Martin and Marion Abbene - Page 9

                                                 - 9 -                                                   

                  Mr. Abbene and Elena managed Blue Ribbon's day-to-day                                  
            operations.11  Blue Ribbon, however, had no paid employees during                            
            the years in issue, and Mr. Abbene kept no record of the number                              
            of hours that either he or Elena worked.                                                     
                  Mr. Abbene normally devoted time to Blue Ribbon after work                             
            and on weekends.  Mr. Abbene also spent much of his vacation, 2                              
            months each year, and holidays traveling with the horses for                                 
            shows.  While he was at work, Mr. Abbene left Elena in charge of                             
            Blue Ribbon's operations.                                                                    
                  Elena worked approximately 50 hours each week at Blue Ribbon                           
            where she was responsible for (1) the general care and                                       
            maintenance of the horses, (2) training, preparing, and riding                               
            the horses shown by Blue Ribbon in competitions, and (3)                                     
            providing riding lessons on behalf of Blue Ribbon.  Elena also                               
            had the authority to make purchases on behalf of Blue Ribbon,                                
            although she did not maintain or review any records concerning                               
            Blue Ribbon's expenditures.  Before 1989, Elena had no experience                            
            operating a business.  Elena did not attend college and had no                               
            formal business education.                                                                   
                  Mr. Abbene had business cards made, highlighting Elena's                               
            1989 Olympic Bronze Medal, to advertise the services offered by                              
            Blue Ribbon.  The cards were dispersed through the mail and given                            

            11    Mrs. Abbene had no active involvement in Blue Ribbon's                                 
            operations and did not take part in any of the decision making                               
            concerning its operations.                                                                   




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