William G. and Vivian Loomis - Page 2

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                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated, and the stipulation            
          of facts and attached exhibits are incorporated herein by this              
          reference.                                                                  
               Petitioners resided in Lind, Washington, at the time of the            
          filing of their petition.  Petitioners timely filed their joint             
          1991 Federal income tax return with the Internal Revenue Service            
          Center at Ogden, Utah.  Petitioners reported their income using             
          the cash method of accounting.                                              
               During 1991, petitioners engaged in the business of farming.           
          Specifically, they grew and sold grain.  They have been in the              
          business of farming for over 25 years.  In October and November             
          1991, petitioners entered into deferred payment contracts (the              
          contracts) with the Union Elevator Warehouse Co. (Union                     
          Elevator).  Pursuant to the contracts, title to the grain passed            
          to Union Elevator at the time of sale.  However, petitioners                
          contracted for payment to occur the following year.  One of the             
          contracts with Union Elevator, which is representative of all the           
          contracts at issue, provides:                                               
               The Seller agrees to sell and Buyer agrees to buy from                 
               Seller the following commodities and both agree to                     
               abide by the terms and conditions listed below:                        
                    Quantity:      2,000 BU.                                          
                    Commodity:     Soft white wheat                                   
                    Price:         4.00                                               
                    Price basis:   FOB whse                                           
                    Title passes on: 11-22-91                                         
                    Payment date:   Jan 1992                                          




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