What was going on when I was born?

The Internal Revenue Service will not grant tax-exempt status for savings certificates purchased as part of advance bonus programs that require depositors to buy the new certificates, Administration officials said tonight. The I.R.S., however, apparently will maintain the tax-free status of the certificates if the customers purchase the certificates, which become available Oct. 1, without any prior commitment, the officials said. They said t hat the I.R.S. would stand by a tentative position it took last wee kend, when it said it had ''substantial doubt'' about the legality of the bonus packages. Interest Could Be Too High The I.R.S. contended that the bonus programs would result in more interest and longer maturities on the one-year certificates than Congress had authorized when it established the program as part of the tax law passed this summer. This I.R.S. concern was discussed with Treasury officials last Friday and again today when the final decision was made.

The McDonnell Douglas Corporation, which is under indictment on fraud and other charges in an overseas payment case, has agr eed to plead guilty and pay the Federal government more than $1.2 mil lion to settle pending civil and criminal proceedings, Justice Depar tment sources said today. As part of the settlement, which was proposed by the Justice Department last week and accepted by the company's board of directors yesterday, the Government will drop criminal charges against four top officers and executives of the aircraft manufacturer, the sources said. They said that the concern had agreed to pay $55,000 in criminal fines. In addition, McDonnell Douglas has agreed to pay the Government $1.2 million to settle a civil suit filed by the Justice Department, the sources said.

Sadat poised to deal with religious militants A2 China's labor experiment: the threat of dismissal A3 Testimony on Madrid coup raises some might-have-beens A3 West German terrorists say they bombed U.S. air base A4 Around the World A5 Soviet paper implies U.S. fi- nanced Teheran bombing A7 Cambodians try to form common front against Vietnam A8 India denies Soviet influenced re- jection of U.S. diplomat A9 Government/Politics Black Mississippi lawmakers see redistricting plan as a setback A15 Democratic organization assails Reagan in fund-raising effort A17 City hopes to improve priority bus lanes in Manhattan B3 Bank attacks Goldin move to put city funds in minority banks B6 Mrs. O'Connor reports assets at more than $1.1 million B12 General Board rules longshoremen's boy- cott of Soviet broke law A13 Around the Nation A14 Hundreds of aspiring cousins lay claim on Hughes estates A14 The Region B4 Widow, 86, slain in her home on City Island in the Bronx B5 The City B10 Health/Science Expedition to Andrea Doria re- turns to port with safe A14 Medical care costs are rising faster than inflation rate A16 Rorschach Society casts business- like silhouette in capital B26 Obituaries Funeral service for Lowell Thomas attended by 800 B16 The Home Section Home Old-house decision: Restore, renovate or remodel? C1 Home parties, where the selling is easy C1 Restoring the furniture when it's sun-faded C6 Finding an unusual coffee table C8 Homes still available, new coast data show C9 Hers C2 Helpful Hardware C2 Home Beat C3 Child care: Elderly in Berlin fill a void C3 Home Improvement C4 In love with a vintage range C5 Calendar of Events C7 Design Notebook C10 Drug may be effective treating breast cancer C11 Gardening C12 Arts/Entertainment Actors who take command, whether veteran or newcomer C15 Maria Tucci is signed for Broad- way-bound "Kingdoms" C17 A Broadway rehearsal goes from gloom to boom C17 L. Dawidowicz's "The Holocaust and the Historians" reviewed C17 "CBS Reports" examines vio- lence among teen-agers C20 Features/Notes Notes on People B26 Going Out Guide C16 Sports Grudge fight looms at Rahway between Scott and Braxton D20 Yanks lose, 4-3 to Twins; Dent out indefinitely D21 Borg and Chris Evert Lloyd win easily at Open D21 Cosmos beat Rowdies, 6-3, in playoff ser ies opener D21 Ivie of Padres faces emotional problems D21 N.C.A.A. may allow schools more television control D22 Dave Anderson at the U.S. Open D24 Mets lose fourth in row as Astros romp, 8-0 D24 A new spirit detected in Michaels and his Jets D26 Editorials/Letters/Op-Ed Editorials A18 Indulging South Africa To pick a Borough President Speer, Hess and punishment Topics: death and milk Letters A18 William Safire: the archeological dispute in Israel A19 Fred Wertheimer: fixing election law A19 L. James Binder: the draft took a beating and so may we A19 Even Kemp Jr.: no pity, please, in aiding the disabled A19

The Defense Intelligence Agency, in its latest analysis of the Soviet economy, says that the Soviet Union's energy prospects for the rest of this century appear ''highly favorable,'' and that Moscow will be able to increase its oil production and exports for the foreseeable future. Clearly differing from earlier, more conservative projections by the Central Intelligence Agency, the defense agency says that the Soviet Uniof will, in effect, be able to meet its oil production targets of 12.2 million barrels daily this year and 12.9 million by 1985. The C.I.A., in its most recent statement, said last May that Soviet oil production would begin to decline in one to three years. The Soviet Union is the world's leading oil producer, outstripping second-place Saudi Arabia by about 3 million barrels a day. The United States is third, with daily production of about 8.6 million barrels of crude oil.

