Evening star., 1933-06-09

- the Associated Press.
TINE full text of the prepared
statement read to the Senate
Banking Committee today by
i Thomas S. Lamont youthful
Morgan partner, explained the
stock transactions whereby. he deducted
s114,s07 from his 1880 taxable income
by selling stock to his wife. follows:
when 1 went home over last week
end 1 looked up as thorough as I could
in those two days the transactions
which I had had in those stocks men,
toned last Friday by Mr.. Pecora. I
ascertained the following facts:
Il was in 1880 the owner of those
stocks which Mr. Pecora specifically
referred to. At the end of that year
I had a real loss in them. due to the
decline in values. 1 sold them as fol-
lows:
"(a) Publicly
"One thousand shares Shamrock Oil
& Gas Co. On December 30. 1880
"One thousand five hundred CONT
mental Oil Co, on December 81. 1880.
Two hundred Durium Products Cor
poration preferred, on December 81,
1890
Three hundred Hall Electric Heating
Co., on December 81, 1880.
"(b) To my wife on December 80,
1896
Five hundred shares State Street In
vestment Corporation.
Three hundred and fifty Investment
Corporation of Philadelphia.
"237 P. r. Mallory e. Co., common.
my beneficial interest in 1000 Of
| Simms Petroleum capital stock.
Gave Note for Stock.
my wife purchased in the market
similar amount of the shares sold
| publicly
"She purchased them for cash and
borrowed an equal amount from me,
upon her demand note which. though
not specifically collateralled. was well
| covered by the shares themselves plus
her other personal estate.
Proper transfer stamps were affixed
| to each transfer; the usual commissions
F, we're paid to the brokers where securi-
! ties were sold through public sales.
There was no agreement nor any
understanding between us that should
any time later on repurchase these
| shares from her, or any Of them.
II intended the sale to be a COM
| plete and final disposal of these shares
| and she understood it to be So
Dividends on these shares after she
| bought them were naturally paid to
my wife for her own personal account
Il was advised that under these cir
| cumstances I was fully within my
| rights in deducting from my income
return for the year 1890 the amount
of the loss sustained.
I'm. the early part of 1881 things
| seemed to improve, but after several
months they seemed to me to be slipping
and by April it looked to me as though
| they might get considerably worse.
! II talked to my wife about this and
we both felt that 1t was not wise that
she should continue to carry this debt
| against stocks.
Repaid Original Price.
Therefore, I purchased the stock
| from her on April 8, 1881, at the orig
| inal price and she thereupon paid her
| loan; the note was surrendered and
marked paid
There was no substantial difference
| then in the value of the securities COM
pared to December, 1890 The neces-
| sary steps involved in purchase OF
securities compared took place, includ-
| ing the payment Of transfer taxes.
pelleVe THAT 1 dcleQ Iuliy Witnln my
rights in making this purchase.
Il am told that even if my tax deduc-
| tions growing out of the loss on all
the above sales except those made pub
| licly were eliminated it would result in
! an additional tax of 81 ,440.29 in my re-
| turn and $595.75 in my wife's.
| II have always understood that the
Bureau of Internal Revenue regularly
| examines the tax returns made in our
Office and that whenever they find mis-
takes they call our attention to them.
Il have been told that in 1882 they
made their usual examination, both of