December 9, 1973

Pres Nixon's ouster of J A Love and energy adviser and replacement by Deputy Sec Simon, who was also named to head new Fed Energy Office, noted

White House concedes on Dec 8 that there are serious questions about legality of 2 separate aspects of Pres Nixon's recent tax returns and says that he and Mrs Nixon might owe as much as $267,000 in additional Fed income tax if both of his original contentions are reversed; Nixon, in move believed to be without precedent, announces that he will let Cong Joint Com on Internal Revenue Taxation decided whether he should pay any additional tax because of 2 disputed items; com chmn W D Mills says Nixon asked him, in brief telephone conversation on Dec o, to take on job and that he agreed; documents made public Dec 8 by White House show that 1 of Nixon's own accountants, Coopers & Lybrand, believes Nixon should have paid capital gains tax on sale, in '70, of land adjacent to his San Clemente, Calif, estate; other accountant, A Blech, holds the Nixons owe no capital gains tax; other main item in dispute concerns deduction of $576,000 that Nixon has claimed for his donation of his pre-Pres papers to Natl Archives; Tax Analysts & Advocates, public interest law firm, has charged that gift was not made before July 25 '69--effective date of legis disallowing such deductions; documents disclose that Nixons had total adjusted gross income of $1,122,264 during 4 yrs of '69-'72, or avg of $280,556 a yr; on that income Nixons paid total of $78,650 in Fed income tax, annual avg of $19,662; documents show that in 3 most recent yrs, '70, '71 and '72, Nixons paid $792.81, $878.03 and $4,298.17 respectively in Fed income taxes; show that charitable contributions by Pres and Mrs Nixon, other than disputed pre-Pres papers gift, were as low as $295 in '72 and averaged out to $4,370 over 4-yr period, or about 1/2 of what typical taxpayer in $100,000-to-$200,000 bracket gives; Nixon has defended relatively small amounts of tax that he paid on ground that his taxes for '71 and '72 have been audited by IRS and accepted as filed; White House makes public names of 2 'supervising agents' who conducted audit, R E Kuschke and G S Percuoco, both of whom are IRS career employes; documents and some details of audits show that audit took only 8 days, from time that Nixon's reprs 1st responded to audit order by bringing relevant documents into IRS offices until date of lr from IRS accepting returns as filed; Nixon atty A Blech and F Demarco Jr, law partner of H W Kalmbach, are said to have handled audit on behalf of Pres; individuals who conducted briefing would not permit themselves to be indentified by name by press; 1 said audit was of type known as 'Taxpayer Compliance Audit,' which, he says, is strictest kind IRS does and requires that every item of income and deductions be checked; S S Cohen, who was IRS Comr in Johnson Adm, says completion of such audit in 8 days would be 'exteremly out of the ordinary'; White House sources say audit was ordered in early May '73 when IRS's computer flagged Nixons' tax return as 1 that showed unusually low tax and unusually high refund; refunds were $72,614 in '70, $58,889 in '71 and $81,732 in '72; questions about Nixon's gift of his papers noted; Nixons have deducted $482,018 from their income taxes in 4-yrs period

analysis of Nixon's financial disclosures as not answering ultimate question: will this latest Pres initiative head off impeachment or resignation, or will it fall short; holds answer lies with public, and that public impact of disclosures--gen impression of Nixon's culpability or innocence--becomes central; notes importance of timing of financial disclosures; holds Nixon has seemed to make gestures to public indignation at precisely point when those gestures lost their power to soothe; says reasons offered by White House officials as to why it took so long to make disclosure are that it took long time to gather data; that Nixon did not initially see peril in which accusations placed him; that he clung to idea that these matters were private; notes outsiders view that Nixon was fearful of new disclosures and wanted attacks to run their course before making public his defense; notes questions that arise from Nixon's action in turning over matters of date of his gift of Pres papers and of capital gains tax on sale of part of his San Clemente property to Cong Joing Com on Internal Revenue Taxation: is he setting precedent that would constrain his successors; and are not cts rather than Cong corns proper forums for resolving such issues

Pres Nixon makes public on Dec 9 voluminous amount of information, including his income tax returns for his 1st 4 yrs in office, which he says should lay to rest 'false rumors' about his personal financing; extensive disclosures are unprecendented for an Amer Pres; Nixon acknowledges more 'questions and controversies' might result from disclosures; documents show Nixon had no hidden $1-million investment portfolio, that he had not illegally sheltered income on which his daughter, Mrs Cox, should have paid taxes and that campaign funds were not used in purchase of his San Clemente, Calif, home; documents show Nixon, during 4 yrs as Pres, became millionaire by more than tripling his net worth, which was $307,141 when he entered office, with virtually all his income deriving from his $200,000-1-yr salary and $50,000 expense allowance; Nixon has been able to triple his net worth while in office largely because of his small tax payments and fact that many of his expenses are paid for by Govt; documents show that 'by taking advantage of wide assortment of deductions and exemptions, Nixon paid about same income tax for 3 yrs as typical wage earner making $15,000 a yr, or total tax of $4,969; some questions of legality remain with respect to Nixon's finances; for example, while his accountant found that he realized no capital gain on San Clemente land, firm he hired to audit his property deals. Coopers & Lybrand, found that he had $117,370 gain; attys K W Gemmell and H C Rose prepared financial material with Nixon's financial mgr accountant A Blech; Pres has not paid any state income tax since he has been in White House; his assts say this is because they were informed by independent Calif firm and state taxing authorities that he was not required to pay tax, although he maintains home there; White House officials say Nixon does not see his pay check, which goes monthly to atty H W Kalmbach, who deposits it in Nixon acct at Key Biscayne (Fla) Bank & Trust Co, which is headed by C G Rebozo; money for certain expenses is kept in separate acct in Newport Beach, Calif, in Security Pacific Natl Bank; Kalmbach and F Demarco Jr are authorized to sign checks on this acct, but Blech does all bookkeeping and prepares Nixon's tax returns; Nixon says he will will to US his home at San Clemente, currently appraised at about $500,000 at time of his or Mrs Nixon's death, whichever comes later; White House officials disclose that of $200,000 Nixon recd in expenses during 4-yr period, he used about $108,000, which he deducted from his income tax; remaining $92,000 went into his bank accts and was taxable; $108,000 went for such things as total cost of maintaining his Key Biscayne home because he has office there, 25% for upkeep of San Clemente estate because it is estimated that 1/4 of its functions are for official duties, Christmas cards, gifts from foreign leaders and some entertainment expense; contributions to charities noted

documents released Dec 8 by White House indicate that E H Bobst established $25,000 trust fund for Nixon's elder daughter, now Mrs E F Cox, in '58 when Nixon was Vice Pres; Bobst was then chmn of Warner-Lambert Pharmaceutical Co and gift consisted primarily of Warner-Lambert stock; officials say Pres Nixon's younger daughter, now Mrs D Eisenhower, had no such trust fund; Cox reed proceeds from trust fund in '67 when she became 21 and shortly afterward lent $20,000 to her father to buy 2 undeveloped lots in Key Biscayne; Nixon sold lots 5 yrs later for nearly 4 times what he paid for them; Newsweek (pub) reptd last mo that investigators were checking repts that, to minimize capital-gains taxes on profit from sale, Pres claimed entire capital gain on his own tax return last yr; reptd that since Nixon had established such large deductions last yr, he would have had to pay lower taxes than his daughter on her share of profit; documents released Dec 8 by White House indicate allegation reptd by Newsweek was incorrect and that Cox paid $11,617 in capital gains last yr and will owe additional taxes this yr on final installment payment; transaction detailed; illus of Bobst and of Nixons in '58