The Los Angeles Times from Los Angeles, California • 36

West Could Aid Oil Search, Russ Admit usinrss finance 10 PartB- MONDAY, JANUARY 30. 1978 National Officials Concede Technology Would Help in Siberia Pepsico's Vodka Deal May Bring Pizza Hut Cloud I mi rif--Trr'f i hi jhj riTnir i ijh iumstnm i nu ju.h 1 A I j4 MJr'A break was passed and sent to the senate. The bill, sponsored by Assemblyman John Known (D-Richmond), would shield World from having to pay state taxes on its 1974 sale of First Western Bank to Lloyds Bank now known as Lloyds First Western. World had to sell the bank because of federal laws prohibiting companies holding banks from conducting other business. World's primary business is a charter airlawTSer-vice.

Knox mentioned World only in passing during a brief presentation of the bill. World Canada will resume uranium ore shipments to Japan. Canadian External Affairs Minister Donald Jamieson called the agreement to resume shipments after a one-year suspension "a substantial achievement" in his four days of talks with Japanese leaders in Tokyo. He told a press conference there that the agreement, which lays down stricter safeguards against military use of uranium, was "an example that can be used in other international negotiations on nuclear non-proliferation." Jamieson said economic questions were the main topics of a final meeting with Japanese Prime Minister Takeo Fukuda. FAMOUS FIREFIGHTER Paul (Red) Adair, right, the most famous oil well firefighter in the business, directs a member of his team at natural gas flareup.

Adair now has some new competition. Time photo COMPETITION FROM OWN RANKS Red Adair Team Splits With Unusual Fireworks BY LINDA GIILAN Timm Staff WrlhT Adair was reportedly surprised to learn that the men would be competing with his company. "I wasn't just going to lay down and die," said Hansen, 52, who became vice president of the new firm when Matthews won the coin toss for president "These oil well fires are all I've done since after the service." Hansen has been fighting well fires for 26 years, and Matthews, 54, has been at it for 20 years. Adair's company has had no strong competition over the years, and rumors are that his fees have run into the millions of dollars. Adair always Please Turn to Page 12, Col.

2 IRS-California Dispute Puts Taxpayer in Middle Goodyear introduced what it calls a "flat -proof" tire. Goodyear Tire Rubber Co. said the secret to the tire is "a sidewall rubber compound that can support the weight of a car" even when a large part of the tire's surface is removed. The Akron, Ohio-based company said the sidewall rubber compound allows use of thicker sidewalls which can support the weight of a fully loaded car with zero inflation pressure. It added the tire can be driven without air in it for about 40 miles at 40 miles an hour.

To warn drivers that they have lost air, a car would be fitted with a warning light in its dashboard, Goodyear said. Checking accounts at savings banks are up, a Fed study said. Since May, 1976, when thrift institutions in New York were permitted of offer checking accounts until last September, they acquired about 5.7 of total checking account deposits in the state, up from 5.1 last June, according to a survey by the Federal Reserve Bank of New York. The savings banks account for 15 of nonbusiness checking accounts, up from 13.6 in June. The 124 thrift institutions accounted for 58 of the rise in checking account deposits between May, 1976, and the end of last September, the N.Y.

Fed said. There were 142 commercial banks included in its study. A grand jury indicted seven for allegedly manipulating stock. A federal indictment issued in New York accused the seven of purchasing 100,000 shares of the common stock of Indecon a Chicago-based computer firm, then driving up the over-the-counter trading price to $12 a share from $5. Between December, 1972, and January, 1973, they allegedly rigged and fixed transactions to gain enough control over the supply of Indecon stock to restrict the amount available to the public.

The stock plunged to $1 a share in late February, 1973, causing an estimated $750,000 loss to investors. The defendants were Burton Kozak, 48, of En-cino, William Rodman, 35, of Monsey, N.Y.; Thomas Herman, 32, and Ronald Pilatsy, 35, both of New York. Others named were Arthur Mintz, a 40-year-old Chicago lawyer; Malcolm Shub, 40, of Mt. Prospect, 111., and Stuart Aronesti, 35, of Lincoln, 111. Wage hikes in labor contracts in 1977 were less than in 1976.

The Labor Department said increases under 1977 agreements averaged 7.9 for the first contract year and 4.8 over the life of the contracts. It compared with a first-year increase of 8.4 and 6.4 over-the-life of agreements negotiated in 1976. The information was based on 905 labor settlements, each covering 1,000 or more workers. About 3.8 million workers were involved in the 1977 settlements, mostly in the communication, construction and steel industries. The department's figures excluded possible gains under cost-of-living escalation clauses that protect workers against inflation.