The Triad Energy Corporation and Everest Petroleum Inc. charged in court yesterday that two of their top executives, helped by a junior officer of the European-American Bank and Trust Company, had looted them of undetermined bank deposits and other assets. The two related oil companies are seeking damages of more than $5 million in the suit, filed in Federal District Court in Manhattan. The two executives, Thomas and Samuel F. McNell, have disappeared, touching off a search by the Federal Bureau of Investigation for them and for the missing money. Named with the McNell brothers and 15 other persons in the 50-page Triad suit was Jean Marie Carson, assistant manager of the European-American Bank's branch at 785 Fifth Avenue.

An arbitrator ruled yesterday that the Metropolitan Transportation Authority had the right to impose changes in bus schedules in its effort to reduce costs, but that it could not make the changes until next year. In an unusual action, the authority immediately challenged the ruling and got a court order temporarily overturning the arbitrator's decision. Justice Aaron D. Bernstein of State Supreme Court in Brooklyn issued the order and scheduled arguments in the case for Friday. The effect of these developments was to throw into confusion the fall bus schedule, which is supposed to begin on Sept. 13 to help accommodate the opening of school next Thursday.

THE setting is an Upper East Side co-op and the gathering is middle-aged preppy. Standing at the entrance to the elegantly furnished living room, Corinne Borrelli takes a plastic bowl from a table, seals it shut, then lifts the lid slightly to expel air. ''Hear the air come out when I burp it?'' she asks. The men and women nod solemnly. The occasion is a Tupperware ''home party,'' one of about five million held across the United States each year. The merchandise bearing the Tupperware label is among a growing number of products sold in the American living room these days - housewares, cosmetics, clothing, toys, plants, craft items, even sexual aids. The parties take place in homes at every socio-economic level, in cities as well as in the suburbs.

Mayor Koch watched in tight-lipped anger yesterday as Frank J. Barbaro accused him of using inflamatory words to ''set off the races.'' The Mayor, in turn, said that Mr. Barbaro favored a quota system of awarding New York City jobs. ''Now Frank believes in quotas,'' he said, adding with a little laugh: ''He just doesn't like the word.'' Mr. Koch and Mr. Barbaro, one of the Mayor's opponents in the Democratic primary on Sept. 10, sat in shirtsleeves, occasionally glowering at each other across the third candidate, Melvin Klenetsky, who was a taut barrier between them in a dark blue suit. From Jokes to Gibes The radio debate on station WKCR, in a cramped and stuffy studio on the Columbia University campus, began with heavy jocularity but turned testy when Mr. Barbaro accused the Mayor of worsening racial tensions.

An article in Business Day yester- day about Sears, Roebuck's new money market fund incorrectly stated a position of the American Bankers Association. It has not endorsed proposals to amend Federal law to permit interstate banking.

President Reagan's goal of a balanced budget by 1984 is unlikely to be realized, some Administration officials now acknowledge. (Page A1.) As Mr. Reagan ended his California vacation, his advisers said he would make deeper cuts in social and military spending in an effort to persuade Wall Street that his economic program would work. (B17.) If he has not done so in the next six months, both supporters and critics warn, the economy will be in serious trouble. (D1.) The I.R.S. will not grant tax-free status to the bonus interest packages offered in promoting the new tax-free savings certificates that will be available Oct.1, officials said. (A1.)

With interest rates in the municipal bond market at record highs, the chairman of the Municipal Assistance Corporation proposed yesterday that, for the first time, New York City, the state and their agencies coordinate the $3 billion in borrowing they do each year. Their total borrowing should also be reduced by perhaps as much as 25 percent, said the chairman, Felix G. Rohatyn. Mr. Rohatyn said the many state and city agencies that issue bonds are competing against one another in an unfavorable market and perhaps driving up their rates. This could be adding millions of dollars to interest payments each year, he said. The proposed reduction in borrowing would probably mean putting off or even abandoning some construction projects, Mr. Rohatyn acknowledged. He said, however, that he was opposed to across-theboard cuts, and recommended that the agencies affected decide among themselves which projects be deferred.

-------------------------------------------------------------------- --------------------------------------------------------------------- Norma Skurka is a freelance writer in the design field. By NORMA SKURKA BUYING an old house is an adventure, fraught with trials. Few new owners of houses more than 100 years old know exactly what they're getting into. What the purchaser finds as the living room may well be the former kitchen, a downstairs bedroom may have originally been the dining room . Often, the most elementary modern living needs are missing, such as heat, electricity and plumbing.