flights where the President was a passenger. However, the staff believes this type of analysis is not appropriate when all that is being treated as income is the cost of the first class fare of the individuals involved. In addition, generally where a family member accompanies an employee on a business trip, the presence of the family member must be shown to serve a business purpose for his or her expenses to be deductible.

In determining the economic benefit in the case of the flights shown on the manifests supplied to the staff (those where members of the family were not accompanied by the President), the staff made the computation of the flight costs at the standard first class fare applicable to each flight, using the rates in effect at the time the flights were taken.19 Because Government air bases were used for landing and takeoff in numerous cases, an approximation of fare charges had to be made by using the flight costs to the nearest commercial airport. Also, in some cases where there were numerous stops or no comparable commerical flight between the same series of points it was impossible to make an exact determination of fare charges by using commercial fare schedules. In such cases the staff made the computations from the commercial schedules on the basis of either the furthest point to which there was direct flight service or the beginning and ending points for the trip. In addition, in numerous cases it apparently was necessary to arrange either to have an "empty" plane flown to meet the persons involved at their departure point or to leave them at their destination point and the plane return "empty" to its base. No attempt was made to include any charges for these "empty" plane flights. Although the manifests do not indicate all such flights, they do disclose that at a minimum such flights were necessitated 175 times during the period under review.

The manifest lists do not generally indicate whether the persons on the flights were Executive Department employees officially accompanying the President's family as one of the duties of their position or whether they were personal friends of the family. The staff in computing the fare charges has attempted to take into account only those flights involving family members or personal friends (or personal employees) of the family, and not others.

Computations of fare charges were made with respect to all of the flights involving members of the President's personal family and friends (on flights in which they were not accompanied by the President). Subsequently these amounts were reduced for reimbursements made by the President (between April 1, 1971 and March 31, 1972 and again after November 16, 1972).

Although the staff was not supplied with information as to which of the flights were personal and which were official, it made a breakdown on the basis of the best judgment it could apply. For example, it classified as official flights those which involved relatively brief stops at a number of cities. Also omitted were flights where it was suggested by the passenger lists that it was an official flight. Finally, all foreign flights were omitted.

Based upon the analysis indicated above, the staff found that there were 411 flights covered by the manifests of the flights where family members were not accompanied by the President. Of these, the staff believes that 70 may have been of an official nature,

19 To determine the rates in effect when the flights were taken the staff used the Official Airline Guide, published at two-week intervals and computed each flight separately.

leaving 341 as personal. Using the first class air fare in effect at the time the flights were made, staff calculations indicate these flights represented a total value of $33,708.19 (including $2,266.47 as the Federal air ticket taxes which would be applicable to first class fare flights). Of this amount, the President has reimbursed the Treasury for $6,693, leaving a total nonreimbursed figure of $27,015.19.20 By tax years the total indicated above is as follows:

1969

1970. 1971

1972__

$4,001.45.
$9,275.89.

$9,247.85 less reimbursement by the President of $4,612, which leaves $4,635.85.

$11,183.00 less reimbursement by the President of $2,081 which leaves $9,102.00.

The staff believes that these amounts should be treated as taxable income to the President for the years in which the flights occurred. The staff is aware that the President intended to make some reimbursements for the personal use of Government aircraft which occurred after March 31, 1971. In the staff's examination of the manifests and the reimbursements made by the President with respect to the personal use of the aircraft after March 31, 1971, the staff determined that a number of personal trips made by the President's family and their friends were not reimbursed. Since the staff has no information that there is an intention to make reimbursements for either the pre-April 1, 1971, personal use flights or the as-yet-unreimbursed post-March 31, 1971, personal use flights (particularly in light of the significant delay between the times the flights occurred and the present), the staff also believes that the charges for these flights should be included in taxable income.

As indicated above, manifests were not supplied to the staff with respect to flights on which the President was a passenger. Therefore, it has not been possible for the staff to make any determination as to an appropriate inclusion in income with respect to these flights.

Information is available, however, as to air travel involving President Nixon's trips on working vacations and weekends in each of the years 1969 through 1972. This includes primarily trips to Key Biscayne, Florida, San Clemente, California, and trips designated as private family trips. This does not include trips to Camp David (119 trips listed) or trips from Key Biscayne to the Bahamas (16 trips listed). The Camp David trips apparently were a mixture of working weekends and working vacations where presumably family and friends were less likely to accompany the President than in the other cases. In addition, apparently most of these trips were by helicopter, and helicopter flights are not included in computations shown here. The flights from Key Biscayne to the Bahamas also presumably were by helicopter.

As indicated above, the staff has not been supplied any information as to the number of family or friends on board these flights. If 2 or 3 personal friends or family members accompanied the President the charges (not including any charge for the President's fare) would be as follows: 21

The computation of fare costs on a flight-by-flight basis for those where the President was not a passenger is shown in the appendix (Exhibit VI−1).

The computations of fare costs on a flight-by-flight basis for those where the President was a passenger is shown in the appendix (Exhibit VI-2).

