Sealy Corporation and Subsidiaries, f.k.a. The Ohio Mattress Company and Subsidiaries, et al. - Page 14

                                             14                                              
                     losses may be carried back to each of the taxable                       
                     years during the period beginning with the taxable                      
                     year in which the plant was placed in service.  No                      
                     loss, however, may be carried back to a taxable                         
                     year beginning before January 1, 1984, unless it                        
                     may be carried back without regard to these rules.                      
                           The provisions of the bill apply generally to                     
                     expenses incurred (without regard to the economic                       
                     performance requirement) after the date of                              
                     enactment.                                                              

                          *     *     *     *     *     *     *                              
                Conference Agreement                                                         

                     The Conference Agreement generally follows the House                    
                bill, with modifications.                                                    
                     *     *      *      *      *      *      *                              
          H. Conf. Rept. 98-861, at 871-873 (1984), 1984-3 C.B. (Vol. 2) 1,                  
          125-127.                                                                           
                The conference report states that the 10-year carryback of                   
          specified liability losses applies to "net operating losses                        
          attributable to certain liabilities deferred under these                           
          provisions."  "These” provisions are the limits on premature                       
          accruals; i.e., the economic performance rules of section 461(h).                  
          This suggests that Congress intended the 10-year carryback to                      
          apply only to liabilities for which deduction is deferred by the                   
          economic performance rules.  Petitioners' accrual of the                           
          deduction for the expenses at issue was not deferred by the                        
          economic performance rules.  Since the economic performance rules                  
          do not limit petitioners' accrual of the deduction for the                         





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