Sam E. Scott - Page 4

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               Sometime during the late 1980's, the firm adopted a new                
          partnership agreement that granted partners only income interests           
          in the firm rather than specific interests in the firm's assets.            
          Partners under the old partnership agreement were bought out by the         
          partnership.  Thus, under the new partnership agreement, partners           
          did not make capital contributions when  they  entered  the                 
          partnership, and received no liquidating distributions when they            
          left.  The income interests were based on an annual evaluation of           
          each partner through a point system used by the firm's compensation         
          committee.  In 1990, petitioner had an 8.86-percent interest in the         
          partnership.                                                                
               On January 2, 1991, petitioner gave notice of his termination          
          from the firm, effective retroactively to December 31, 1990.                
          Petitioner then left Heidelberg & Woodliff, and together with               
          several other individuals who had earlier left the firm, started a          
          new law firm.  At the time petitioner left Heidelberg & Woodliff,           
          he was the firm's largest producer.                                         
               Petitioner's 1990 Schedule K-1 on Form 1065 (Partner's Share           
          of Income, Credits, Deductions, Etc.) from Heidelberg & Woodliff            
          reported petitioner's capital account adjustments as follows:               
               (a) Capital account at        $(21,369)                                
                    beginning of year                                                 
               (b) Capital contributed            ---                                 
                    during year                                                       








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