Verl W. and Frances M. Haderlie - Page 4

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          petitioner was drawn on an account in the name of "Stable                   
          Reserve, Inc."  Petitioner instructed Schwab to delay the deposit           
          of petitioner's $40,653 premium check to Royal for a few days in            
          order to permit petitioner's deposit of the $40,653 Stable                  
          Reserve check from Schwab to fund petitioner's check.                       
               In addition to remitting the two checks, petitioner signed a           
          document that contained the recitation that the $40,653 check               
          payment to him from Stable Reserve (Schwab) was a nonrecourse               
          loan.  Petitioner and Schwab understood that the signed document            
          reciting the existence of a nonrecourse loan was prepared and               
          executed in the event that the Internal Revenue Service looked              
          into their insurance transaction and that the document had no               
          substance or effect.  Beginning in 1991, petitioner and his                 
          beneficiary(ies) had the benefit of $1,250,000 in life insurance            
          coverage from Royal.  The coverage was under a universal life               
          policy, which differs from a whole life policy in that a                    
          universal life policy more closely reflects current interest                
          rates thereby improving the accumulation of cash value.  The                
          $40,653 premium paid by petitioner was competitive with the                 
          premium charged by insurance companies other than Royal.  Schwab,           
          in turn, was entitled to a commission approximating 118 percent             
          of the $40,653 1-year's premium on petitioner's Royal life                  
          insurance policy.                                                           

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