Mr. FISH. And it refers there a couple of times to a Monday. What was the day of the week of December 27, 1968 ? Mr. NUSSBAUM. December 27 was a Friday. Mr. FISH. So Monday would be what? Mr. NUSSBAUM. December 30. Mr. FISH. Was the physical custody of the 1968 documents taken over by the GSA in that truck that you talked about, did that take place on either the 30th or the 31st of December? Mr. NUSSBAUM. Yes, I understand it took place on the 30th, Congressman. That is reflected on page 12 of the Joint Committee report which discusses the delivery of the 1968 papers. Mr. FISH. So there is no issue here of the completion of the gift? Mr. NUSSBAUM. There is no issue here of the completion of the gift. Mr. BUTLER. One question, Mr. Chairman. The CHAIRMAN. Mr. Butler. Mr. BUTLER. Was the deed, a copy of the deed, filed with the income tax return on which he claimed it as an unrestricted gift? Mr. McKEITHEN. We have not viewed that income tax return so I cannot make a definitive statement to that effect. However, a copy of the deed was not filed with the 1969 income tax return and there, it would seem to me that there would be no reason for the deed to be filed with the 1968 income tax return, since the description of the terms, of some of the terms of the gift-that is, as to the restrictions or lack of restrictions on the gift-was contained in the papers filed with the 1968 income tax return. Mr. OWENS. Mr. Chairman? The CHAIRMAN. Mr. Owens. Mr. OWENS. Mr. Nussbaum, was it you who conducted the interview with Mr. Ritzel? Mr. NUSSBAUM. No, Mr. McKeithen conducted the interview with Mr. Ritzel, and another member of our consultant staff. Mr. OWENS. Mr. McKeithen, in your interview, did you discuss whether Mr. Ritzel had discussed possible tax implications of the differing kinds of deeds in his conversation on the 28th with the President? Mr. MCKEITHEN. Mr. Ritzel indicated to us that in his conversation on the 28th with the President-elect, they discussed mainly the question of access to what sensitive papers might have been in the collection deeded. He said they did not, he did not narrow his description of the discussion any more than that. Mr. OWENS. So far, he did not say that he did or did not, then? Mr. McKEITHEN. That is correct. Mr. OWENS. Mr. Nussbaum, when you just answered in response to Mr. Fish that there is no question of the delivery of the gift, you are talking about delivery of is that what you said, that there is no question that the materials were delivered to GSA before the end of the year? Mr. NUSSBAUM. As I understand it, that is correct, yes. Mr. OWENS. You were not making a legal Mr. NUSSBAUM. No, I am talking about physical delivery, physical picking up of the papers and taking them to a Government office building, a Federal records center in New York. 41-018-75-pt. 3-2 Mr. OWENS. Thank you. Mr. NUSSBAUM. What I would like to do now with the chairman's permission is turn to 1969 and just touch on some of the events mentioned in our report. First, I would ask the committee to turn to page A-155 of the Joint Committee report, which is a memorandum to the President from John Ehrlichman. That memorandum is dated February 6, 1969. As you can see, in that memorandum, the subject of which is charitable contributions and discussions, Mr. Ehrlichman writes to the President that "as you know"-and I am just paraphrasing, since the memorandum is in front of the committee-we arranged for the maximum 30 percent charitable gift tax deduction in 1968 by donating a portion of your papers appraised at the necessary amount to the United States. Then he goes on to say that this year, you are in a position to make charitable contributions up to 30 percent of your joint income. Then he goes on to suggest that of that 30 percent, 20 percent would come from income which he receives from his writings. Of this 30 percentwithout reading the entire memorandum, I would direct your attention to the second paragraph: I would suggest that we arrange a schedule of charitable contributions from sales of your writings so you can give to those charities you select 20 percent of your adjusted gross income. The remaining 10 percent will be made up of a gift of your papers to the United States. In this way, we contemplate keeping the papers as a continuing reserve which we can use from now on to supplement other gifts to add up to the 30-percent maximum. Then on the next page, he discusses certain of the President's writings, publication of those writings. Now, on the next page, there are some handwritten notes, and they are apparently handwritten notes of the President. He says, one, "Good." And two, he says, "Let me know what we can do on the foundation idea." There is no mention, obviously, in this memorandum of any gift, any bulk gift of papers, any $500,000 gift or any large gift of papers, as is evident to the committee. The next significant event, or one of the next significant events— Mr. HOGAN. Mr. Chairman, may I ask a question? The CHAIRMAN. Mr. Hogan? Mr. HOGAN. What was