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Taxable Income
Fiscal Before Certain
Year Gross Sales Assets Adjustments
1989 $8,644,356 $4,119,578 $774,054
1990 10,283,552 5,106,452 1,154,903
1991 12,904,812 5,443,713 1,663,073
B. The Cummings Family
Mr. Cummings is married to Karen R. Cummings (Mrs.
Cummings). Their children are Grant, Bruce, Dwight D. (Deen),
Karen Ann, and Cynthia, who is married to Jim Medding (Medding).
1. Mr. Cummings
Mr. Cummings lived in Redmond, Washington, during the years
in issue. Mr. Cummings knew the technology that affected
petitioner's business. He was president and a director of
petitioner; Dacor, Inc. (Dacor), petitioner's management company
(see par. C-1, below); and Lasercolor, Inc. (Lasercolor), another
photographic processing business (see par. D, below). He had
offices at petitioner's Portland facility and at Lasercolor's
Bellevue, Washington, facility, near Seattle. Mr. Cummings did
not keep records of how much time he worked for petitioner or
Lasercolor. He was a shareholder and officer of Kadac, Inc.
(Kadac), petitioner's management company that succeeded Dacor
(see par. C-2, below). He reported on Kadac's income tax return
that he devoted all of his time to Kadac. He attended some of
petitioner's weekly management meetings. He helped decide which
equipment petitioner would buy for the color lab. Mr. Cummings
served on the boards of the International Prepress Association
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