David W. Hill - Page 3

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          operated with an annual budget between $1.2 million and $1.6                
          million.  In his capacity as director of property operations,               
          petitioner oversaw the entire operation of the department and               
          supervised as many as 70 employees, as well as a number of                  
          subcontractors.  These subcontractors performed various tasks at            
          Bay Point Yacht and Country Club that could not be performed by             
          employees of Bay Point, Inc.  One of petitioner's duties as                 
          director of property operations was to determine whether his own            
          employees could perform a specific task.  If petitioner found               
          that his own employees could not perform the job, he would then             
          retain a subcontractor on behalf of Bay Point, Inc., to complete            
          the work.                                                                   
               James Hall was a subcontractor retained by petitioner on               
          behalf of Bay Point, Inc.  During the years in issue, Mr. Hall              
          made a series of cash payments to petitioner in the following               
          amounts:  $142,377 in 1989; $76,450 in 1990; and $180,609 in                
          1991.  Petitioner received cash payments from Mr. Hall                      
          approximately every other week.  Petitioner did not report any of           
          the payments from Mr. Hall on his original Federal income tax               
          returns filed for the taxable years 1989, 1990, and 1991.                   
               On June 8, 1992, following an internal investigation of                
          petitioner’s department, the president of Bay Point, Inc.,                  
          William F. Spann, requested and received petitioner’s                       
          resignation.                                                                






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