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middle class lifestyle and the education of 3 children and
service of credit card and other debt.” Among the attachments to
the Form 8857 is a questionnaire answered by Barbara before her
death and containing the following question and answer pertaining
to her knowledge of the circumstances surrounding David’s
investment in Vulcan:
Q. Explain what you knew about the investment and how
you learned about the investment.
A. This investment was recommended by a banker friend
of my husband. My husband explained that the
investment was entirely legal and proper,
according to the lawyers and accountants
associated with this tax shelter. Even the
Attorney General for the U.S. at the time, William
French Smith, thought it was proper (see attached
news clipping). At the time, IRS tax rates for
the upper brackets were very high and we had three
kids in college. We were desperate for some tax
relief to make ends meet. I took my husband’s
word that it was OK.
The referenced news article, from the May 13, 1982, edition
of the Rocky Mountain News, reported that Attorney General Smith
considered some $66,000 in deductions attributable to a $16,500
“investment in a risky energy tax shelter” to be “proper”, but it
quoted a Justice Department spokesman as stating that Mr. Smith
“will look into it to reassure himself”. The article cited a
Washington Post report quoting “experts” as describing the
venture “as ‘one of the most aggressive and perhaps questionable
tax shelters available to wealthy Americans’”. The report was
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