AMW Investments, Inc. - Page 4

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                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulations of facts and attached exhibits are incorporated            
          herein by this reference.  Petitioner's principal place of                  
          business was in Durand, Michigan, when it petitioned the Court.             
          Petitioner filed a Form 1120, U.S. Corporation Income Tax Return,           
          for each year in issue using a fiscal year ended August 31 and an           
          accrual method of accounting.  The 1988, 1989, and 1990                     
          Forms 1120 were filed on August 15, 1991, March 6, 1992, and                
          July 17, 1992, respectively.                                                
               Petitioner was incorporated on August 24, 1977, to purchase            
          real property and to lease this property primarily to businesses            
          engaged in adult entertainment.  From its incorporation through             
          August 31, 1988, petitioner was a wholly owned subsidiary of                
          Dynamic Industries, Ltd. (Dynamic).  During the subject years,              
          Mr. Mohney owned all of petitioner's voting stock, and he was its           
          president.  At all times relevant herein, petitioner was a member           
          of an organization of over 50 businesses that were engaged in the           
          adult entertainment industry.  All of these businesses were                 
          wholly or partially owned by Mr. Mohney, either directly or                 
          indirectly through various trusts.                                          
               In 1966, Mr. Mohney had started acquiring (and operating as            
          sole proprietorships) numerous enterprises that were primarily              
          engaged in adult entertainment.  The assets of these enterprises            

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