Montana labor news., 1938-07-21
.Raskob. dupont Stock
Losses Too Good 10 Be
True, Tribunal Rules

WASHINGTON.-(FP) Juggling
of millions of dollars between John
J. Raskob, former chairman of the
national Democratic Committee, and
Pierre S. dupont, heavy Republican
contributor and Liberty Lacquer,
was found too good to be true by
the Board of Tax Appeals here which
found that losses established by the
swapping were not bona fide.
The Bureau of Internal Revenue,
in examining the tax returns of
Raskob and dupont for the years
1929 and 1880, found that DUPONT
had established a "loss' of SO, 120, GAS
by selling stocks to Raskob and that
Raskob had lost $4,975,523 by sell
ing stocks to DUPONT.
The sales, the revenue bureau
found, occurred within six weeks and
involved the swapping of almost
identical blocks of stock. When the
swapping was through both Raskob
and dupont owned what they had
when the swapping began and du-
Pont was $46.86 to the good.
The Bureau of Internal Revenue
disallowed the 'losses" as deductions
from the income tax of the two eco
nomic royalists and the case was
presented to the Board of Tax APP
peals which ruled that the transac-
tons were designed to create tax
losses.
Dupont commended that he snapped
the stocks with Raskob because he
was supporting a panicky market"
and did not want to sell a large block
of stock which might have an adj
verse affect on the market. The
boards decision threw out this con-
tention entirely, declaring:
ut therefore appears from a con-
sideration of these transactions as
actually consummated that they
would have supported rather than
have depressed the market from
which it follows that the fact that
Raskob and DUPONT consummated
their transactions out of the market,
and privately, is not explained on
the theory of duPont's desire to sup
port the market.
"In short, there was no need, ac-
cording to the testimony of DUPONT,
to keep the sales off the market after
Raskob agreed to buy and also sell
stocks of approximately the same
value to dupont. These transactions
would have supported the market.
The explanation is not convincing"
How much Raskob and dupont
will have to pay in back taxes as the
result of the decision was not an
nounced but it was estimated that
Raskob would owe about $1,000 900
and DUPONT would be liable for
about $4,000
There is an ancient authority, I'M
necessary of citation, for judging a
tree by its fruits" the majority de-
cision of the Board of Tax Appeals
said. ''The fruit of these transactions
was found in a return of these
parties to the status quo ante in
minute particular, in stocks and back
account"
"Men do not conduct themselves
and accomplish the end as did these
parties toward each other and attain
an end SO advantageous to their for
tunes without a common understand
ing" the decision said.
When the suit was begun Raskob
charged that it was because both he
and dupont were Liberty Leaguers
and that zone could secure no better
illustration of the tyranny which a
government bureau can inflict on a
citizen" Dupont said it was part
of a scheme to injure me and to
force a compromise of claims in a
manner amounting to %extortion." It
was thought that the case will be
appealed.