Charles A. Greene and Christine J. Greene - Page 5

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          Classic Gallery                                                             
               Petitioner called his business Classic Gallery, and the                
          corporation elected to file Federal income tax returns for the              
          business as an S corporation.  After the second or third year of            
          operations, the business began generating enough income to allow            
          petitioner to draw a salary.  Before 1978 petitioner's average              
          income was below $75,000.  After 1978 the company's profits                 
          "blossomed", generating for petitioner a very substantial six-              
          figure income in wages and dividends.                                       
               Over the years, Corman became petitioner's friend,                     
          associate, and chief adviser.  Corman came to be retained on a              
          monthly basis to provide accounting advice and services to                  
          Classic Gallery.  As petitioner's furniture manufacturing                   
          business prospered, Corman began to suggest to petitioner how his           
          earnings from the corporation might be invested.  Although Corman           
          presented various investment "possibilities" to petitioner, he              
          was not separately compensated as an investment counselor.                  
               Petitioner discussed the investment proposals with Corman,             
          reviewed materials that Corman presented, and evaluated them "a             
          number of different ways".  Although petitioner relied on Corman            
          to tell him if something was a "good investment", he did not                
          "just blindly accept" Corman's recommendations.  Petitioner                 
          rejected some investments presented to him by Corman.                       

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