Wy'East Color, Inc. An Oregon Corporation - Page 12

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               1 The parties agree that Dacor paid these amounts to Mr. Cummings in   
          1989 and that Dacor paid $72,115 to Dwight Cummings in its fiscal year 1989 
          (Apr. 1, 1988 to Mar. 31, 1989).                                            
               2 The parties stipulated that Kadac paid $70,000 to Grant Cummings in  
          1991 and that a Form W-2 for 1991 showed that Kadac paid him $68,900.04 in  
          1991.  We find that Kadac paid him $70,000 in 1991.  The $1,099.96 difference
          does not alter our analysis.                                                
               3 Respondent determined that Kadac paid $57,793 to Deen Cummings.      
          Petitioner contends that Kadac paid $57,500.  We accept respondent's        
          determination.  The $293 difference does not alter our analysis.            
          D.   Lasercolor, Inc.                                                       
               Lasercolor was a Washington corporation that did business in           
          Washington as Wy'East Color.  Mr. Cummings acquired Lasercolor in           
          1988.  He owned all of Lasercolor's stock during its fiscal years           
          ending March 31, 1990 and 1991.  Dacor filed a consolidated tax             
          return with Lasercolor for its fiscal year ending March 31, 1989,           
          on which Dacor reported that it owned Lasercolor.  Lasercolor did           
          not pay dividends during its 1989 fiscal year.                              
               Lasercolor paid the following amounts for officer                      
          compensation, salaries and wages, and management services:                  
                                                       Management                     
                                                       Services                       
               Fiscal         Officer        Salaries       Paid to                   
                Year          Compensation   and Wages       Kadac                    
               1989           $72,115        $206,002       unknown                   
               1990           none           113,534        $10,385                   
               1991           none           102,769        none                      
          E.   Other Related Corporations                                             
               During the years in issue, Mr. Cummings owned 30 percent of            
          Dynagraphics, a printing company in Portland, Oregon, that was              
          one of petitioner's clients.                                                





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