Evening star., 1961-02-13
The
Rambler
Meets
New Commissioner
By GEORGE KENNEDY

tereSted, especially in the
items under the head of EN-
tertainment."
Ordinary and necessary"
expenses are not taxed. But
was that party necessary?
President Franklin D.
Roosevelt told a news con-
ference Is years ago about a
millionaire who formed a
corporation for the operation
of his yacht.
This was no cabin cruiser
but a good old-fashioned
yacht over 200 feet long with
a crew Of so. The corpora
ton operated at a loss. The
loss was deducted from his
income. Legislation put an
end to that.
Recently credit cards for
almost everything from gas
oline to night clubs have be-
come an important develop
ment in the economy. Their
popularity is in part due to
the way they simplify charg-
ing-just like the Charge-a-
Plate in the department
stores. But part is due to
this: They document expen-
ditures which the Internal
Revenue Service is asked to
accept as deductible.
Add to this the key clubs.
Many Of US remember the
"era Of wonderful nonsense"
as Westbrook Pegler called
Prohibition.
Washington has the Gas
Light Club across Sixteenth
street from the Statler where
a $1O0 initiation fee entities
one to purchase = drink for
$1.50. Now another key club,
the Bourbon Street, is open
ing tomorrow night and will
replace the Old New Orleans
Restaurant. Same initiation
fee, probably the same price
for drinks.
Similar clubs have opened
or are opening all over the
country. But this second era
may be drawing to a close.
The Rambler learned this
from the new Commissioner
of the Internal Revenue
Service, Mortimer M. Caplln.
"rhis matter of entertain
ment has been a very diff
cult one for Internal Rev.
enue," said Mr.. Caplin.
where do you draw the line?
The policy of the service has
been that If it helps a money
maker make money, 1t is de-
ductible.
But he may be entertain
ing his wife. or just giving
himself a good time. No one
knows how much the United
States loses in taxes 1t should
have collected.
But several Senators take
this quite seriously. This
came out at the hearing on
my nomination. Legislation
will be introduced in this
session to eliminate enter
tainment as a necessary ex-
pense. This will limit deduc-
tible expenses pretty much to
transportation, room and
meals.
Here's a copy Of the testi-
mony at the hearing. You'll
see what I mean"
His testimony started with
a biography-born in New
York almost As years ago;
BIS. University of Virginia,
1887 (Phi Beta Kappa), law
degree University of Virginia,
1910: as lieutenant U S.N.R.
received Army distinguished
unit award for service on
June 8, 1914, as beachmaster
in Normandy invasion; pro-
fessor at the U. of Va. Law
School since 1852; counsel to
Perkins, Battle & Minor,
Charlottesville.
Certainly no citizen Of Vir-
ginia born in New York ever
had it better before a Senate
committee. The chairman OF
the Finance Committee read
a letter from Senator Robert
son warmly indorsing the
nomination. Then the chair
man joined in the indorse-
ment. The chairman is Sen
ator Byrd.
Asked if he had engaged in
the private practice Of law,
Mr.. Caplin said he had been
a partner of former Gov. Bat
tie of Virginia.
It was not brought out In
the hearing but in giving his
course on income tax law,
Prof. Caplin had a senior stu
dent then and now known as
Bobby Kennedy. He also
taught Ted Kennedy.
It was Senator Fulbright
who brought up the problem
of entertainment deductions.
The discussion mentioned a