Wally Findlay Galleries International, Inc. and Subsidiaries - Page 3

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          1981 through FY 1984 (taxable years at issue) WFGI was engaged in           
          the acquisition and sale of works of fine art through art                   
          galleries located in New York City, Palm Beach, Chicago, Beverly            
          Hills and Paris, France.  Operations in Paris were conducted in             
          the form of a French limited liability company, Wally Findlay               
          Galleries International, S.A.R.L. (French subsidiary), of which             
          WFGI owned 99 percent and a domestic subsidiary owned the                   
          remaining 1 percent. The French subsidiary commenced operations             
          in 1971.  The French subsidiary performed a number of functions             
          for the corporate group (Wally Findlay Group).  It operated two             
          Paris art galleries for exhibition and sale of paintings from               
          WFGI's inventory.  The advantages of the Paris location and a               
          series of highly celebrated exhibitions in the early years served           
          to enhance WFGI's international reputation.  The French                     
          subsidiary also served as the international buying office for the           
          Wally Findlay Group.  The WFGI annual report for the first year             
          of the French subsidiary's operations explained the benefits                
          expected from this arrangement:                                             
               Working from this office in the midst of the European                  
               art market, our ability to acquire important French                    
               Impressionist and Post-impressionist paintings, a vital                
               factor in our sales, has been greatly improved.  At the                
               same time, our contacts with contemporary artists have                 
               been expanded.  For the first time, we are in a                        
               position to work closely year-round with the European                  
               based artists whom we represent exclusively and to                     
               review new artists.  This makes it possible to control                 
               our inventory and to schedule a more far-reaching                      
               program of exhibitions for all our galleries.                          





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Last modified: May 25, 2011