Floyd L. Garrett and Dorothy G. Garrett - Page 12

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               A.  Well, first of all I asked Mr. Garrett if he could                 
               come up with something to verify that basis in more                    
               detail.  He went--he came back and said that he had                    
               acquired these cars over years and years, and he had                   
               traded some, and he had improved some, and he didn't                   
               really have the detailed records.                                      
                    But I did require him to sign, not exactly an                     
               affidavit but something that was to the best of his                    
               ability.  And then I also, since I had known him for                   
               ten years, and I have a reputation as a CPA, I wanted                  
               to at least be satisfied that he had acquired enough                   
               net worth outside of the company to allow him to                       
               acquire that kind of inventory of vehicles.                            
                    So I did a little worksheet, kind of a mental                     
               worksheet, as to if that would be possible, and I                      
               decided that, yes, he would have had enough personal                   
               assets to acquire that.                                                
               Q.   So at that point, you were satisfied that he had                  
               the after-tax resources to have invested $800,000 in                   
               the cars he sold in 1988?                                              
               A.   Yes, I did.                                                       
               Q.   Okay.  Would you step us through the mental                       
               process you went through in proving that $800,000 basis                
               to yourself?                                                           
               A.   Well, just in--there is three aspects of that                     
               calculation, and the biggest one is that each year,                    
               pretty much from 1980 through '89, which is nine years,                
               we would bonus him out approximately $100,000 a year at                
               the end of the year to cover some of the items that we                 
               considered to be personal.                                             
                    And I presumed the majority of that was for muscle                
               cars, because he had a regular salary of 3,000 a month                 
               for his living expenses.  So that is approximately 8-or                
               900,000; after tax, it would be maybe $500,000.                        
                    That was the first and largest part of the                        
               calculation.  The second one was the loan balance.                     
               Even after these bonuses, he still had a loan balance                  
               with the company of in excess of $300,000.  And there                  
               again, I presumed that the majority of that was for                    
               these type of personal muscle cars.                                    

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