Mr. Ehrlichman's title at that time? Mr. NUSSBAUM. Mr. Ehrlichman then was counsel to the President. Mr. HOGAN. Counsel to the President? The CHAIRMAN. That is correct. Mr. NUSSBAUM. That is right. Mr. FLOWERS. Mr. Nussbaum, you said there was no mention of any bulk gift of papers in the memorandum. The last paragraph of page 155, "The remaining 10 percent will be made up of a gift of your papers to the United States." That is not a bulk gift of papers? Now, it is a judgmental decision as to what they are talking about there. Mr. NUSSBAUM. That is correct, Mr. Congressman. Mr. FLOWERS. When you are talking about 10 percent of adjusted gross income of a man making $250,000, you are talking about $25,000 worth of deduction, are you not? Each year? Mr. SEIBERLING. Would the gentleman yield? Mr. NUSSBAUM. Ultimately, Congressman, the President's tax return reflects that a gift was given of approximately $576,000, which would be sufficient to cover approximately a 5-year period. Now, it is for the committee to make a judgment, of course, as to what this memorandum means and it is not for the staff to make such a judgment. But one interpretation of the memorandum can be contemplation, at least on February 6, 1969, that they would not make a gift, a large gift of $500,000 or any similar amount of papers, but rather, the President's 30-percent charitable deduction would be made up, 20 percent of that or two-thirds of that, really, would be made up by a gift of the proceeds of his writings, and an additional 10 percent would be made up by a gift of papers, and the papers would then be kept year after year and given as necessary to make up that 10 percent. That is one possible interpretation of this memorandum. There may be other possible interpretations. Mr. FLOWERS. Is it not a fact, though, and I do not intend to argue this, that the law had already been passed previously which would require that any public official donating papers do it by a time certain which was already established? Mr. NASSBAUM. No, that is incorrect. At this point in time, February 6, 1969, there was no such law. At this point, there were no restrictions, which were later passed, with respect to a President or anybody else giving papers. You will see as we continue in the chronology that it was only in the late spring of 1969 that the first suggestion became apparent that such a law might be passed, and that law was ultimately passed at the end of December 1969. That is when it became law. Mr. SEIBERLING. Would the gentleman yield? Mr. FLOWERS. Sure. Mar. SEIBERLING. The last sentence on page A-155, it seems to me, is the key to this because it says, "We contemplate keeping the papers as a continuing reserve which we can use from now on to supplement other gifts to add up to the 30-percent maximum." In other words, they were going to give a partial gift of these papers each year to supplement the other 20 percent. As I understand it, and Mr. Nussbaum can correct me, the passage of the law is what made that proposal no longer feasible. Is that correct? Mr. NUSSBAUM. If that was the proposal, if that is your interpretation of the proposal, the passage of the law did make that proposal no longer feasible. Mr. McCLORY. Mr. Chairman, may I ask this question for clarification? The CHAIRMAN. Mr. McClory. Mr. McCLORY. The part you omitted there related to proceeds of his sale of his book "Six Crises" and the effect that the proceeds would be paid directly to the Boys Club of America, Young People of America-was that done? Do you know? Mr. McKEITHEN. Congressman Mr. McCLORY. That would not involve a deduction. That would involve an assignment and then a direct payment. I just wonder if that was done. Mr. MCKEITHEN. As it eventually occurred, proceeds of his writing were assigned directly by the President to certain organizations, including, I believe, the Nixon Foundation. On page 210 of the Joint Committee report, paragraph No. 6 on that page deals briefly with the assignment of royalty income to charities. We do not have any information as to exactly which charities this income was assigned and the amount of such assignments. Mr. McCLORY. You do not know whether the proceeds from the sale of "Six Crises" went directly to the Boys' Clubs of America? Mr. MCKEITHEN. I do not know. Mr. McCLORY. Thank you. The CHAIRMAN. Mr. Doar. Mr. DOAR. Members of the committee, it might be helpful to summarize the legislative history of this particular section of the IRS Code that provides for deductions of gifts of papers to the Government, for example public men's papers. In February of 1969 there was a law on the books of the United States that permitted taxpayers to make gifts of papers to the Government and claim a deduction of the fair market value of the gift. There was also a provision in the Code that permitted taxpayers to make gifts of such papers so that they could carry forward the deduction for 5 years, if they so desired. The amount of the deduction for any particular year, regardless of the size of the gift, was