David Bruce McMahan - Page 3

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            remained at Bear, Stearns & Co. until the summer of 1980, the                             
            year he founded MBMC.                                                                     
                  James Russell, a lawyer with expertise in tax, estate,                              
            corporate, and investment matters, was a special limited partner                          
            in charge of investment banking at MBMC.2  Mr. Russell first met                          
            petitioner in the summer of 1977 when petitioner approached him                           
            for legal advice regarding an upcoming business deal.  In the                             
            fall of that year, Mr. Russell went into business as petitioner's                         
            partner in various investments relating to computer application                           
            programs and oil and gas exploration.                                                     
                  Mr. Russell's responsibilities at MBMC included handling                            
            petitioner's personal tax matters.  He prepared and filed                                 
            petitioner's 1980 and 1981 Federal income tax returns and                                 
            represented petitioner before the Internal Revenue Service (the                           
            Service) in connection with those returns.3                                               
                  On April 14, 1983, Mr. Russell prepared and filed an                                
            application for an automatic extension of time to file                                    
            petitioner's 1982 Federal income tax return.  He attached                                 
            petitioner's check in the amount of $360,000, which represented                           
            Mr. Russell's estimate of petitioner's 1982 tax liability.  Mr.                           
            Russell advised petitioner that the extension request had been                            



            2Mr. Russell received his LL.B. from Harvard Law School and                               
            his LL.M. in taxation from New York University School of Law.                             
            3He also prepared petitioner's 1978 and 1979 tax returns.                                 




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