18- 25. Amortization of indemnities _to workers:_ The new law provides that discharge indemnities paid to workers can be amortized only when the discharge is the result of a readjustment required for the reorganization of the company. In this case, such in-demnities will be amortized for tax purposes over five years beginning with the year in which they are paid. In all other cases indemnities continue to be deductible in the year of payment, provided that the tax applicable to the worker is withheld and paid. Since, for accounting purposes, such indemnities should not be amortized, if it is elected to amortize them for tax purposes, they should be controlled in memorandum accounts. 26. Deduction of deteriorated or _obsolete merchandise: The new law permits a deduction for merchandise on hand which in the opinion of the taxpayer has lost value, because of deterioration or other reasons, only If the Treasury Department authorizes its de-struction, which must be made in the presence of an individual designated by the Treasury Department. It would be desirable if the Regulations were to set forth procedures for cases of partial loss of value of merchandise. 27. Deduction of bad debt _losses :_ A deduction for losses incurred on accounts or notes receivable can be taken when such losses have been realized because the statute of limitations has run "or before, if the practical impossibility of collection is evident". In general, the previous law limited the deduction for bad debt losses to one-tenth of 1% of net revenues, except in those particu-lar cases in which, with the previous specific authorization of the Treasury Department, bad debt losses could be deducted. In order to obtain this authorization, it was necessary to furnish the specific cases of losses, with an indication of the steps taken for collection and the fact that it was not economically feasible to continue them. Transitory Article 10 of the new law provides that beginning January 1, 1965, "reserves for credit losses shall not be established", but that losses incurred beginning with that date must be applied first against the reserves previously established; once these reserves have been exhausted, the remaining bad debt losses will be deductible. This provision should be interpreted to the effect that bad debt reserves for tax purposes will not be established; that is, the reserve provisions of one-tenth of 1% of net revenues previously authorized will no longer be made, but the law cannot prevent the taxpayer from establishing reserves not deducted for tax purposes.