William L. McCurley and Victoria J. McCurley, et al. - Page 3

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          amounts and for the years set forth above.  We hold that they are           
          liable with one exception stated herein.                                    


               3.  Whether petitioners William and Victoria McCurley,                 
          pursuant to section 6661(a), are liable for an addition to tax              
          for a substantial understatement with respect to their 1988                 
          return.  We hold that they are liable.                                      
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          William and Victoria McCurley, husband and wife, resided in                 
          Kennewick, Washington, at the time their petitions were filed.              
          Robert and Gayle Hall, husband and wife, resided in Yakima,                 
          Washington, at the time their petition was filed.  Messrs.                  
          McCurley and Hall each owned automobile dealerships at all                  
          relevant times.  Mr. McCurley owned 100 percent of Bill McCurley            
          Chevrolet, Inc., and McCurley Pontiac, Inc.  Mr. Hall owned 100             
          percent of Sunfair Chevrolet, Inc., and 75 percent of Greenway              
          Auto Plaza, Inc.                                                            
               Each dealership offered financing to prospective customers.            
          The dealership, as an agent for an insurance company, offered               
          credit life and/or credit health insurance policies to customers            
          who financed their purchases through the dealership.  The                   
          dealership retained as compensation a portion of the premium due.           
          The policies provided that the insurer would make payments on the           
          dealership loan in the event the insured became disabled and                




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