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This is to request that you prepare a campaign check in the amount of $959.00
to American Continental Corporation.

These funds are to reimburse American Continental for two trips made by
John McCain in 1985 on their corporate aircraft. One trip was on April 4, 1985
from Miami, Florida to Phoenix. A second trip occurred on August 29, 1985
between Washington, D.C. and Phoenix.

According to FEC regulations, we are obliged to reimburse an owner of corporate
aircraft in the amount equivalent to first class commercial airline rates.
According to my travel agency, $959.00 represents the cost of two first class
tickets for the aforementioned trips.

Please report this expenditure in our next FEC filing. Also, I would appreciate
it if you would send the check to me so that I can forward it to American
Continental with an explanatory note.

That we did not reimburse American Continental at the time of the trips was
an oversight on my part, as John's advisor on FEC matters. However, having
been made aware that the trips occurred, I want to report them properly and
make sure that the appropriate reimbursement is made.

Thank you for dealing with this matter. Call me if you have any questions.
With best regards.

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The

As you requested, I am enclosing a printout which details flights taken by Senator McCain and his family during 1984 and 1985. numbers in the column labeled "Amount Charged" are computed by using IRS formulas. These formulas have been set up to allow taxpayers to determine how such income they should report if they use corporate aircraft for personal purposes. The numbers typically approximate what

the first class charge would be.

The final column on the schedule indicates the amount that Mr. Keating
vas required to pick up in income by the Internal Revenue Service. We
argued with the IRS that it was inappropriate to charge Mr. Keating
with income personally for the flights taken by the Senator and his
family but we were largely unsuccessful in those arguments.
As you
know, Mr. Keating is becoming very accustomed to receiving unfair
treatment from government officials.

As we discussed, we will be double checking to see if there was any reimbursement with respect to two of the flights in 1985. We have no record of any other reimbursements for the 1984 and 1985 flights.

Our records indicate that one flight was taken by Senator McCain, Mrs. McCain, Meghan McCain and a babysitter in August of 1986. It appears that we were fully reimbursed for that flight by a check that we received in August of 1986 for $900.00.

Once you determine what you feel an appropriate payment would be, please contact me so that I can give you instructions as to how to make that payment.

Please let me know if you have any questions concerning this.

Very truly yours,

David E. 'Stevens

Director of Taxation

cfr

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May 15, 1989

Mr. David E. Stevens

Director of Taxation

American Continental Corporation

P.O. Box 29099

Phoenix, Az. 85038

Dear Mr. Stevens:

Recently I asked my staff, before they archived old records, to make sure that there were no unpaid bills in those records. During that process, my staff discovered correspondence about travel I took on American Continental's aircraft, but they could find no cancelled checks or other documented evidence that such travel had been paid for. In following up with your office, my staff was able to obtain from you a list of flights I took on your aircraft.

I

It has always been my policy and directive to my staff to promptly reimburse for such travel. I thought all this travel had been paid for, but I don't have the documentary evidence that this occurred. deeply regret that this policy apparently had not been complied with in every instance. I also appreciate your prompt assistance in identifying for my staff all such travel in question.

I have enclosed checks in the amount of $1,794.14 and $7,884.32 to provide full payment for all travel that Cindy, my family, and I took on American Continental Aircraft during 1984 and 1985. Again, I regret any previous nonpayment. I was never aware that this situation existed, and I am embarrassed that apparently it did. If your records show that any of these flights were in fact already paid for, please either return that amount or I can have a new check drawn. Please accept my apologies, and please let my Senate office know immediately if you ever encounter any other question in this regard.

Thank you for your understanding and assistance.

CO515/MIS/RD
JM/ck

Sincerely,

John McCain

United States Senator

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