Billie and Florence Lykins - Page 4

          payments due Tag Coal under the parties' contract.  Tag Coal                
          filed mechanic's liens in an effort to collect these amounts.               
               The Commissioner notified Mr. Templeman and Mr. Adkins that            
          if Tag Coal did not pay its employment tax liability, then the              
          Internal Revenue Service (IRS) would proceed to collect such                
          liability from J & M and its assets.2                                       
               Sometime prior to August 27, 1984, Mr. Adkins indicated that           
          he wanted to withdraw as a partner from J & M.  Mr. Adkins and              
          Mr. Templeman discussed the possibility of Mr. Templeman's buying           
          Mr. Adkins' interest in the partnership.  Mr. Templeman also                
          discussed the situation with petitioner.  Petitioner expressed an           
          interest in purchasing Mr. Adkins' partnership interest.  At some           
          point prior to August 30, 1984, petitioner and Mr. Templeman                
          orally agreed to become equal partners in J & M.                            
               On August 27, 1984, Mr. Adkins agreed to transfer his                  
          50-percent partnership interest in J & M to Mr. Templeman.  In              
          exchange, Mr. Templeman agreed, inter alia: (1) To assume and pay           
          all delinquent taxes by August 30, 1984, and (2) to relieve Mr.             
          Adkins of all liabilities relative to both J & M and Tag Coal.              
          Although an agreement was executed, it was never consummated and            
          was effectively abrogated by the parties.                                   

          2 As responsible officers of Tag Coal, Mr. Templeman and Mr.                
          Adkins would be liable for the 100-percent penalty under sec.               
          6672, and the IRS was of the view that their personal assets,               
          including their partnership interests in J & M, would be subject            
          to distraint.                                                               

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