TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 29, 2007

An Inside Look at President Nixon's Charitable Deduction Imbroglio

Sheldon_cohenOn Tuesday, I blogged the Washington Post's obituary of Mary Livingston, a senior archivist in the Office of Presidential Libraries at the National Archives for 30 years who blew the whistle on President Nixon's attempted backdating of the donation of his papers in order to claim a charitable deduction for the donation. Shledon S. Cohen, IRS Comissioner under President Johnson (1964-69) and currently Director, Farr, Miller & Washington, Washington, D.C., has agreed to share his experience during this period:

Sen. John Williams of Delaware introduced a bill to cut off deductions for the gift of papers developed while the person was in government service. The bill had a effective date of April 1969 and applied to gifts after that date. It was aimed at then former President Johnson as a news story appeared that said he was planning a gift. President Johnson had used me as his tax lawyer after we left office ....I told him not to be concerned with the bill as the bill only covered income tax deduction and I planned to give his papers at his death and take an estate tax deduction (the marital deduction was then only 50%) and give the rest of the property to Mrs. Johnson free of tax.

Several months later President Johnson was asked to visit then President Nixon to discuss issues about the Vietnam war.  He called me from Rose Mary Wood's desk when he came out of the Oval Office.  He told me that Nixon had closed the meeting by saying they should work together to get the effective date of the Williams amendent changed to later in the year.  Johnson agreed...he asked if I would represent him....of course I agreed.  I asked who would handle it for Nixon and he told me Brice Harlow.  I said I would call him....the President said wait as Nixon had not had time to tell him yet.  I called Harlow later in the day and suggested that I would speak to the chairs of both tax committees as they were Democrats and to Larry Woodworth the chief of staff of the Joint Committee as he was my friend, he agreed to speak to the Republican leaders and get their assent.  We spoke a day later and all seemed in order  Woodworth told me it would be changed to the effective date of the 1969 Act, which should be sometime in the fall.  A couple of days later Woodworth called me and said that Harlow had lost his nerve and was concerned for the pr of the issue.  I said don't do it for President Johnson, as he did not need it.  That is were it laid for a while.

Later the issue of Nixon using shelters and not paying tax arose.  He was to release his returns for public viewing.  The NY Times asked me to help their reporter, Eileen Shanahan, review the returns for issues.  I asked for accounting help and requested we get Abe Briloff of Baruch College...a super accountant.  Abe and I worked in the NY Times office here from 4 in the afternoon of the release date until 2 the next morning.  We had by then identified the errors, including a suspicion that there had been a gift of papers, but we could not tell the date.

Later I was General Counsel of the DNC from late in 1972 to 1977.  Williams & Connolly was handing the Watergate civil law suit for damages from the DNC offices break in.  W&C resigned when the Post reporters were required to be deposed by the Republican defendants.  I took over that litigation.  In a deposition with Haldeman an Erlichman I asked a few questions about who had prepared the President's tax returns and related stuff.  The answers aroused my suspicions.  I figured that if I went to the Achives to look at the papers the White House lawyers would be called and there would be a hearing and lots of delays.  I called a friend who was a reporter for the Washington Post, Nick Kotz.  I suggested he go down to the Achieves and see Mary Livingston, who was the keeper of the Presidential papers.  He should ask her for a copy of the receipt she gave for the deposit of the papers and on the gift of the papers.  He was gone for a few hours but called me later and said I was on the mark.  It was as if Mary Livingston had been waiting for someone to ask, as she was clear that the papers were not gifted until after April.   This is a summary of my testimony before the Watergate Grand Jury....Woodworth told me he had said exactly the same thing as I did.  The Assistant U.S. attorney who worked with the special prosecutor told me later that Harlow did not remember anything, but that Larry and I had agreed on all details.   An interesting piece of my life.

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