Rich and poor nations remained divided on Third World debt. A Geneva meeting of the executive board of the U.N. Conference on Trade Development failed to agree on the debt issue which will be a topic at a March 6 special session of ministers from more than 100 countries. Delegates from industrialized and developing countries could not agree on a common document on how to tackle the problem of Third World external debts, estimated by United Nations officials at $200 billion. A paper submitted by the "Group of 77" developing countries would authorize the ministers to decide to cancel or convert into grants outstanding debts of the poorest Third World states.

A paper advanced by industrialized states was couched in more general terms. An airline executive predicted a slowdown in fare discounting. Richard J. Ferris, president of Chicago-based United Airlines, said there are signs the airline discount-ticket war may be easing. Although American Airlines and Trans World Airlines are seeking to expand their discount fare programs into a number of new markets, the discounts themselves are less than those originally introduced, the executive noted.

The new discounts generally are in the 30 to 40 range, down from the 45 savings first offered. United has asked approval to match its competitors' fares. Still, Ferris said, "The airline industry will have a rougher year in 1978 than in 1977" because of discounting and continuing cost escalation. California An Assembly bill was passed to give World Airways a tax break Without debate or a dissenting vote, the bill giving the Oakland-based carrier a $2.2 million state tax BY HARRY ANDERSON Timet StaH Writer BY DAN FISHER Timet Staff Writer TYUMEN, USSR-The Soviet Union can develop important new oil and gas supplies here in Western Siberia without any help from the capitalist countries, but it could be done a lot quicker if it imports equipment and technology from the West That was the opinion of a dozen Soviet officials interviewed during a three-day tour of the energy-rich Tyumen region by Western newsmen, although some officials bristled at questions about the importance of Western technology. "We developed our space program without your help," commented Ja-cov M.

Kagan, director of the Scientific Research and Design Institute for the oil industry here. "At this stage we could purchase more from the U.S. but we don't, due to tariff barriers," Kagan added. "If normal trade was established without trying to preach to us about how we should live here, I think we would buy more." Other officials appeared to have been briefed in advance about questions arising out of last summer's Central Intelligence Agency report on Soviet oil prospects. That report was critical of Soviet technology and equipment.

Oilmen here defended their drilling and pumping techniques generally as the equal of anything in the West, and possibly superior. But all conceded that by dealing with the West they hope to be able to develop western Siberia's resources faster than they could otherwise. "I wouldn't call it the key, but I would call it important," summed up Yuri Mo Rogachev, deputy chairman of the Tyumen region executive committee, when asked about the importance of Western equipment to the ambitious development plans he outlined. Western Siberia is viewed both here and in Washington as critical to the Soviet Union's energy prospects over the next decade. It already accounts for one-third of all this nation's oil and by 1980 it is supposed to supply 50.

Western firms see a big potential market in those development plans. From 1972 to 1976 the Soviet Union bought $3.1 billion worth of Western oil and gas equipment, according to the CIA study. It also bought $4 billion worth of imported pipe in that period. And the expansion plans ahead dwarf those of the past five years. The biggest deal in the wind here is a $400 million contract for "gas lifting equipment" designed to stimulate the flow of oil from producing wells by pumping gas into them.

A major portion of the equipment is to be used at Please Turn to Page 11, Col. 1 TIPS ON TAXES The Standard Deduction Can Be Stretched BY JACOB SMITH, CPA Many taxpayers who do not own their homes and do not pay out large medical, charitable or other itemized deductions, will find that they are better off claiming the standard deduction. In that case, it is important not to discard the many other deductions that may be claimed in addition to the standard deduction. Those include, but are not limited to: alimony, sick pay, travel and transportation as an employe or while hunting a job, moving expenses, penalty for early withdrawal of savings, retirement plan contributions, political contributions credit, and child-care credit. Question When a taxpayer's income is all from securities, dividends and interest, and he takes the standard deduction, is there any way that he can deduct incidental expenses such as bookkeeping, telephone, financial publications and interest on borrowed funds to purchase securities whose income is taxable? A.L.K.

Answer That is sometimes possible, but it is controversial. An investor must itemize to get the benefit of the deductions you mention. A dealer deducts them off the top. If your activity is a daily effort, and you have a volume of short-term transactions, you may qualify as a trader. A trader deducts interest and all other business expenses on his business schedule and in addition may claim the standard deduction.

Since you are not a dealer, decide for yourself whether you are a trader or merely an investor. I recently returned to the United States after living abroad for some years. My wife has not previously lived in the United States and so will file a tax return for the first time this year. We will file a joint return. She has some stock which she expects to Please Turn to Page 12, Col.

