Written by Terence Winter
Directed by Tim Van Patten
Gyp Rosetti, a volatile New York gangster, has car trouble along a deserted stretch of highway en route to Atlantic City. Interpreting a Good Samaritan's offer of assistance as an insult to his intelligence, Gyp savagely beats him to death with a tire iron and takes the man's dog Regina.
Meanwhile, Nucky interrogates a young man who has stolen liquor from Mickey Doyle's warehouse. First putting him at ease, once the boy reveals his accomplice - Rowland Smith -- Nucky orders Manny Horvitz to put a bullet in his head. Later, Nucky promises Horvitz (a lesser partner in Mickey Doyle's operation), his own still as a reward for tracking and killing Rowland Smith.
In Chicago, Johnny Torrio meets with North Side boss Dean O'Banion to settle a dispute over territory before embarking on a long trip to Italy. The situation worsens when Al Capone doubts O'Banion. When O'Banion asks if Capone is deaf to his claims of innocence, Capone reacts violently. Torrio tells him he has a deaf son -information O'Banion uses again as he leaves, telling Capone to wave to Sonny for him, since he can't hear "hello." Torrio restrains a livid Capone, warning him not to start a war in his absence. Capone makes a New Year's resolution to behave, but once Torrio leaves, he tells Jake Guzik, a bootlegger working for Torrio, his plans to assault O'Banion, explaining: "New Year's ain't ‘til midnight."
In Atlantic City, Margaret prepares for an Egyptian-themed New Year's party, inspired by the recent discovery of King Tut's tomb. On the radio, she learns of female aviatrix Carrie Duncan's historic flight that will take off from Cape May the next morning.
Gillian Darmody, now the proprietor of a high-end brothel - the Artemis Club - lectures her ladies about New Year's business etiquette. Also working for her is Richard Harrow, Tommy's babysitter and caretaker of the Club.In a meeting with Attorney General Harry Daugherty, Nucky objects to the $40,000 monthly fee he pays for protection which has done little to prevent the increasingly public scandals making headlines (including Nucky's operation and the Washington Justice Department). Daugherty dismisses his concerns and tells him that the payment will now be made to a middleman in New York.
Margaret, now a board member (a result of the Thompsons' generous land donation), takes a tour of St. Theresa's Catholic hospital. The group is interrupted when a woman, Mrs. Shearer, miscarries in the hospital lobby. When Margaret later inquires about her condition with Dr. Mason, he tells her that the miscarriage could have been easily prevented if Mrs. Shearer knew the dangers of raw milk. She asks what she can do to help.
Van Alden, a.k.a. George Mueller, now makes his living as a door-to-door salesman for the Farraday Electric Iron Company. Struggling to win a New Year's Eve sales contest, his luck changes when he enters Dean O'Banion's flower shop and inadvertently prevents Capone from exacting revenge. Grateful, O'Banion purchases two dozen irons. But when Van Alden returns to his office he is denied the $500 prize. The cutoff time was moved from 10 to 9pm, allowing the boss's nephew to claim the prize.
On the boardwalk, Richard Harrow uses his sharpshooting skills to load Tommy up with prizes. He learns that Gillian has convinced the boy that she is his mother, not Angela. Back at the Artemis Club, Harrow shows Tommy one of Angela's paintings. They are interrupted by Gillian, who orders Harrow to maintain the boy's illusions about his family.
Eddie Cantor entertains the Thompsons' guests with flapper and performer Billie Kent. Meeting with his fellow gangsters, Nucky reveals his new business plan to export to Rothstein only. The news puts Gyp in a rage and he storms out of the party. Meanwhile, Margaret draws ire when she corners Dr. Landau to suggest a new women's clinic for the hospital. Insulted, he rejects the proposal and tells Nucky about Margaret's audacity.
As 1923 draws near, Nucky presents his guests with a chest of real diamonds and gold souvenirs, à la King Tut, looking on with disgust as everyone greedily helps themselves.
As the door closes on the last guest, Nucky turns on Margaret, furious that she embarrassed him in front of Dr. Landau; he demands she not involve him with whatever new cause strikes her fancy. Teddy's appearance interrupts their argument, and Nucky leaves Margaret with cash for staff tips before returning to his residence at the Ritz, where he has been living since she gave his land away. He opens his bedroom door to find a naked Billie Kent waiting for him, and they agree it was fun to pretend they didn't know each other at his party.
After a New Year's toast with his wife, Manny Horvitz sets out to kill Rowland Smith. Harrow greets him at his door with a shotgun blast to the face, avenging Angela's murder. A dejected Van Alden returns to the Cicero apartment he shares with Sigrid, now his wife, and their two children. At dawn, Margaret rises and heads to the beach to watch Carrie Duncan take off on her historic flight.