Loren F. Paullus and Donna Paullus - Page 2

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          6662(a)1 in the amount of $10,690.  Respondent also determined a            
          deficiency in petitioner Ridgemark Corp.’s 1989 Federal income              
          tax in the amount of $2,488,051 and a penalty under section                 
          6662(a) in the amount of $497,610.                                          
               After concessions, the issues remaining for our                        
          consideration are:  (1) Whether real property held and exchanged            
          in 1989 by petitioner Ridgemark Corp. qualifies for income tax              
          deferral pursuant to section 1031; and (2) whether petitioners              
          Ridgemark Corp. or Loren F. and Donna Paullus are separately                
          liable for penalties under section 6662(a).                                 
                                  FINDINGS OF FACT2                                   
               Petitioner Ridgemark Corp. (Ridgemark) is incorporated, and            
          its principal place of business at the time its petition was                
          filed was Hollister, California.  Petitioners Loren F. and Donna            
          Paullus (petitioners), at the time their petition in this case              
          was filed, resided in Paicines, California.  Loren F. Paullus               
          (Paullus) was president of Ridgemark from 1971 until March 1992.            
          He also served on Ridgemark’s board of directors.                           
               Paullus owned and operated a 110-acre turkey ranch in                  
          Hollister, California, which he considered developing into a golf           

               1 Unless otherwise indicated, all section references are to            
          the Internal Revenue Code in effect for the taxable year under              
          consideration, and all Rule references are to this Court’s Rules            
          of Practice and Procedure.                                                  
               2 The parties’ stipulation of facts and exhibits are                   
          incorporated in this opinion by this reference.                             

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