John B. Mathers, Sr. - Page 3

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               During the years in issue, petitioner served as president              
          and principal operating officer of Furniture Barn, Inc. (FBI).              
          Petitioner owned approximately 97 percent of the outstanding                
          stock of FBI.  Petitioner did not receive a salary from FBI                 
          during the years in issue.  FBI paid petitioner's personal                  
          expenses, including food, household expenses, and other living              
          expenses.  The following amounts represent expenditures by FBI              
          for the personal benefit of petitioner:                                     

                    Year                     Amount                                   
                    1982                     $36,511.39                               
                    1983                     53,743.85                                
                    1984                     60,469.07                                
                    1985                     54,681.48                                
                    1986                     33,599.64                                

          Petitioner also used corporate assets for personal purposes                 
          during the years in issue.                                                  
               Petitioner's son, John B. Mathers, Jr. (Mathers, Jr.),                 
          worked at FBI in sales management and served as vice president.             
          He received a salary from FBI for his services.  During the years           
          in issue, Mathers, Jr. wrote numerous checks from the FBI account           
          to pay his personal expenses.  Petitioner had knowledge of at               
          least some of these checks.  Petitioner had control over the                
          check writing of Mathers, Jr. but did not require Mathers, Jr. to           
          get approval before writing checks for his personal benefit.                
          Petitioner never told Mathers, Jr. that he was taking too much              
          money out of FBI.  On previous occasions, petitioner had helped             
          Mathers, Jr. through financially difficult times.                           



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