1 HOUSTON-Everybody who can spell "oil" has heard of the fearless oil well firefighter Red Adair, but how many people have heard of Boots and Coots? As it happens, Red without Boots and Coots is like Barnum without Bailey, the Captain without Tennille, or the Lone Ranger without Tonto. But Boots and Coots have indeed parted company with Red Adair. When the split-up came recently it sent shock waves through the international oil and gas community. Paul (Red) Adair, Asger (Boots) Hansen and Edward O. (Coots) Matthews have worked together as a team for two decades, putting out the most dangerous oil well fires around the world.

Adair told reporters last year after his team successfully capped the much-publicized North Sea oil blowout, "You would be amazed how small we are. There are just 10 of us to take care of the world." "Now," he says, "there are only five or six." The recent breakup was not amicable, and the newly formed firm of Boots Coots Inc. is now trying to syphon assignments from Adair's Houston-based company. "We know quite a few of his methods," said Matthews of Adair. "We're not going to try to undercut him, but we'll stick so close to him, he'll think we're hugging him." According to Hansen and Matthews, they were fired on Dec.

6, after they got into an argument with Adair. On Dec. 27 Matthews and Hansen had phones installed in a new office in north Houston, ordered long, white Cadillacs (Adair's men have traditionally driven red ones), and told a printer to make up announcements reading "Boots Coots Around the World, Around The Clock." They plan to use rental equipment for fire-fighting until they are able to purchase their own. Even though the names aren't exactly household words like Adair's, Boots and Coots believe their established reputation will win them jobs. FINAL TALLY DUE BY CARL CANNON Tlnwt Stiff Writer Pepsico Inc's trade pact with the Soviet Union is giving it problems with the state of California.

Under terms of the 1973 agreement, Russia received the technology, equipment and concentrate to make Pepsi-Cola. The company in turn received the distribution rights to Stolichnaya vodka. There is the rub, says the California Alcohol Beverage Control Board, the state's liquor enforcement agency. And unless it is smoothed out, ABC director Baxter Rice indicates the nation's second largest soft drink firm's $300 million-plus acquisition of Pizza Hut restaurants could lose a good deal of its luster. Under current law, no producer, wholesaler or distributor can hold an on-site beer, wine or liquor license in California.

The ABC says that most Pizza Huts hold beer and wine licenses. At the time of the merger last fall, a Pepsico spokesman was quoted as saying the 120 California Pizza Huts were the key to the whole deal, which included 3,100 outlets across the country. But Rice says, "If Pepsico can't satisfy us, I can see about three alternatives for them. They might have to drop that trade agreement with the Russians, divest themselves of California Pizza Huts or operate the outlets without beer and wine. I can't see them doing the latter because that area is too profitable." Gerald J.

Fisher, Pepsico vice president, corporate development, professes shock at the ABC attitude. "I can assure you, we are in compliance with the law and we'll do our utmost to convince them of this. This issue is extremely important to us." A Pepsico staff attorney says the Purchase, N.Y. -based firm studied all legal aspects of the question seven months before the merger, and "we Please Turn to Page 11, Col. 2 claims in limbo until the appeal is settled, the spokesman said.

But some tax advisers have begun telling their clients to take the disability insurance deduction on 1977 federal returns, regardless of the IRS opinion. They claim that the tax court decision is the only legal foundation at present, and it clearly allows the deduction. "In case of a legitimate doubt, the taxpayer is always entitled to resolve the doubt in his own favor," says Los Angeles tax lawyer John Hall. He adds that if the IRS wins its appeal, taxpayers who claim the deduction would be obligated to pay extra tax plus interest but no penalties would be assessed because they relied on the tax court decision. Last week, the taxation section of the California Bar Assn.

advised that if taxpayers choose to rely on the court ruling they should simply lump their disability insurance contributions with state income tax payments as a deduction on their federal return. Please Turn to Page 12, Col. 1 Nip and Tuck "It would take 45 to 95 days just to hook in new Western Union wires" to accommodate the expansion, he says. Keeley belongs to the San Francisco Floor Members Assn. which, along with the Pacific Assn.

of Marketmak-ers, a stock option group, funded a separate consolidation study last fall. Keeley says the study clearly showed the San Francisco stock exchange building is where consolidation should take place not Los Angeles. Both of these trading groups have been lobbying in opposition to the pending consolidation proposal. Separately, the PSE's search committee to find a successor to PSE President G. Robert Ackerman, who recently announced his resignation effective Feb.

