Charles A. Dennis and Alison M. Dennis - Page 5

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          While he denies that he received a $3,577 discount, he                      
          acknowledges that he may have received a discount, but he does              
          not know the size of it.  Petitioner did not put into evidence              
          the insurance policies, evidence as to his basis in such                    
          policies, the cost, or the fair market value of such policies.              
          Commission Expense                                                          
               Respondent determined that petitioners overstated the                  
          commission expense shown on Schedule C of their 1989 Federal                
          income tax return by $403.  Petitioner testified that he                    
          presented respondent with substantiation of the $403 deduction.             
          No such substantiation was introduced into evidence at trial.               
          Advance Commissions                                                         
               Petitioner was an insurance sales agent for American Service           
          Underwriters, Inc. (American), for the years 1988 through 1991.             
          Petitioner was paid advance insurance sales commissions in the              
          amounts of $93,413, $17,839.79, $51,161, and $42,529 for the                
          1988, 1989, 1990, and 1991 tax years, respectively.  Under                  
          petitioner's contract with American, he would receive a monthly             
          draw against his future commission income.  Petitioner signed a             
          note, dated July 14, 1986, which made him personally liable on              
          the advance commissions, payable on demand.  Regarding such                 
          personal liability, the contract with American provided:                    
                    7.  INDEBTEDNESS:  Any and all indebtedness of any                
               kind or nature owed by [petitioner] to [American] shall                
               be and serve as a first lien on any commissions due or                 
               to become due said [petitioner].  [American has] the                   
               right and may at any time elect to withhold or offset                  

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