Federal taxation of corporate taxpayers should be remodeled in order that they may have funds immediately available for the postwar transition period, believes J. Keith Butters, assistant professor of Financial Research at the Harvard Business School and Consultant to the Treasury Department. In a report released today he points out that Federal tax liability of all corporations in the aggregate is their largest liability and that if tax regulations are framed inequitably the strain of conversion in the postwar period may be much more serious than it need be.

According to Professor Butters the failure to recognize as deductions costs and losses accruing during the war, but not actually incurred until after the war, leads to an overstatement of war profits. Items likely to cause such overstatements are: dismissal compensation payments, reconversion expenses, deferred maintenance, and inventory losses.

Cantioning that tax adjustments present delicate political and economic problems. Professor Butters warns that discriminatory tax reductions will destroy customary competitive positions.

Advocating revision of the present tax law. Professor Butters suggests that since conversion problems will arise for many firms before the war's end that they be given the 10% refund on excess profits taxes before it finishes if they can't present reasonable evidence that their need for reconversion funds will proceeds this date."