Alexander M. Moye and Judy H. Moye - Page 13

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                    I.        Oddo's Discovery That Bischoff Had Filed the Articles of                                                                                     
                              Incorporation                                                                                                                                
                              On October 11, 1990, Oddo called Mr. Moye and suggested that                                                                                 
                    it was time to incorporate the police dog training business                                                                                            
                    because it was the end of its first quarter of operations.  Mr.                                                                                        
                    Moye told Oddo to call Bischoff.  Oddo called Bischoff's office.                                                                                       
                    Bischoff's secretary told Oddo that Bischoff had already                                                                                               
                    incorporated petitioners' police dog training business.  Oddo                                                                                          
                    decided to keep the books as if the police dog training business                                                                                       
                    were a sole proprietorship until the end of the year.  The record                                                                                      
                    does not indicate whether Oddo discussed this with petitioners.                                                                                        
                    J.        Bank Account, Business Records, and Tax Returns                                                                                              
                              1.        Business Bank Account and Records                                                                                                  
                              In 1990, petitioners conducted all of the banking for their                                                                                  
                    police dog training business through a bank account which was in                                                                                       
                    their individual names.                                                                                                                                
                              Oddo prepared a general ledger and general journal for                                                                                       
                    Southern Police Dog Academy for January 1 to December 31, 1990.                                                                                        
                    Under "Loans - officers & shareholders", the ledger and journal                                                                                        
                    lists several loans from petitioners.                                                                                                                  
                              On June 26, 1991, Oddo sent to petitioner at "Rosewood                                                                                       
                    Kennels d/b/a Southern Police Dog Academy" a balance sheet and                                                                                         
                    income statement for Southern Police Dog Academy as of December                                                                                        








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