Jerry and Patricia A. Dixon, et al - Page 11




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          Director's Office, requesting that the latter process a refund to           
          the Thompsons in the amount of $30,000.47                                   
          E.   The Cravens Settlement                                                 
          By letter dated September 29, 1986, Mr. Seery informed                      
          Mr. Cravens of the terms of the modified 7-percent settlement               
          offer.  On October 28, 1986, Mr. McWade disseminated the modified           
          7-percent settlement offer by form letter mailed to all known               
          Kersting program participants, including the Cravenses.48                   
          Considering the nature and purpose of the form letter, it appears           
          that issuance of the letter to the Cravenses, who had already               
          been designated test case petitioners, was inadvertent.                     
          On October 15, 1986, Mr. Cravens wrote to Mr. Seery asking                  
          him to explain how the proposed settlement offer affected him and           
          to give him a recommendation.  By letter dated October 23, 1986,            
          Mr. Seery advised Mr. Cravens to consult a tax preparer or                  
          accountant because the offer was complicated in its application             
          to his case.  Mr. Seery also noted that Mr. Cravens could take              
          advantage of the unlimited deduction for personal interest in               
          effect for 1986 by paying the liability in full in 1986 whether             
          or not he settled his case.49                                               


          47  The full text of Mr. McWade's memorandum is set forth                   
          infra p. 137.                                                               
          48  Mr. McWade's letter included a statement that the                       
          modified 7-percent settlement offer would be withdrawn on                   
          Dec. 31, 1986.                                                              
          49  See supra note 44 regarding the Thompsons' interest                     
          payment.                                                                    

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