When Congress returns from its August recess, it will start to learn something about antiques, stamps, gold, and silver. A major lobbying effort will be mounted after Labor Day by the advocates of "collectibles" to repeal part of the new tax legislation, the part that eliminates the self-directed pension-fund tax advantage for such items as Louis XIV desks, Chippendale highboys, and rare coins.
Already howard Ruff, a financial adviser who champions what he considers the gold and silver inflation hedges, has begun to rally support in Congress for repeal of this part of the legislation. Other parties, such as Sotheby PArke Bernet, the prestigious auction house, are also considering lobbying.
Nearly everyone in the collectibles business is miffed that the legislation was included in the tax bill signed by President Reagan last Thursday without any congressional debate. In fact, Mr. Ruff maintains the provision was attached to the bill "without the President's knowledge." Ruff, as well as people associated with the antiques or auction business, is trying to determine how it got tacked onto the tax bill.
At stake is the question of whether or not collectibles should enjoy the same tax treatment as stocks, bonds, mutual funds, or savings deposits in individual's self-directed individual retirement accounts (IRAs) or Keogh plans. If they did have this advantage, any gains someone made on such items would be deferred until the person started to draw down on the IRA upon retirement. At that point, it's expected, someone's income is lower.
Mitchell Zuckerman, a lawyer for Sotheby Parke Bernet, says the firm considers the repeal of the tax advantage unfair and discriminatory. "We want congress to consider the concept that all assets are created equal," the lawyer says.
According to one congressional source who worked on inserting the provision into the tax legislation, however, the reason for its inclusion was a desire to turn IRA and Keogh funds toward more productive uses.
"The Treasury thought it was a good idea," this source claims. As to the argument that hearings were never held on the provision, he counters, "Hearings were never held on a lot of the provisions in the bill." As for repealing it, he says, with a knowing congressional snicker, "It has to get through the House Ways and Means Committee first."
Although advocates of collectibles claim that only a small portion of IRA or Keogh assets flows into highboys, a congressional source notes, "As I understand it, it is a growing business."
According to Neal Blair, of Mr. Ruff's lobby, which is called Free the Eagle, Sen. Jesse A. Helms (R) of North Carolina and Rep. Larry McDonald (D) of Georgia have both agreed to sponsor or round up sponsors for repeal legislation. At the moment, Mr. Blair notes that Rep. James Mr. Shannon (D) of Massachusetts was responsible for the legislation and that the congressman had met with banking lobbies before enactment. "We want to find out what they had in mind and see if we can work with them," Mr. Blair says.
A spokesman for the congressman says that even if Mr. Shannon met with banking lobbies, "that wouldn't influence him. He's not that kind of guy." However, he adds, "The congressman is really getting a kick out of the uproar this has caused." Shannon could not be reached, an aide said.
Harry Lamon, an Atlanta lawyer representing the National Association of Numismatic Professionals, says that ironically the legislation has spurred the buying of collectibles, since it doesn't go into effect until Dec. 31, "People are buying collectibles like they are going out of style," he said.
Mobil lost a war, but finally won a battle.
While the Mobil Corporation was losing its war with Du Pont over control of Conoco, the Securities and Exchange Commission (SEC) cleared the company's president, William Tavoulareas, of any wrongdoing in an investigation on Mobil's relationship to a ship management firm run by Mr. Tavoulareas's son.
The 18-month investigation was set off by an article in the Washington Post, published late in 1979. The Post Article was based on charges contained in a letter Rep. John D. Dingell (D) of Michigan wrote the SEC charging that a Mobil disclosure to its shareholders about Tavoulareas "was incomplete and may have been misleading." The letter also charged that both the Mobil directors and the SEC may have been misled. An earlier story in the Post said that Mr. Tavoulareas's son had profited from his father's position at Mobil, a charge the company denied.
Mobil reported that the SEC turned up no evidence of wrongdoing. The commission, as is its policy, would neither confirm nor deny it was involved in an investigation. Mr. Dingell's staff, for its part, did not return a phone call inquiring if the investigation would go any further.
Remember Genentech, the hot new issue that went from $35 a share to $90 the day it was issued?
Today, nearly 10 months later, it is back to $35.50. And, according to Dr. Robert S. Aries, president of Polytechnic Institute of New York and an expert on te DNA biochemical building blocks, biotechnology stocks listed on the over-the-counter market have declined an average of 18 percent since their issue date. Dr. Aries says some of the "hotter" stocks, such as Cetus, BioLogicals, and Interferon Sciences, have dropped even further, falling 30 and 40 percent from their original subscription prices.
On Sept, 17 and 24, Aries will examine the economics of DNA at two lectures at the Chemist's Club in New York. For transcripts of the lectures, available the day after the lectures, contact Sharon Hammer of Verbatim Productions at 1780 Broadway, Suite 202, New York, N.Y. 10019. The cost is about $50 for the set.
Tax cut or no tax cut, the stock market continued its losing ways. For the week, the Dow Jones industrial average fell 5.61 points, to 936.93. Analysts blamed indecision by investors as they tried to sort out the next move in the economy.