M.S. Food Stores, Inc. - Page 18

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                     Loans Receivable           Loans Payable                         
          TYE        Stockholder Fred Sutton    Mrs. Sutton   Fred Sutton             
          09-30-86   $42,760.61   $1,000.00     ---                                   
                     $ 1,536.17                                                       
          09-30-87   136,158.90   2,536.17      $87,964.71    ---                     
          09-30-88   148,637.57   2,536.17      60,505.01     12,000.00               
          09-30-89   128,877.95   2,536.17      59,908.40     57,000.00               
          The corporate petitioner reported liabilities to commercial                 
          lenders on these financial statements.                                      
               The corporate petitioner's U.S. Corporation Income Tax                 
          Returns show the following amounts at the end of the respective             
          taxable years:                                                              
            TYE          Loans to Shareholder     Loans from Shareholder*             
            09-30-86     $42,760.61               -0-                                 
            09-30-87     136,158.90               $87,964.71                          
            09-30-88     148,637.57               60,505.01                           
            09-30-89     128,877.95               59,908.40                           
            09-30-90     110,262.77               59,908.40                           
            *These were actually loans from Mrs. Sutton who was not a                 
          shareholder.                                                                
               The Suttons' North Carolina Intangible Personal Property Tax           
          Returns for the years 1987 through 1990 do not show any loans               
          from Mr. Sutton to the corporate petitioner, nor do they show any           
          loans from the corporate petitioner to Mr. Sutton.  Those                   
          intangibles returns do reflect a $90,000 loan from Mrs. Sutton to           
          the corporate petitioner; the value of that debt at the end of              
          each year was indicated as:                                                 
                              Year      Value                                         
                              1987      $60,505.01                                    
                              1988      60,505.01                                     
                              1989      59,908.40                                     




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