William N. and Moira M. Carlstedt - Page 12

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                  Year                     Entity                  Hours                                 
                  1990                     Partnerships            1350                                  
                                           CDI                     396                                   
                                           CCI                     41                                    
                                           Encosys                 1                                     
                                           Other (includes                                               
                                           outside activities)  200                                      
                  1991                     Partnerships            1205.5                                
                                           CDI                     483.5                                 
                                           CCI                     100                                   
                                           Other                   166                                   
            The underlying notes from which petitioner had prepared the                                  
            diaries were disposed of prior to trial.                                                     
                  Petitioners filed joint Forms 1040, U.S. Individual Income                             
            Tax Return, for 1990 and 1991.  On Schedules E attached to their                             
            returns petitioners reported losses of $692,676 and $638,604, in                             
            1990 and 1991, respectively, as petitioner's share of passive                                
            losses from the partnerships.  Furthermore, for purposes of                                  
            section 469, petitioners classified their participation in the                               
            business activity of CDI in 1990 and 1991 as passive.  On that                               
            basis, petitioners reported as passive income their share of                                 
            taxable income from CDI in the amounts of $714,212 in 1990 and                               
            $596,642 in 1991 on the Schedules E.                                                         
                  On November 7, 1995, respondent issued a notice of                                     
            deficiency to petitioners for their 1990 and 1991 taxable years.                             
            Among other adjustments, respondent disallowed petitioners'                                  

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