George A. and Marysue Coward - Page 3

            time that they filed their petition.  The pertinent facts are                                
            summarized below.                                                                            
                  George Coward (petitioner) was an investor in Washoe Ranches                           
            #7 LTD. (the partnership), a limited partnership formed to engage                            
            in the business of breeding cattle.  On December 20, 1978, Walter                            
            J. Hoyt III, as general partner, executed the Certificate and                                
            Articles of Limited Partnership for the partnership.  Mr. Hoyt                               
            signed the limited partnership agreement on behalf of each of the                            
            limited partners including petitioner.  The agreement stated that                            
            it was executed on January 1, 1978.  The agreement was filed with                            
            the county of Washoe, Nevada.                                                                
                  The partnership agreement provided that each limited partner                           
            would contribute cash to partnership capital in the amount set                               
            forth after his name.  No amount was shown on the agreement after                            
            any limited partner's name.  On December 28, 1978, petitioner                                
            made his first and only capital contribution to the partnership                              
            for the taxable year 1978 in the amount of $500.  The partnership                            
            records show that capital contributions to the partnership from                              
            the six limited partners totaled $2,750 for that taxable year,                               
            and all of the contributions were made on December 28, 1978.  On                             
            March 18, 1979, petitioner signed an agreement to purchase 12                                
            units of the partnership for $30,000 as his interest.                                        
                  Under the terms of the partnership agreement, the general                              
            partner was not to contribute capital to the partnership.  The                               
            general partner was responsible for managing the partnership.  In                            

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