Sam Kong Fashions, Inc. - Page 10

                                       - 10 -                                         
          Y. Ling, P.C., created this depreciation schedule from a list of            
          equipment prepared by Mr. Kong.  Mr. Kong’s list showed that Sam            
          Kong Fashions purchased the following pieces of equipment:11                
                                   No. of              Purchase price                 
               Equipment           machines            per machine                    
               Button machine      1                   $2,300                         
               Pocket opener       Unknown             6,500                          
               machine                                                                
               Two needles         1                   2,000                          
               sewing machine                                                         
               Twelve needles      1                   2,900                          
               sewing machine                                                         
               Sewing equipment    2                   1,900                          

               During the taxable years of 1994 and 1995, Sam Kong Fashions           
          employed 10 to 20 full- and part-time employees.  Sam Kong                  
          Fashions paid some employees partially by check and partially in            
          cash.  An employee of the corporation, Bi Ling Wu, received cash            


               11 On brief, petitioners assert that Mr. Kong or Sam Kong              
          Fashions purchased the following equipment:                                 
                                   No. of         Total                               
               Equipment           machines        purchase price                     
               Button machines     2              $2,008 ea.                          
               Sewing machines     22-23          1,800 ea.                           
               Other machines      3              2,300 ea.                           
               Other machines      6-7            1,900 ea.                           
               New button          2              2,100                               
               machines                                                               
               Used button         1              1,500 ea.                           
               machine                                                                
          Petitioners argue that they are entitled to additional                      
          depreciation deductions of $14,263 and $22,821 in 1994 and 1995,            
          respectively.                                                               
                                                                                     





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