Northwestern Indiana Telephone Company - Page 19

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            NITCO as a limited partner in the RSA #1 limited partnership.                              
            Under the original RSA #1 partnership agreement entered in mid-                            
            1989, NITCO and the other partners had agreed that subsidiaries                            
            or affiliates of a partner would be allowed to assume the                                  
            partner’s rights and obligations in and to the partnership.                                
                  In 1990, Serv-U-Cellular received $750,000 as a result of                            
            the agreement to cede the northern portion of the rural                                    
            statistical number one area to Ameritech.  NITCO received the                              
            $750,000 from Ameritech and paid it to Serv-U-Cellular.                                    
                  Pursuant to Mr. Mussman's plan, Serv-U-Cellular was to be                            
            owned individually by him and Rhys.  Mr. Mussman was to own 6                              
            percent and Rhys was to own 94 percent of Serv-U-Cellular's                                
            outstanding shares of stock.                                                               
                  Mr. Mussman subsequently decided to abandon his plan that he                         
            and Rhys individually own Serv-U-Cellular, as a result of the                              
            Internal Revenue Service’s (IRS) commencement of the examinations                          
            that led to the instant proceedings.  On its 1990 return dated                             
            September 12, 1991, NITCO reported in its income $696,772 of the                           
            $750,000 payment that Serv-U-Cellular had received from                                    
            Ameritech.  Attached to its Form 1120 for the tax year 1991,                               
            Serv-U-Cellular notified the IRS of the termination of Serv-U-                             
            Cellular's S corporation status as a result of the transfer of                             
            all its shares to NITCO on January 1, 1991.  However, on its                               
            annual reports for 1990, 1991, and 1992, to the FCC and the                                
            Indiana Utility Regulatory Commissioner (IURC), NITCO did not                              
            report that it had any subsidiaries.                                                       



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