Estate of Donald H. Ray, Deceased, Patricia G. Ray, Independent Executrix, and Patricia G. Ray - Page 10

                    As stated above, the government's offer to settle                 
               the above-referenced cases, including the penalty                      
               portion, will expire on May 6, 1991.  This deadline                    
               will not be extended.  However, if a partner of Valley                 
               Cable, Ltd. properly accepts the offer, by law you will                
               be entitled to what is known as consistent settlement                  
               for a period of 60 days after the government executes                  
               that partner's Form 870-L(AD).                                         
                    I sincerely hope that this letter eliminates any                  
               confusion which may have been caused by the "form"                     
               letter.  As I am the attorney for the government, I                    
               expect that you will consult someone before accepting                  
               my word for all of the above.  If you have any                         
               questions, however, please contact the undersigned                     
               * * *.                                                                 
          When Breese received the Balboni letter, he still was overseeing            
          RDB's investment activities.                                                
               The partners of RDB met with William Podsednik, Jr.                    
          (Podsednik), a certified public accountant who had advised them             
          on various matters since 1988, to discuss what options were                 
          available and whether to accept respondent's proposal.  RDB,                
          through its partners, decided to "accept" respondent's proposal.            
          Mrs. Ray, acting on behalf of RDB, executed the Form 870-L(AD) on           
          May 2, 1991.  Mrs. Ray executed the Form 870-L(AD) because she              
          held a majority interest in RDB.  RDB forwarded the executed Form           
          870-L(AD), which applied to the 1983 and 1984 taxable years, to             
          Redding, who forwarded the document to respondent.                          
               On May 6, 1991, Redding delivered to Palka a letter dated              
          May 6, 1991.  The relevant portion of the letter states:                    
               Dear Mr. Palka:                                                        
                    Attached are separate envelopes containing                        
               settlement acceptances for:                                            

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