New Doubts Over Nixon's Finances

In making public the voluminous data on his personal finances, President Nixon somewhat blithely announced that the tangle of figures raised only two questions, and that both of them could be settled by the Congressional Joint Committee on Internal Revenue Taxation. Last week the committee, headed by Arkansas Congressman Wilbur Mills and Louisiana Senator Russell Long, agreed to review Nixon's tax returns for the past four years. The legislators, however, will not just look into the two points that the President chose to cite, but they say that they will comprehensively examine the whole tax strategy that has helped make him a millionaire. That should make them busier than an accounting firm in April. As he has in so many of the other controversies swirling about his Administration, Nixon in baring his financial record sorely underestimated his --and his critics' --capacity to raise new questions (see THE PRESS).

Nixon insisted that the only matters open to inquiry involved his donation of some of his vice-presidential pa pers (diaries, memos and the like) to the Government and his failure to report any capital gain on the sale of part of his property in San Clemente, Calif.

There are indeed questions still to be answered in those transactions, plus many more in other areas. Among them:

Did Nixon donate his papers to the Government in time to claim the tax privileges that he took? A tightening in the tax laws ended deductions for gifts of such material, effective July 25, 1969. On that date, according to a General Services Administration investigation performed at the request of Connecticut Senator Lowell Weicker, the President's documents were being kept at the National Archives in an area reserved for "courtesy storage" and they were neither sorted nor formally valued until later in the year. The President still retains control over access to all the pa pers, which are stored in the Archives.

The deed for the material that Nixon's appraiser eventually chose to give was not delivered to the Archives until April 10, 1970 --almost nine months after the cutoff date. Senate investigators are looking into the possibility that the deed, which was signed by Nixon legal aides rather than the President himself, might have been predated. Over the next four years Nixon used the gift of the papers to avoid $235,000 in income taxes that he otherwise would have owed.

Did Nixon realize but not report a capital gain on the sale of 23 acres of his San Clemente property in 1970? The White House has admitted that the President's financial advisers differ on this point. Coopers & Lybrand, the firm called in recently to audit NIXon's accounts, figured that he had a capital gain of $117,370. But Nixon followed the counsel of his usual tax accountant, Arthur Blech, who reckoned that there was no gain. Blech made some admittedly arbitrary valuations of the 5.9 acres of property and the grand house that Nixon retained. On the basis of those valuations, Blech concluded that Nixon originally had paid as much for the remaining land as he later sold it for --thus, no capital gain. Further, because Nixon could have claimed more than he did that year for the gift of his vice-presidential papers, the White House points out that he could have absorbed a sizable capital gain in 1970 without being liable for any more taxes than the absolute minimum of $792.81 that he actually paid.

Critics of the deal counter that since the President recouped about 80% of his original investment by selling 80% of the land, the mansion that he kept on the remaining 20% in effect came free. Also, the current owner of the 23 acres, Nixon Pal Robert Abplanalp, has promised merely to hold the property for as long as his friend is President, thus providing Nixon with the gift of a sanctuary around his home.

Did Nixon skirt other capital gains taxes in the sale of his New York City apartment in 1969? After winning the election, the President sold the Fifth Avenue co-op where he had lived while practicing law on Wall Street. The price was $312,500, or $142,912 more than his original purchase price plus the value of improvements and incidentals. The law allows homeowners to avoid such profits as long as they reinvest them within a year in another "principal residence." The President claimed that he had done so by using the $142,912 to help buy his San Clemente home. Yet in order for Nixon to escape paying state income taxes in California, his lawyers later argued that the President occupies San Clemente merely "for brief periods of time [that] would not aggregate more than a few weeks in each year" and claimed that his principal residence is the White House. In that case, Nixon should have paid capital gains taxes on the apartment. As it is, the President seems to be claiming two principal residences. Says Stephen W. Porter, chairman of the Washington, D.C., Bar Association's tax section: "He tries to play it two ways."

Both of California's Senators and all of its 43 Congressmen reported that they pay state income taxes. Governor Ronald Reagan, who suffered deep political embarrassment by admitting that through legal shelters he paid no state income tax at all in 1970, defended Nixon. Legislators, said Reagan, "are supposed to maintain residence here, they're supposed to represent an area. The President is the one man who represents 50 states."

Were all of Nixon's expense claims justified? The President has kept meticulous records of expenses that could be used as income tax deductions. In one year he took off the cost of a tree that he donated to the state of Connecticut ($25) and he annually claims about $1,000 in "depreciation of personally owned White House office furniture," including the table used at Cabinet meetings. Some of his larger expense deductions may be dubious-especially $56,954.97 claimed over the four years for "costs incurred in use of property for official purposes" at San Clemente and Key Biscayne, Fla. Nixon charged off the full upkeep of his Key Biscayne office (but not his home) and 25% of the upkeep on his San Clemente home, which contains an office. Congressman Charles A. Vanik, an Ohio Democrat, complained that under the Internal Revenue Code "personal tax deductions for voluntary visits to [Nixon's] personal vacation homes seems highly questionable."

Nixon has staunchly maintained that he "never profited" from politics and did not rely on "interest or all of these gimmicks" to save on taxes. In fact, he claimed deductions for $257,000 in interest payments over four years. He also profited hugely from a gimmick available at the time to a fraction of the population: the right to escape large amounts of taxes by donating papers to the public. Without commenting on the legality of the matter, Wilbur Mills said last week: "Frankly, had I been the President's attorney, I would have advised him not to take the deduction."

Though Nixon claimed that he was merely following in the footsteps of his predecessors, only one other President in modern times, Lyndon Johnson, has used such gifts to claim a tax deduction. Moreover, it was specifically because of congressional distaste for his action that the law was changed in 1969.

Now the uproar over Nixon's low tax payments is so widespread that it may well lead to a drive for general tax reform in 1974, with a narrowing of many deductions and an increase in the minimum tax.

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