MINOR MEMOS.  Entergy claimed a $2.316 billion tax deduction on its return for 2001 by “marking to market” a long-term contract it signed years ago to buy electricity from the Vidalia hydroelectric project in Louisiana.  The tax deduction was expected to provide it with a cash flow benefit of between $700 and $800 million at the end of 2002, according to a US Securities and Exchange Commission order in December.  Section 475 of the US tax code requires dealers in securities to mark their securities inventories to market at the end of each year for tax purposes.  Dealers in “commodities” have had the option of doing so since 1997 . . . . Forty-six percent of IRS agents who audit large and medium-sized businesses are eligible for retirement within the next three years.  The agency is worried about the brain drain.  It takes years to train IRS agents in these positions . . . . The IRS announced a new approach to large corporate tax audits in January.  It said that it would be willing to enter into formal agreements at the start of audits with large companies where each side agrees not to raise issues below a certain dollar threshold.  The hope is to streamline audits.  It remains to be seen how attractive this is to large companies.  A company would have to have at least $10 million in assets to take advantage of the program.  The ground rules are described in an information release IR-2002-133.

Keith Martin