Milward Corporation - Page 5

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          either the fiscal year ending January 31, 1989, or the fiscal               
          year ending January 31, 1990.                                               
               Petitioner reported taxable income in the amount of $114,717           
          (without regard to any NOL deduction) on its income tax return              
          (Form 1120) for the fiscal year ending January 31, 1989.                    
          Petitioner reported a loss in the amount of $17,776 on its income           
          tax return (Form 1120) for the fiscal year ending January 31,               
          1990.                                                                       
               Materials that petitioner ordered for specific jobs were               
          either delivered to petitioner's premises or "drop-shipped" to              
          the job site, where the materials were stored in petitioner's               
          containers.  Most of petitioner's materials were ordered FOB-POS;           
          i.e., free on board--point of shipment.  Petitioner retained                
          title to materials purchased for a job until the main contractor            
          or owner of the property approved petitioner's work.                        
               In some instances, petitioner was able to purchase materials           
          only in lot sizes larger than those needed for a particular job.            
          Materials that petitioner purchased for a particular job that               
          were not used in the project were retained for future jobs.  Any            
          excess materials remaining at the end of a job either were                  
          collected and sold as scrap by petitioner's employees, who                  
          retained the proceeds, or were removed to petitioner's warehouse.           
          Petitioner accounted for the direct and indirect costs                      
          associated with work in progress as costs in excess of billings.            





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