Humes Houston Hart - Page 3

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          exhibits are incorporated herein by this reference.  At the time            
          the petition was filed, petitioner maintained a permanent legal             
          address in Waynesville, North Carolina.                                     
          1.  Dealer, Trader, or Investor                                             
               During the years in issue, petitioner was employed full time           
          as an information systems engineer--first by General Electric Co.           
          until August 1988 and then by Systems Planning Corp. until March            
          1989.  Petitioner began investing in the stock market in 1975.              
          Until June 1987, petitioner considered himself an investor, after           
          which he considered himself a "securities trader and dealer".               
          Beginning with his 1987 individual Federal income tax return,               
          petitioner reported all activity relating to his stock purchases            
          and sales, such as dividend income, investment expenses, and                
          gains and losses, on Schedule C.                                            
               Petitioner considered his stock activity a part-time                   
          endeavor during his full-time employment with General Electric              
          Co. and Systems Planning Corp.  Petitioner committed                        
          approximately 10-20 hours of his free time each week to this                
          activity.  Petitioner listened to the radio for stock reports and           
          prices during his lunch hour.  During the evenings at home, he              
          studied newspaper quotations, books, magazine articles, ran                 
          commercial software on his computer, and analyzed stock market              
          data.  Petitioner gave his trading instructions to his broker in            
          the morning, prior to the market opening.                                   

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