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Show Utah to Fight IRS Ruling That Refunds Taxable By MICHAEL WHITNEY SALT LAKE CITY (WPI) — The Internal Revenue Service ruled Thursday that some of the refunds paid ta Wteh homeowners under a state tax rebate scheme are subject to federal income taxes. The IRS ruling means that about$3-4 million of the to the approximately $45 million in total refunds claimed Utah rsidents will be wind up in the federal treasury, said State Tax Commission Chairman David Duncan. However. Deputy Utah Attor- ney General Michael Deamer said the IRS misintepreted the state tax refund law when it madethe ruling. “The IRS is wrong on the facts and its wrong on the law.” said Deamer. ‘‘If we can’t get the IRS to change its mind by appealing Gold Up to the ruling we'll file suit against the IRS in federal court.’ A homeownerwho itimizes on his 1929 federal tax return must decuct the amountofthe state refund he received from the amountof local property taxes he paid in 1979 before deducting the local levy from taxable his income. The net effect is an increase in taxable income A homeowner who itimize on his 1979 income tax return but received his refund after Dec. 31 1979, must report the refund as income for 1980 and pay federal taxes on it when hefiles his 1980 return Homeowners who do notitmize when calculating their federalincometaxes need notlist the refundson their returns. Theneteffect is that people in that catagory escape taxes on the refunds. Refundspaid torenters are not taxable An additional rule comes into playinall cases where the refund is larger than the property tax or rent paid by an individual. In those cases the difference between the refund and the propertytax or rent is taxable income. However since refunds range from a minimum $100 to a maximum $400, there would be fewif any cases where the refund wouldbe larger than the property taxorrentpaid byanindividual Deamer said the IRS ignored the fact that the refunds are not property tax rebates. ‘This is not a property tax tebate program,” said Deamer. “The Utah Supreme Court ruled that it was not a rebate program whenit declared the refunds constitutional.’” Because the refunds are not Property tax rebates he said they should not be subject to laxes The Utah Legislature last year enacted the refund porogram as a meansto distribute $56 million in surplus state funds to the state's residents. So far. applications for a total of only $45 mil lion in refunds havebeenfiled The lawmakersdecided to use the amount a homeowner paysin local property taxes and the amocata renter paysin rent as a yardstick to calculate thesize of the refund given to each person The surplus state funds dis. tributed were collected from a varietyof state taxes — but none of the money came from property taxes. Utah does not levy a state propertytax Deamer said people whoseincome taxes are increased bythe GheBa Government Laboratory Gold Missing OAKRIDGE, Tenn. (UPI) — A batch of gold used in research and valued at about $64,000 is missing and believed stolen despite tight security at a governmentlaboratory. The FBI entered the investigation Thursday for the 81 ounces of gold at the Oak Ridge National Laboratory, a Department of Energy installation 25 miles west of Knoxville, where the atomic bomb was developed and energy research is now going on. The FBI and DOEofficials offered few details on what was described as a “mysterious disapperance.”’ “The mere fact wecalled in the FBI indicates we are suggesting it was stolen,” said DOE spokesman Jim Alexander. Hesaid the material was discovered missingin the ‘last couple of days." The missing gold at Oak Ridge was the second such incident in recent weeks at a DOEfacility. A Padacah Ky., plant reported 40 ounces of gold missing in December. The FBIearlier this month arrested four men in the case, the IRS refund the taxes levied Jections of Democartic Gov on refunds Scott Matheson and Democratic However, he conceded that the IRS ruling makes the normally difficult job of figuring income taxes even more complicted “It's just. a mess,’ Matheson and the Democratic lawmakers prefered a tax relief program which center around repeal of the sales tax on food he said In the wake of the IRS ruling. some Republican leaders of the GOP-controled legislators. Legislature backed away from earlierpredictions that the refund program would remain in existance through 1980. “I think we may find a better way to reduce taxes — onethat does not involve refunds.’ said Senate Majority Leader Fred Finlinson, R-Murray Finlinson. along with other They warned that refunds might be declared taxable by the IRS But House Speaker James V. Hansen, R-Farmingon. said the IRS ruling did not harm the viability of the refund program ‘To the individual the extra federal income tax will be only pennys,” said Hansen. “I think we haveto look at the impact on the individual. not the $3-4 million total that will go to the federal government. Seeing Recession Theprice of gold shot up $79.50 over- whichall contracts dueon thatdate are settled, was $802 an ounce. Republican leaders pushed the refund program through the Legislature last year over the ob- — but at the same time Defies Forecasts By United Press International Gold fever spread across the world’s financial markets today with the price per ounce shooting over the $800 mark in London, Zurich, Hong Kong and New York. The. price rose to $825.50 at the London morning gold fixing. ‘‘Tradin, is rather hectic as speculators from all over cover their position for the weekend,”’ a bullion dealer for Sharps Pixley said. New York Commodity Exchange, at money Economy Growth $825 night in curich from $730.50,to open at $810 an ounce. In London, the price jumped $45to open at $805 an ounce and within minutes the market was trading at $820 an ounce. It climbed to a newall-time closing high of $817 an ounce in Hong Kong, taking the lead from New York where it surpassed the $800 mark Thursday. The price of gold, triggered by the crises in Iran and Afghanistan and the renewed East-West cold war, has doubled in two months andtripled within a year. Panic buying set in Tuesday and Wednesday, but the markets were relatively calm Thursday. “T guess yesterday was the calm before the storm,” one Zurich gold dealer said. ‘The relatively quiet day Thursday seems to have triggered a new wave of buying and the market was also partly influenced by the fact Hong Kong closed at over $800.” The price of gold opened on Hong Kong’s Chinese gold and silver exchange at $800 an ounce in hectic trading, up a thumping $66 from the previous day’sclose. Within minutes,it reached $812 an ounce, finally closing at $817. The buying binge in the United States, following early profit-taking, stampeded the price on the New York market from low of $715 an ounce toa highof $820 during trading before closing at $800, a new record,It had closed Wednesday at $747.50. Gold closed Thursday in Zurich at $730.50 an ounce, down from Wednesday's close of $760, a new recordfor the Swiss market. In London, wheregold hit a previous all-time high of $765 an ounce Wednesday, gold recoveredto close at $760 an ounce, up from $755 at Wednesday's close. The January settlementprice at the Tuling should pay the additional submit a letter demanding that WASHINGTON (UPI) — The nation’s economydefied predictions of a Tecession by expanding at an annual rate of 1.4 percent during 1979's final cue the government reported toay Forthe entire year, economic growth was 2.3 percent aheadof 1978, after adjustmentfor inflation, the Commerce Departmentsaid. Willingness on the part of consumers to spend money in the face of rapid price increases was the main reason for the unexpected economicstrength, government analyists said. Most economists. however, still helieve the economy will fall into a recession during the first half of 1980 and unemploymentwill surge upward. After taking into account the effects of inflation, ‘‘real"’ output was 2.3 percent. Inflation last year, as measured the Commerce Department’s implicit price deflator, was 8.8 percent compared with 7.3 percent in 1978, the report said. The implicit price deflator measures cost changes at all levels of the economy, not just for consumers, and is considered to be a more accurate inflation barometer than the Labor Department's more widely publicized Consumer Price Index. For the fourth quarter, economic growth afterinflation was gauged at 1.4 As manyas1.5 million workers could 3.1 percentincrease, it was still far bet- be laid off by year-end as the economy slows, analyists have predicted. The Gross National Product, whichis the value of all goods and services produced in the United States, totaled $2.368 trillion last year — a rise of $240.9billion, or 11.3 percent, from the 1978 level. percent. Although the October-Decemberincrease wasless than the third quarter's ter than previous forecasts. The economy grew by 1.1 percent during last year’s first quarter and then sagged 2.3 percent during the second quarter. Total GNPfor the fourth quarter was $2,455,800,000, a gain of $59.3 billion over the third quarter. Friday: County’s Hospitals SaidFilled Sick? Maybe you ought to go toa hospital. You may haveto take a bed in the hallway, but you'll receive quality care just the same. Utah Valley’s three hospitals told the Herald this morning they are bulging with patients. e growing population in Utah County is probably the biggest reason, but illness-producing weather and an after-holiday surgery boom are other reasons, they explained. Regardlessofthe patientload, the hospitals can handle crises that may arise, they assure. Utah County's Civil Defense director supports their claims. See story on page2. Crises Developments at a Glance Afgharistan’s foreign ministry has invited newsmen from all countries, except the U.S., to visit and