A bill to amend sections 46(f) and 167 (1) of the Internal Revenue Code of 1954 regarding the treatment of public utility property and to provide a transitional rule with respect thereto.

(Reported to Senate from the Committee on Finance with amendment, S. Rept. 96-1038)

Amends the Internal Revenue Code to provide that public utilities which utilize, for ratemaking purposes, a procedure or adjustment which is inconsistent with methods used in estimating or projecting tax expense, depreciation expenses, or reserve for deferred taxes, shall not be considered to have complied with the normalization method of accounting required for computing the accelerated depreciation and investment tax credit amounts of such utilities. Authorizes the Secretary of the Treasury to prescribe regulations which define other procedures and adjustments which are inconsistent with the normalization method of accounting.

Provides that violations of normalization requirements shall not result in a public utility's loss of eligibility for accelerated depreciation or the investment tax credit if: (1) such violations involved the use of estimates, projections, or adjustments to the utility's rate of return; and (2) such estimates, adjustments, or projections only applied for periods ending prior to March 1, 1980 and were included in certain specified orders of a public utility commission.

Delays the payment of any tax refunds or credits for overpayments resulting from the amendments made by this Act until after October 1, 1981.

Terminates retroactively a waiver of exemption from social security coverage filed by a certain corporation.

Provides that gain from the sale of stock in a foreign investment corporation which is attributable to such corporation's earnings and profits before the time such corporation became a foreign corporation shall not be taxed as ordinary income.

Treats certain authors or artists under contract with a corporation as employees of such corporation for taxable years beginning after December 31, 1980, if: (1) such individuals were, on December 31, 1977, participants in qualified pension plans of the corporation; (2) the employment contract is a "first refusal" or "best efforts" contract; and (3) the corporation's pension plans meet certain specified requirements.