William O. Harrison - Page 12

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                  In July or August 1989, petitioners received a                      
             statement referred to as the "W.O. Harrison Income                       
             Statement Cash Basis 1988" that reports the following                    
             income and expenses from the cattle feeding business for                 
             1988:                                                                    
             Income:                                                                  
             Sale of cattle                          $1,880,166.94                    
             Cost of cattle sold                      1,123,070.95                    
                                                    757,095.99                       
             Expenses:                                                                
             Interest                                                                 
                  Leadership Banks    $52,360.77                                      
                  Ralph Grounds       9,500.00                                        
             Futures loss             4,584.38                                        
             Feed expense             402,862.12                                      
             Total expenses                            469,307.27                     
             1988 Taxable income                     287,788.72                       

             Petitioners and their accountants were surprised by the                  
             amount of income shown on this statement.  Petitioner's                  
             participation in this business came to an end at the close               
             of 1988.                                                                 
                  In August 1989, petitioners' accountants filed, on                  
             their behalf, Form 2688, Application for Additional                      
             Extension of Time To File U.S. Individual Income Tax                     
             Return, requesting an additional extension of time to                    
             file petitioners' 1988 return.  The Form 2688 gives the                  








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