Inverworld, Inc., et al. - Page 198

                                                 - 53 -                                                   
                  Clients establishing an offshore corporation or trust were                              
            charged fees for the service directly against their accounts.                                 
            LTD’s gross receipts derived from charging an "opening expense"                               
            and an "annual expense".  LTD’s direct costs were its payments to                             
            the third party lawyers and fiduciaries.  The gross receipts and                              
            direct costs relating to LTD’s "Client Incorporation Fees" for                                
            each taxable year are as follows:                                                             
                        TYE June 30        Gross Receipts    Direct Costs                                 
                        1986               $147,951                 $18,286                               
                        1987               363,014                  126,855                               
                        1988               290,518                  161,037                               
                        1989               404,286                  227,697                               
                        g.     Legal Advice Income                                                        
                  In an operating manual under the heading, "Legal Advise"                                
            (sic) LTD described its services regarding the creation of                                    
            offshore corporations and trusts.  The record reveals only that                               
            LTD derived gross receipts relating to "Legal Advice Income".                                 
            LTD’s direct costs were the commissions that it paid to promoters                             
            for counseling clients regarding offshore corporations or trusts.                             
            The gross receipts and direct costs relating to LTD’s "Legal                                  
            Advice Income" for each taxable year are as follows:                                          
                        TYE June 30        Gross Receipts    Direct Costs                                 
                        1988               $8,630             $3,453                                      
                        1989                     (328)              5,272                                 
                        h. Letters of Credit                                                              
                  LTD issued, either directly or through a bank, letters of                               
            credit to Mexican banks to secure loans for its clients.  The                                 




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