American Underwriters, Inc. - Page 3

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               Unless otherwise indicated, section references are to the              
          Internal Revenue Code in effect for the subject years.  Rule                
          references are to the Tax Court Rules of Practice and Procedure.            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulated facts and exhibits submitted therewith are                   
          incorporated herein by this reference.  Petitioner's principal              
          place of business was in San Anselmo, California, when it                   
          petitioned the Court.                                                       
               Petitioner was organized by Alfred Roven (Mr. Roven) on                
          October 20, 1980, primarily to transact business in the                     
          securities market, buying and selling securities, bonds, and                
          derivatives, among other things.  Mr. Roven is petitioner's sole            
          shareholder, as well as its president and one of its two                    
          directors.  Joy Martin (Ms. Martin) is petitioner's other                   
          director, and she is its secretary and bookkeeper.                          
               Mr. Roven organized Kenilworth Corp. (Kenilworth), on                  
          January 12, 1982, to trade securities and to provide consulting             
          services on the trading of securities.  Mr. Roven owns 40 percent           
          of Kenilworth's stock, and its remaining stock is equally owned             
          by two of his children.  Kenilworth's taxable year ends on                  
          May 31, and it began filing a consolidated income tax return with           
          a lone subsidiary effective with its taxable year ended May 31,             








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