William Norwalk, Transferee, et al. - Page 8

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          Library service          --         --          --   1,000        --        
          Office expense      13,333    24,640    25,567    26,073    14,197          
          Employment agency  5,486        --          --          --          --      
          Payroll processing  767       1,067     659        --          --           
          Postage             4,546     6,940     6,944     7,441     7,684           
          Telephone           8,289     7,803     9,911     8,013     5,182           
          Travel              2,838     6,825     7,022     1,971     6,445           
          Tax processing costs   --          --          --  1,577  3,590             
          Advertising         1,718     2,551     1,755     4,449     4,094           
          Consulting fees   --         3,225        --          -- 40,000             
          Peer review expense   --   4,952        --          --          --          
          Pension administration    --  700       372       270       465             
          Legal & professional    450        --  8,986        --          --          
          Supplies            --          --      10,001        --    8,492           
          Equipment rental    631       219       7,459     1,808     5,611           
          Moving expenses   --    500  4,522        --          --                    
          Total expenses      674,023     918,171   1,004,080     997,750     553,575 
          Taxable income/loss (7,838)    (73,125)    (65,504)    (30,255)    177,608  

               From 1988 to 1992, the shareholders received the following             
          salaries from the corporation:                                              

          Year                     Mr. DeMarta          Mr. Norwalk                   
          1988               $98,024              $70,000                             
          1989               107,463               79,920                             
          1990               107,440               69,923                             
          1991               107,440               89,901                             
          1992                40,880               33,774                             

          A portion of the salaries paid to Messrs. DeMarta and Norwalk was           
          derived from bank loans guaranteed by the shareholders and from             
          loans made to the corporation by the shareholders.  At the                  
          beginning of the corporation's 1992 tax year, it had outstanding            
          loans from shareholders of $22,533.  At the end of the                      
          corporation's 1992 tax year, its liabilities included outstanding           
          loans from the shareholders of $96,678.                                     
               In addition to their salaries from the corporation, Messrs.            
          DeMarta and Norwalk received $23,320 and $16,680, respectively,             




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