Robert A. Stanford and Susan Stanford - Page 9

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          did not receive this return, along with a further extension                 
          request, until February 28, 1992.                                           
               On their 1990 joint Federal income tax return, petitioners             
          reported subpart F income of, among other entities, Guardian Bank           
          and deficits in the earnings and profits of Guardian Services and           
          Stanford Financial, as follows:                                             

                                                       Deficits In                    
                                   Subpart F Income    Earnings & Profits             
          Guardian Bank            $2,789,722               ---                       
          Guardian Services             ---            ($1,251,891)                   
          Stanford Financial          ---                ($  154,474)                 
                                                                                     
                              Total   $2,789,722       ($1,406,365)                   

               As indirect owners of Guardian Bank and as required under              
          section 951, petitioners reported on their 1990 joint Federal               
          income tax return the above $2,789,722 subpart F income of                  
          Guardian Bank.  On their 1990 joint Federal income tax return,              
          petitioners also reduced this subpart F income of Guardian Bank             
          by the above $1,406,365 total deficits in the 1990 earnings and             
          profits of Guardian Services and of Stanford Financial.                     
               On their 1990 joint Federal income tax return, petitioners             
          also reported a $615,890 net operating loss carryforward                    
          deduction from 1989, which net operating loss arose, in part,               
          from petitioners’ reduction of reported 1989 $580,483 subpart F             
          income of Guardian Bank by reported $385,386 total deficits in              
          1989 earnings and profits of Guardian Services and of Stanford              
          Financial.                                                                  



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