J. Brent Haymond and Janis S. Haymond - Page 5

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          brought them to Mr. Strong to prepare the tax returns.  Mrs.                
          Haymond did not have possession of InTex's financial records, nor           
          did she review them.                                                        
               In preparing the tax returns for the taxable year 1990, Mr.            
          Haymond and Mr. Strong discussed the sale of the stock.  Mr.                
          Strong requested all documentation related to the stock.  Mr.               
          Haymond provided Mr. Strong with a copy of the resolution, among            
          other items.  Mr. Strong knew that the commission had not been              
          paid.                                                                       
               Mr. Haymond did not instruct Mr. Strong as to the treatment            
          of the commission.  Mr. Strong "assumed that it was additional              
          basis because it was a commission paid [sic] on the--on the                 
          stock, on the sale [sic] of the stock."  He had understood from             
          reading the resolution that Mr. Haymond was "entitled to" a                 
          commission, and he assumed the commission would be paid in the              
          near future.  From InTex's books, Mr. Strong believed InTex was a           
          going concern and would have the cash to pay the commission.  He            
          analogized the commission owed to a note given for borrowed funds           
          to purchase property.  Based on this reasoning, Mr. Strong                  
          included the commission in the basis of the stock.                          
               Once Mr. Strong had prepared both InTex's and petitioners'             
          returns, Mr. Haymond and Mr. Strong met to review those returns;            
          Mrs. Haymond was not present.  They discussed each item on                  
          InTex's Schedule D, including the amount shown as the basis of              





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