Evening star., 1933-06-29

personal legal firm. Stroock & Stroock
and his daughters firm, Parsons. Par
sons e. McIlvane.
The protest against the Internal
Revenue agents ruling dholding Kahn
owed a tax Of S16.000) was not signed
by me. It was signed while I was In
Europe
Il certainly had no intention Of doing
anything that could be to the detriment
OF the Government"
Pecora said the field agent. N. C.
Shields, made his report April 20. 1888
which he pointed out was only two
months ago. and sought to assess tax
Of $4,000 or more on the theory 1t was
wash sale
80 I am informed this morning.
Kahn said
Discrepancy in Report.
Pecora pointed out discrepancy in
Shields report that the sale was made
in the open market and Kahn's state
ment it was made through his office.
Il do not know who made the error,
whether 1t was the agent or my at
torney, but I'm inclined to believe my
attorney" Kahn said
"All my books and the family's books
were opened to inspection Of the field
agent" he added
Pecora asked again II any cash en-
, tered into the stock sale. Kahn said
while none actually was transferred II
was a book transfer Of credit and 95
per cent Of all cash transactions are
carried out in that way.
Suxgests Probe.
After the morning session Pecors
suggested to newspaper men that other
governmental agencies might investigate
the reason why an Internal Revenus
Bureau official first held an income tax
reducing stock sale by Otto H. Kahn
was a wash sale" and then reported 1t
was "an ordinary transaction on the
Exchange"
PecoraS statement was made. after
ne produced evidence that N. c. Shields
submitted memorandum to the In
ternal Revenue Bureau two months
ago holding Kahn's sales constituted
IAN ordinary transaction" on the Ex-
change.
Shields previously had reported in
, 1881 that the sale by which Kahn
claimed q deduction of $117,000 was q
wash SALE" but was overruled by su-
periors
In the first report Shields held the
transaction was wash sale" because
the stock was reacquired from Kahn's
daughter in less than 80 days.
Sold Stock Direct.
Pecora said in the second report only
two months ago, Shields reported Kahr
had no direct transactions with hi.
daughter.
Kahn testified he sold the stock direct
to his daughter, and that the mistake
| was made either by his attorneys OF
Shields.
Asked II the Department Of Justice
would be requested to look into the mat.
ter, Pecora said he did not know. but
suggested other agencies Of the Govern
ment could inquire into 1t better than
the committee.
Just before the recess Pecora asked
Kahn how Shields made the erroneou:
statement in his memorandum of two
months ago that the sale was an
ordinary stock transaction, calling at
tention TO Kahn's earlier statement to
the contrary.
Kahn said the error either was made
by the agent or his own counsel and
I'm inclined to believe my counsel was
correct"
Ignorant on Income Tax.
Kahn unllesitatingly told the investi-
gators yesterday he had paid no income
tax during the past three years, bu'
impressed the hope there will be
different picture for 1888"
Questioned by Pecora, he confessed
an "abysmal ignorance" on income tar
affairs, and said he did not remember
selling some stocks. on December 30
| 1880, ct o loeg Of 9ll7.000 --