28, held its first meeting in San Francisco Friday. Ross Cobb, president of Sutro Co. of San Francisco, a former PSE chairman and a member of the four-man search panel, says a successor for Ackerman would be chosen "as quickly as possible." Cobb said "a national search" would be conducted for the post, which currently pays $90,000 a year, and that the committee would first look inside the securities industry and then outside to find the right person. North Sea oil development will get tougher, an executive said. Lord Kearton, chairman of the British National Oil said in Glasgow, "The whole future development of the North Sea is not going to be easy.

In fact, it is going to be very difficult." He described as an understatement estimates that about $20 billion would be invested in Britain's sector of the North Sea. Lord Kearton said the total might well be nearer $40 billion. The engineering effort required, he predicted, would be far bigger then that involved in Britain's nuclear program. British National Oil was set up in 1976 as a public corporation to oversee the industry. Briefly Told Kaiser Cement Gypsum expects fourth-quarter earnings of about 90 cents a share, up from last year's 56 cents a share.

Full-year earnings are expected to increase "very close to $3 a share" from $1.36 a share a year earlier. Shareholders of Hoffman Electronics approved a previously announced merger of the company into Gould Former astronaut Neil A. Armstrong was named a director of both UAL Inc. and its subsidiary, United Airlines Shareholders of International Mining approved the previously reported merger of the company into Pacific Holding Macke purchased all the outstanding stock of Family Fish Houses from Smithfield Foods for $7.8 million in cash Air Canada filed with the Canadian Transport Commission for increases in its "normal domestic and transborder fares." The increases average 4 plus a 2 currency charge for fares from Canada to the U.S. Synertek, a privately held Santa Clara firm, reached a definitive agreement to merge with Honeywell, Dupont and Monsanto boosted carpet fibers prices effect tive with March shipments.

40 30 20 10 800 90 80 70 60 750 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 21612231230 16 1 113 I2Q 1 127 WEEKS ENDING NEW YORK The Dow Jones average of 30 industrial stocks opens the week at 764.12, down 12.82 from the prior week. The 1977-78 high of 999.75 was set Jan. 3, 1977. The 1977-78 low of 763.34 was set Jan. 26, 1978.

PSE Consolidation Vote Few things start an argument quicker than taxes. At the moment, a heated dispute has arisen from a tax court decision last summer which allows Californi-ans to deduct contributions to the state disability insurance fund from their federal income tax if they itemize deductions. The Internal Revenue Service says it wants to appeal the decision. And in the meantime, it is telling taxpayers not to deduct such payments on 1977 tax returns. However, a spokesman said IRS computers won't automatically reject returns which claim the deduction.

It would not normally be discovered unless a taxpayer is audited, he said. Less than of all taxpayers were audited last year. What's more, the IRS has taken no action thus far on claims for refunds on 1975 and 1976 returns which were amended to reflect the deduction after the court decision was handed down. The agency will continue to hold all THURSDAY membership narrowly defeated a proposal that would have given its governors the power to combine the operations under one roof in one city. And, once again, the outcome is in doubt.

"It will be very close," says Lee W. Wilson, president of San Francisco-based L. W. Wilson Co. He expects to be elected Thursday as the new PSE chairman, succeeding Edward W.

Wedbush of Los Angeles. The PSE proxy material mailed to members says "approximately to $462,000" a year would be saved through combining equities operations in Los Angeles. "To continue to operate the two equity floors as done presently will seriously impair the PSE's ability to grow and be a sipificant part of a national market system," says the exchange's statement to members. But Ken Keeley, a San Francisco floorbroker, says the PSE's statement is distorted. Keeley said in a telephone interview Friday that the Los Angeles PSE facility on Spring St is antiquated and suggests it could not support an equities consolidation without extensive remodeling.

BY RONALD L. SOBLE Tlmei Stiff Writer It's too close to call. That's what some Pacific Stock Exchange officials and members are saying about the PSE board of governors' proposal to consolidate equities trading facilities in Los Angeles and leave San Francisco with a stock options market. PSE members' ballots will be counted this Thursday at the exchange's annual meeting in San Francisco. At least 51 of the PSE's 451 members must cast their ballots for the vote to be allowed under the exchange's constitution.

As of last Fri-day, a count of mailed proxies showed this majority hadn't been achieved. But PSE officials expect that many ballots will be cast in person to put it over the top. Another hurdle in the path of the consolidation proposal is that under the PSE constitution, a two-thirds membership approval is required for the change in location of the trading floors. Different concepts of consolidating the PSE's two-city operation have been rebuffed for various reasons in recent years. Just last year, the PSE's.