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          made a deposit of $85,000 on the purchase of the Bertram yacht by           
          using a check drawn on their Indian Head personal checking                  
          account.  The bill of sale for the Bertram yacht indicated that             
          the buyer was "SHIRLEY A. OLBRES, Trustee, Under a Trust Agree-             
          ment Dated: October 19, 1988, for the Benefit of:  The H.N.                 
          Nautical Trust (Tamara C. Olbres, Tyler M. Olbres, Jason A.                 
          Olbres)".  On October 26, 1988, Ms. Olbres withdrew $120,000 from           
          the 1988 Indian Head business savings account and purchased a               
          treasurer's check in the amount of $145,325, payable to Norwood             
          Marine, for a further downpayment on the Bertram yacht.  In                 
          addition, two receipts from Norwood Marine indicated that two               
          checks in the amounts of $535,383 and $3,500 were received from             
          Security Marine Creditcorp, which provided financing to petition-           
          ers for the purchase of the Bertram yacht.                                  
          Petitioners' Returns                                                        
               Petitioners filed returns for 1986, 1987, and 1988 that they           
          signed and that Mr. Dennett signed as return preparer.  In                  
          petitioners' Schedules C for those years, petitioners reported              
          gross receipts and net profits of Design Consultants, as follows:           
                      Year      Gross Receipts      Net Profits                       
                      1986        $740,990            $75,784                         
                      1987        1,235,069           83,502                          
                      1988        340,675             26,061                          
          On line four of Schedule C of petitioners' 1988 return (1988                
          Schedule C), petitioners reported $49,525 of "Other income",                
          which was compensation that White Star paid to Mr. Olbres during            
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