It should be emphasized that the staff is not recommending to the committee any inclusion in income of the amounts shown above, since it has not been supplied with adequate information to make any appropriate estimates. This information is supplied merely to inform the committee as to the approximate amounts which could be involved.

PART SEVEN

EXPENDITURES OF FEDERAL FUNDS AT PRESIDENT NIXON'S PROPERTIES AT KEY BISCAYNE AND SAN CLEMENTE

1. Scope of Examination

After his election as President of the United States, President Nixon acquired properties at Key Biscayne, Florida, and at San Clemente, California. First, on December 19, 1968, Mr. Nixon purchased two residences located at 500 and 516 Bay Lane, Key Biscayne, Florida. Then on July 15, 1969, he purchased an estate referred to as the "Cotton estate" in San Clemente, California. Finally, in October, 1969, he purchased a small additional property adjacent to the Cotton

estate.

As a result of the use of these properties by the President during his first term in office, substantial expenditures have been made by the Federal Government. The authority to make these expenditures is set forth in two different statutory provisions. The first of these provisions requires the General Services Administration to provide services and administrative support to the Executive Office of the President. The statutory authority in this regard is derived from three different sources. The second of these provisions requires the Secret Service to provide protection for the President (and certain other individuals) by the Secret Service. The statutory requirement in this regard also directs other Federal departments and agencies to assist the Secret Service in the performance of its protective duties upon request.

The General Services Administration, Secret Service, and other Government agencies have spent approximately $1.4 million at the President's properties at Key Biscayne and San Clemente. In recent months, numerous questions have been raised as to whether these expenditures were protective or nonprotective in nature and whether or not the applicable laws have been followed with respect to these expenditures. A thorough review of these expenditures at Key Biscayne and San Clemente was made by the General Accounting Office. In addition, congressional hearings were held by the Government Activities Subcommittee of the House Committee on Government Operations.

The Government Activities Subcommittee held hearings on the expenditure of Federal funds in support of presidential properties on October 10, 11, 12, and 15, 1973. In his opening statement at the

The Federal Property and Administrative Services Act of 1949, 63 Stat. 377, as amended; the Public Buildings Act of 1959, as amended (40 U.S.C. 601-615); and Reorganization Plan No. 18 of 1950 (40 U.S.C. 490 note).

18 U.S.C. 3056; Pub. L. 90-331, June 6, 1968, 82 Stat. 170.

This does not include those expenditures to construct and maintain the Western White House complex on Government property adjoining the President's San Clemente estate. These expenditures have been estimated to be $6 million.

hearings, the Subcommittee Chairman, Jack Brooks, stated the responsibility of the Subcommittee in this regard‘:

"It is the responsibility of this subcommittee to determine if the GSA and the Secret Service are fulfilling their obligation in an efficient and economical manner. It is the objective of the subcommittee during these hearings to determine (1) if the reported figures are approximately correct, (2) if the Government agencies involved are carrying out their respective responsibilities in an economical and efficient manner, (3) whether applicable laws have been properly followed, or if there have been possible violations of law, and (4) whether additional guidelines or legislation might be needed."

The staff understands that the subcommittee intends to submit a report as to its findings and determinations with respect to the expenditure of Federal funds in support of the Presidential properties. As of this date, however, the report has not been filed.

The General Accounting Office made a report to the Congress on December 18, 1973, on "The Protection of the President at Key Biscayne and San Clemente (with information on protection of past Presidents)." The report indicated that the General Accounting Office undertook its review as a result of the publicity given to the Federal expenditures made on President Nixon's residences at Key Biscayne and San Clemente and the letters received by the General Accounting Office from Members of Congress asking for information or calling for an investigation. The report indicated that the questions basically were directed to the issue of whether the work performed was related to the protection of the President and in addition whether any work provided a nonprotective benefit to the President. As a result, the General Accounting Office in reviewing the expenditures made by the Government on the residences sought to determine which expenditures either served a protective purpose or were incident to other protective work and which expenditures had a nonprotective benefit to the President.

The staff believes that the Joint Committee on Internal Revenue Taxation also needs to investigate these expenditures as part of its examination of the President's tax returns for years 1969 through 1972. The purpose of the Joint Committee staff review, however, is somewhat different from that of the General Accounting Office and the Government Activities Subcommittee. The purpose of the Joint Committee staff review is to determine if any of the expenditures made by the Government, which were not reimbursed by the President, should be treated as taxable income to him. The review made by the General Accounting Office, and the hearings conducted by the Government Activities Subcommittee, on the other hand, were primarily directed at the issue of the propriety or impropriety of these expenditures, a classification which is not concerned with the issue of whether or not any of these expenditures result in taxable income to the President.

This report of the staff of the Joint Committee on Internal Revenue Taxation is not intended to be an exhaustive analysis of all those ex

4 Expenditure of Federal Funds in Support of Presidential Properties, Hearings Before a Subcommittee of the Committee on Government Operations, House of Representatives, 93d Cong., 1st Sess. (October 10, 11, 12, and 15, 1973). Report #B-155950.