Nancy with the Golden Threads

By Janice Castro

Clothes hounds were not the only ones eyeing those size-4 designer dresses that NANCY REAGAN wore as First Lady. The Internal Revenue Service was studying them too. Shortly after President Reagan left office, the IRS undertook an audit of his taxes, prodded by former fashion executive Chris Blazakis, who was familiar with the value of Mrs. Reagan's extensive wardrobe. The former First Lady, who promised to stop accepting free designer goodies in 1982, told the tax officials that everything obtained after 1983 was purchased. The designers, however, said she did not pay them. Concluding that between 1983 and 1988 the Reagans failed to report some $3 million worth of free clothes, jewelry and furs, the IRS presented them with a hefty bill for back taxes and interest. A former assistant to Mrs. Reagan says the bill was settled.

With reporting by Wendy Cole.