Judith A. Madden - Page 3

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          1989, $6,885 in 1990, $2,795 in 1995, $4,419 in 1996 and $32,796            
          in 1997.                                                                    
               During 2000, petitioner was self-employed as a systems                 
          developer, operating under the name of Nikken Distributorship.              
          In 2000, Nikken Distributorship had gross receipts of $500 and              
          incurred $450 of business expenses which petitioner reported on             
          Schedule C, Profit or Loss from Business, of the joint return.              
               Before and for part of 2000, Mr. Sturges worked for Cisco              
          Systems Sales & Services, Inc. (Cisco), as a software engineer.             
          Mr. Sturges terminated his employment with Cisco in 2000.                   
               Mr. Sturges began working as a software engineer for Tiburon           
          Networks, Inc. (Tiburon), after he left Cisco.  Tiburon was an              
          affiliate of Nortel Networks, a Canadian telecommunications                 
          company.  Tiburon paid Mr. Sturges wages of $31,286.40 in 2000.             
          Tiburon also gave Mr. Sturges options to purchase 192,000 shares            
          of Tiburon stock over a 3-year period.                                      
               During his employment with Cisco, Mr. Sturges acquired stock           
          options to purchase Cisco stock.  From 1997 until he terminated             
          his employment in 2000, Mr. Sturges exercised a small number of             
          options each month.  When Mr. Sturges left Cisco, Cisco required            
          him to exercise (or lose) his remaining Cisco stock options.                
               Petitioner and Mr. Sturges engaged Paine Webber, a                     
          professional financial advisement firm, to assist and advise them           
          with respect to the exercise of the Cisco stock options.  Mr.               






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