Evening star., 1938-07-12
DU PONT-RASK0B.
SECURITIES DEAL
HELD fAXEvAS|0N
Board Finds They Attempted
to Avoid ST 800, 900 of
Income Levies.
CLAIMED DEDUCTIONS
AFTER STOCK EXCHANGE
Result Gould Be Without Design,
Ruling Says, but Too Remarkable
for Belief.
BY the Associated Press.

BY the Associated Press.
The United States Board Of Tax Ap-
peals found today that Pierre S. du
Pont and John j. Raskob had at
tempted to evade more than 81 900. 900
of income taxes by paper transac-
tions" in securities.
The exact amount of additional
taxes due on their 1929 incomes was
left by the board to be determined
later, but attorneys estimated Mr.. Ras-
kob might be held to owe about
100000 and Mr.. du Pont about
100000.
Mr.. du Pont, large contributor to
Republican campaign funds in 1886.
is chairman of the Board of Directors
Of E. I. du Pont de Nemours L Co.
Mr.. Raskob was chairman of the DEM
ocratic National Committee and cam
paign manager for Alfred E. Smith in
1928, but turned against President
Roosevelt and. with Mr.. Smith, pro-
moted the American Liberty League
in opposition to Mr.. Roosevelt.
Stocks Sold and Resold.
After the 1929 Stock Market crash,
Mr.. Du Pont and Mr.. Raskob sold
about $4,500.00 of securities to each
other at prices far below what they
had paid for them. Eventually they
resold the securities to each other so
each wound up with his original hold
ings
They claimed deductions from their
income tax for the losses indicated
by the difference between the original
value Of the securities and the prices
at which the securities were sold.
The board said:
When summed up. our whole oues-
ton is one as to whether the transac-
tions considered are such as the sta
tutes as to deductible losses intended
and contemplated. or were paper
transactions to escape tax liability.
The matter before us here required
examination in the light of the ordi-
nary actions and reactions of men.
guided BY criteria Of reasonable hu-
man behavior in business transactions
Too Remarkable for Belief.
so viewed. they demonstrate, in our
opinion. the complete improbability of
the asseverations Of petitioner that
the sales were bona fide. real, free
from agreement to reacquire, in spite
OF the result-the complete return to
original ownership. Such a result
could conceivably be without design.
but such thing would be entirely too
remarkable for belief.
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. This design was too complete to
be without designer.
The record before us bears its
transparency, and though the respond
ent (Government) had. contrary to
the usual situation, the burden of
proof because of having raised this
issue after proceeding was filed, in our
opinion that burden was abundantly
met
ITO reach a different conclusion
would require us to be blind to fact
and to place a premium on ingenuity,
rather than bona fides."
The decision was written by Richard
L. Disney. Ten members of the board
approved the opinion. three concurred
in the decision without approving the
opinion, and three dissented.
John M. Sternhagen, Charles P.
Smith and j. Edgar Murdock dissent
ed. Concurring in the decision. but
not in the opinion, were Ernest H.
Van Fossan. j. Russell Leach and
Arthur j. Mellott.
Mr.. Sternhagen, in brief dissent,
said he believed the first sales of Du
Pont and Raskob to each other were
bona fide, although when they resold
the securities to each other q few
weeks later the transaction might
have been based on an agreement.