless the government acknowledges GM did not violate any laws.

FURTHER WOES FOR GM ... could arise from the outcome of the Federal Trade Commission's decision whether to allow a joint venture between GM and Toyota Motors to produce small cars in the United States. According to reports, the future of the proposed joint venture, which until recently appeared to be proceeding on course in spite of complaints from Chrysler and Ford, now appears to be hanging in the balance due to Toyota's balking at FTC requests for sensitive information. The joint venture, which would produce 200,000 small cars designed by Toyota, built at GM's currently unused Fremont, CA, plant, and sold under the Chevrolet nameplate, is the subject of an antitrust investigation by the FTC. Although GM was confident that the joint venture would gain approval, the FTC's contention that it would present unfair competition, its demands for pricing and cost documents, and Toyota's resistance to these demands, have created fears that the deal may sour.

TRACS WOULD NOT BE TAKEN INTO ACCOUNT ... if a new house bill, H.R. 1607, sees final passage. The bill, which was recently argued before a House Subcommittee by representatives and spokesmen for the auto leasing industry, would ensure that terminal rental adjustment clauses (TRACs) would not be taken into account in determining whether motor-vehicle leases are to be considered leases or conditional sales for tax purposes. The open-end or TRAC lease has been in widespread use since the 1950s, with the lessors taking the tax advantages accruing from ownership. But in 1979 the IRS declared that open-end leases were to be considered conditional sales, giving the tax breaks to the lessees. In 1982 Congress passed the Tax Equity and Fiscal Responsibility Act, which among other things, stated that TRAC leases could not automatically be considered conditional sales until the IRS issued a final regulation saying they could. It is the contention of the proponents of H.R. 1607 that rejecting the bill could have dire consequences for both auto lessors and auto manufacturers. The House Ways and Means Committee has not yet scheduled a markup session for the bill, and likewise, the Senate Finance Committee also has not scheduled markup on 1607's companion bill, S. 1162, on which hearings were held last June.

 

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