Fashions Lent to First Lady Taxable, Magazine Holds

Gifts and loans of designer dresses to Nancy Reagan could force the Reagans to pay a substantial amount in back taxes, Time magazine reported in this week’s editions.

According to tax experts surveyed by the magazine, including a former Internal Revenue Service commissioner, such items are taxable because the designers of the gowns, some valued at more than $20,000, received significant publicity from having Mrs. Reagan wear their creations in public.

The loans and gifts were not reported on the Reagans’ joint tax returns for 1982 through 1987, Time said.

A gift is exempt from taxes only when it is given out of “detached and disinterested generosity,” Time reported. The article said the designers were well aware of the value of outfitting Mrs. Reagan.

Last week, Time reported that Mrs. Reagan had continued to borrow expensive designer clothes and jewelry without reporting it, as required by federal law.

A representative of the First Lady said last week that she was under no obligation to report the dresses, but had agreed publicly to do so in 1982.

“She set her own little rule, and she broke her own little rule,” her press secretary, Elaine Crispen, said.