W.M. Goldstein, 72, tax lawyer in gambling case

William M. Goldstein, 72, a nationally recognized tax lawyer whose successful arguments on behalf of a bad-luck Atlantic City gambler are legal legend, died yesterday at the University of Pennsylvania Hospital.

The cause of death was complications from melanoma.

A 40-year resident of Wayne, Mr. Goldstein was a partner at the Center City firm Drinker, Biddle & Reath L.L.P. until his death and had served as deputy assistant secretary of the treasury for tax policy under President Gerald R. Ford.

When he wasn't wearing a suit, Mr. Goldstein could be found over the years playing tennis, squash or golf; white-watering in Maine's Allagash Wilderness; coaching a championship little-league basketball team known as Goldstein's Gorillas; vacationing in Cape Cod or Hawaii; or rooting for one of Philadelphia's sports team.

According to his family, Mr. Goldstein missed no more than 10 games in his 46 years as an Eagles season-ticket holder.

Mr. Goldstein, a graduate of Princeton University and Harvard Law School, also was a Big Brother, serving as a mentor to the same Little Brother for 47 years.

"He was a great influence because he was always calm. There was nothing he couldn't handle," said Michael Cherry, who was 10 when he met Mr. Goldstein and now owns a towing business.

Mr. Goldstein's famous tax case is known as

Zarin v. Commissioner

and is regularly cited in textbooks.

It involved an Atlantic City developer named David Zarin, now deceased, who settled a $3.44 million debt with Resorts International Casino for $500,000 in 1981.

The Internal Revenue Service later ruled the $2.94 million in forgiven debt was income and should be taxed as such.

But Goldstein challenged the ruling in the U.S. Court of Appeals for the Third Circuit in Philadelphia and won in 1990, sparing Zarin payment of more than $5 million in taxes and interest.

The court ruled that the debt was not enforceable because the casino had illegally extended credit to Zarin, who later became an active member of Gamblers Anonymous.

Mr. Goldstein's primary clientele was made up of high rollers of another variety, business people who relied on his knowledge of the tax aspects of complex corporate transactions.

He also wrote and lectured on tax law.

"No one at our firm knew better how to engender - and reciprocate - the type of loyalty and dedication that Bill had with his clients," said Alfred W. Putnam Jr., chairman of Drinker Biddle.

"He wasn't the stereotypical tax lawyer, either. He was outgoing, brilliant, iconoclastic and collegial, a potent combination of qualities that earned him the respect of all of his colleagues. We are going to miss him terribly."

Mr. Goldstein's son Adam said his father continued to work through his illness.

"The firm had a wonderful non-retirement party for him in June," he said. "He was still working. He just was relentless."

An only child, Mr. Goldstein grew up in Melrose Park and attended Cheltenham High School before going to Princeton, from which he graduated magna cum laude in 1957 and with which he maintained a lifelong association.

At Harvard Law School, Mr. Goldstein was an editor of the Law Review before graduating in 1960 and taking a clerkship with Judge William H. Hastie of the Third Circuit.

He worked for 14 years at Morgan, Lewis & Bockius before joining Drinker Biddle in 1982.

Mr. Goldstein is survived by Lilia, his wife of 30 years; their daughter, Laura; his sons from an earlier marriage, Adam, Ben and Dan; and four grandchildren.

Services are set for 10 a.m. tomorrow at Goldsteins' Rosenberg's Raphael-Sacks, 6410 N. Broad St. The family requests memorial donations for Camp Kennebec Campership Fund, c/o American Camp Association, 5000 State Rd. 67 North, Martinsville, Ind. 46151, or Big Brother-Big Sister Association of Philadelphia, 4601 Market St., Philadelphia 19139.