Carl J.D. Bauman and Margaret A. Bauman - Page 3

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               (2)  Whether notes ERL issued with respect to advance                  
          royalty payments due under a lease agreement represented bona               
          fide indebtedness.  We hold that they did not.                              
               (3)  Whether annual payments ERL agreed to pay under a lease           
          agreement were properly accrued and deducted as advance royalties           
          due under a minimum royalty provision described under section               
          1.612-3(b), Income Tax Regs.  We hold that they were not.                   
               (4)  Whether ERL was engaged in an activity for profit.  We            
          hold that it was not.                                                       
               (5)  Whether petitioners have established their entitlement            
          to various other deductions stemming from ERL’s mining operations           
          pursuant to section 183(b).  We hold that they have not.                    
               (6)  Whether petitioners are liable for the addition to tax            
          under section 6653(a) for taxable year 1980 and under section               
          6653(a)(1) and (2), for taxable years 1981 and 1982.  We hold               
          that they are.                                                              
               (7)  Whether the increased interest rate attributable to               
          tax-motivated transactions under section 6621(c) applies.  We               
          hold that it does to the extent stated herein.                              
               (8)  Whether petitioners are liable for the addition to tax            
          under section 6651(a)(1) for failure to file their 1982 tax                 
          return by the prescribed date.  We hold that they are.                      
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the exhibits attached thereto are              

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