Thomas B. Drummond - Page 7

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          McVeigh, Jr. (Mr. McVeigh), about the sale of the drawing in                
          question and inquired about establishing some type of retirement            
          plan.  Mr. McVeigh advised petitioner to consult with Earl                  
          Schoenborn about establishing a retirement plan.  The three of              
          them met and discussed the amount of the contribution that                  
          petitioner could make to a retirement plan for 1989 after taking            
          into account the approximate amount of petitioner's income and              
          expenses during 1989 from various sources, including the New Life           
          Center and the sale of the drawing in question.                             
               Sometime thereafter, petitioner chose to consult with                  
          another individual about establishing a retirement plan.  Peti-             
          tioner established a simplified employee pension (SEP) for 1989             
          to which he contributed $20,000.  Petitioner's contributions to             
          the SEP for 1990 and 1991 were $30,000 and $26,000, respectively.           
          Petitioner's Horse Activity and Cattle Activity                             
               Petitioner's Horse Activity                                            
               During the early 1970's, petitioner, who has at all relevant           
          times enjoyed equestrian activities, owned a horse, took riding             
          lessons, and learned how to train a horse (1) to perform at an              
          unspecified level in dressage and (2) to do low-level jumps,                
          provided that the horse had received some training in jumping.              
               In July 1988, petitioner, who did not have any formal                  
          training as a horse breeder or a horse trainer, purchased for               
          approximately $8,000 a five-year old thoroughbred gelding named             
          Moonshadow (Moonshadow) that had received some training in riding           

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