limited to 30 percent of the taxpayer's adjusted gross income, so that if a person in one particular year desired, he could give 200 percent of his adjusted gross income and carry forward 170 percent of that amount for 5 years. I am sure that many of the members of the committee are familiar with other carry forward and carryback provisions of the Internal Revenue Code. Now, sometime in the late spring in one of the committees, on the Tax Committee of the House of Representatives, consideration began to be given to the elimination of this provision and to putting a stop to it. Ordinarily when the tax laws are amended they are usually amended prospectively; that is, the taxpayers of the United States receive notice that at some date in the future they will no longer be able to claim a particular deduction. That is ordinarily the way deduction eliminations are handled by the Congress, if I understand it correctly. In the end of July or right after the 1st of August the committee of the House that was preparing the amendment to the IRS, including a number of reforms to the IRS, included a recommendation or I believe the House passed a bill that eliminated this particular deduction as of the close of 1969. And when the bill got over to the Senate there was debate on the floor and in the committee, and in the Senate Finance Committee as to the fact that this was not an appropriate kind of deduction, that a great number of persons had taken advantage of this deduction, of this claim by giving papers, and that it was the kind of a thing that ought to be eliminated. As a result of the viewpoints of several of the U.S. Senators who were on the committee, the Senate Finance Committee passed a bill that provided that the deduction be eliminated, but eliminated retroactively back to December 31, 1968. So, when the bill came to conference in the end of November 1969, you had a House bill that provided the deduction would be eliminated as of December 31, 1969, and a Senate bill that provided it would be eliminated as of December 31, 1968. In the conference committee, the committee members of the House and the Senate compromised and set the elimination of the deduction for July 26, 1969, and so that is the legislative history of the elimination of this deduction that included the right to give away enough papers so that you could accumulate deductible items for 5 years. Mr. HOGAN. Mr. Chairman? The CHAIRMAN. Ms. Holtzman. Ms. HOLTZMAN. Thank you, Mr. Chairman. Mr. Nussbaum, in line with the question asked by Mr. McClory regarding the assignment of writings or proceeds of writings to charitable groups such as the Boys' Clubs, even though assignment is made of the royalties to a charitable organization, the taxpayer still has to claim those proceeds as income, and then takes the assignments as a deduction, is that correct? Mr. NUSSBAUM. That is correct. As the memo from Mr. Ehrlichman to the President states: "While we will have to account for those proceeds in gross income, the amount will be deductible as a charitable contribution." Mr. HOGAN. May I ask a question? One interpretation is possible that Mr. Doar outlined that they have been alleging the deduction over a 5-year period, but is it not also possible that in the Ehrlichman memorandum that they were referring to new papers which would be accumulated during that year? In other words, Presidential papers are accumulated on a constant basis. Mr. NUSSBAUM. Presidential papers are accumulated on a constant basis, but the 1968 gift and the 1969 gift consisted solely of pre-Presidential papers. But, as to whether it is possible that Mr. Ehrlichman had that in mind, the accumulation of Presidential papers, I guess I would have to say that is possible, yes. Mr. HOGAN. Thank you. The CHAIRMAN. The committee will please defer questions until we have gotten through with this presentation. I think the presentation will not take too long, and I think the committee members can ask questions thereafter. Mr. NUSSBAUM. Thank you, Mr. Chairman. In early 1969 Mr. DeMarco, Frank DeMarco, who was a partner of Herbert Kalmbach, one of the attorneys who handled the President's tax returns, Mr. Kalmbach's firm, in other words, replaced the Nixon, Mudge Rose firm in New York as the President's attorneys with respect to his returns. On March 20, 1969, the 1968 papers, the gift of the 1968 papers was delivered to the Archives in Washington, D.C. Now, these are the papers, as you will recollect, that were picked up on December 30, 1968, and taken to a Federal record center in New York. On March 20, 1969, they went from New York to the Archives in Washington and were placed in a room there, a room called 14–W for Walter. Now, the President also had a large amount of papers which had not been given to the Government. As you understand, the 1968 gift was a selection of a portion of those pre-Presidential papers. Those papers were moved initially from New York to the Executive Office Building in Washington. And without going into a great amount of |