Alexander M. Moye and Judy H. Moye - Page 14

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                    31, 1990.  Total liabilities included loans of $45,969.82 from                                                                                         
                    officers and shareholders.                                                                                                                             
                              Business cards for the police dog training business and                                                                                      
                    correspondence such as vendor and utility bills and marketing                                                                                          
                    brochures did not state that the business was incorporated.  Some                                                                                      
                    of those documents were prepared in the name of Southern Police                                                                                        
                    Dog Academy.                                                                                                                                           
                              Petitioners applied for a Federal identification number for                                                                                  
                    Rosewood Kennels, Inc., on March 12, 1991.                                                                                                             
                              2.        S Corporation Election                                                                                                             
                              On April 22, 1991, Rosewood Kennels, Inc., received a notice                                                                                 
                    from respondent accepting its S corporation election.                                                                                                  
                              3.        Petitioners' Income Tax Returns                                                                                                    
                              On June 25, 1991, petitioners and Oddo signed petitioners'                                                                                   
                    income tax return for 1990.  Petitioners reported the income and                                                                                       
                    expenses from the police dog training business on a Schedule C.                                                                                        
                    Petitioners reported that the business lost $159,426 in 1990.                                                                                          
                    Petitioners deducted the mortgage interest they paid on the                                                                                            
                    United Bank loan on that Schedule C.  They said the business was                                                                                       
                    "Rosewood Kennels, Inc. d/b/a Southern Police Dog Academy".                                                                                            
                    Petitioners filed their 1990 return on June 28, 1991.                                                                                                  
                              Oddo prepared an undated corporate return with zeros                                                                                         
                    throughout for Rosewood Kennels, Inc., Southern Police Dog                                                                                             
                    Academy, for 1990.                                                                                                                                     





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