- 85 -
to the acceptance of an Internal Revenue Service settlement
offer.
On April 16, 1987, Mr. Chicoine wrote to Mr. Kersting and
confirmed that he would be meeting Mr. McWade in Hawaii the
following week to discuss the possible settlement of six cases.
Mr. Chicoine warned Mr. Kersting not to address the subject of
the status of settlement negotiations in his letters to Kersting
program participants, inasmuch as his comments could be
detrimental to such negotiations. On or about April 27, 1987,
Mr. Chicoine informed Mr. Kersting that he would recommend that
Kersting program participants accept a 20-percent settlement
offer.
By letter dated May 22, 1987, Mr. Kersting provided
Mr. Hallett with information pertaining to a purported 30-percent
settlement negotiated by Mr. DeCastro on behalf of Benness M. and
Jane Richards.41 Mr. Kersting stated that he was attempting to
obtain information respecting additional settlements negotiated
by Mr. DeCastro. Between May 1987 and February 1988,
Mr. Kersting wrote no fewer than seven letters to Chicoine and
Hallett strongly objecting to their communication of a 20-percent
settlement offer to Kersting program participants. In his
41 In Richards v. Commissioner, T.C. Memo. 1997-149,
supplemented by T.C. Memo. 1997-299, affd. without published
opinion 165 F.3d 917 (9th Cir. 1998), we observed that the
settlement may have been detrimental to Mr. and Mrs. Richards
insofar as the original deficiency had been computed using an
excessive tax rate (70 percent) and may have been based in part
upon the disallowance of legitimate non-Kersting interest
deductions. See supra p. 27.
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