report on the situation in that nation. Theinvitation came24 hoursafter the Afghan government ordered American newsmen expelled from the country for allegedly failing to accurately report the situation there. That is one of several crises stories on Page 5. Says Elvis Felt He ‘Needed Drugs’ Picture shows scene where cargo ship hit Swedish bridge. UPITelephoto Ship Rams Swedish Bridge; Autos Fall 100 Feet Into Sea GOTHENBURG, Sweden (UPI) — An 18,000-ton freighter moving through heavy fog smashed into supports of a bridge linking an island and the Swedish mainland today. The bridge collapsed and sent cars and trucks tumbling into the sea. a many as 10 persons were feared lead. Witnessesonthe freighter said seven cars and twotrucksfell 210 feet into the icy waters of the Skagerrak, the body of water separating Sweden and Norway. “Even if someone survived the fall, there would be little hope of finding them alive now," said a Coast Guard spokesman. Authorities said as many as 10 Persuns were feared dead in the acci- dent. A major search operation was launched with five Coast Guard and customs boats equipped with underwatertelevision cameras. Divers were searching in 120 feet of waterfor the vehicles but were severely hampered by poor visibility, the Coast Guard said. A Coast Guard spokesmansaidit was “highly unlikely’ that anyone would have survived “We have searched all the beaches around the area and found nothing,’’ he said. Police said they did not immediately know how manyvehic'esfell into the sea. “All we cansayis that we know some vehicles havein all likelihood gone over the edge," the spokesmansaid. “We have onereport that one truck and four orfive cars wentover. anothertalks of three trucks and one car." The Liberian-registered Sta: Clipper struck a bridge linking the island of Tjorn with the Swedish mainland and was immobilized when huge fragments of concrete from the smashed bridge struckit. No one aboard the vessel was injured, police said. Japan Discloses Soviet Spy Charge TOKYO (UPI) —- Securitypolice today arrested a retied Japanese major general on chargesoi passingclassified information to the Soviets in a major espionage case that shook the military establishment. The Tokyo metropolitian police broke the GroundSelf-Defense Forces. Sources said official secret documents, a codebook and a radio transmitter were found in Miyanaga's house in Tokyo during a police search Thursday. Immediately after the anthe news, announcing that they had ar- nouncement, a grim-faced chief of the rested former Maj. Gen. Yukihisa ground forces, general staff, Gen. Shigeto Nagano, faced a batiery of M:yanaga, 58, along with two junior officers of Japan's army,officially called reporters at the defense agencytodis- cuss the background of the three arrested men “It is extremely regrettable that something like this has happened,”’ he . said Nagano said Miyanaga. a proficient Russian speaker, had been connected with the Defense Agency's Russian military information division before his retirement in 1976. Friends and physicians told a Tennessee Board of Medical Examiners that Elvis Presley felt he had aneed to get ‘‘excited”’ for his concerts and wanted drugs so bad he would turn to mysterious out-of-town sourcesif his doctors cut off his supply. Theboard is conducting a hearing into charges that Dr. George -Nichopoulos indiscriminately prescribed drugs for the entertainer. See story on Page 5. Witness Tells Hew Pinto Exploded A witness testified Thursday that the Pinto exploded ‘like a large napalm bomb,” during the Ford Motor Co.trial, in which the auto firm faces charges of reckless homicide. Three girls died when the Pinto burst into flames after being rearended by a van, and the prosecution contends Ford was negligent in designing the Pinto, making it susceptible to explosions and fires in rear-end collisions. See story on Page 5. Stiffer Marijuana Penalties Wanted Four teenagers screaming abuse at an elderly woman underline the sharp differences between those who wantstiff penalties for marijuana use and those who think the punishment does more harm than need. The elderly womantestified in favor of legalizing marijuana and the teenagers screamed abuse at her because they want stiffer penalties. Testimony for stiffer penalties surprised the senators, whoindicated they're reconsidering the issue. See story on Page 13. SnowLikely as Temperatures Dip Today's rain could turn into snow showers tonight in Central Utah, as forecasts call for overnight lows to dip into the mid 20s. The probability of measureable precipitation is expected to decrease, however, to 50 percent tonight and 30 percent Saturday, whenhighsare expectedtobe in the 30s. See addition Utah weatherinformation on Page 2. Here’s Where ToFind It Aaiusements Arts Classified Ads Comics Commerce (Stocks) Editorial 13-15 0 23-32 a 9 2 National-International Obituaries Society Sports Utab-Regional 5, 13 4 17-19 . 68 10 |