J. Michael Joly and Bonnie B. Joly, Jody Steven Joly, and David Andrew Joly - Page 5

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               The corporation did not maintain books and records by which            
          its shareholders' respective bases in their stock could be                  
          determined, primarily as a result of Michael's failure to keep              
          such records.  Michael, Jody, and David have not proved their               
          bases in their corporate stock, other than zero, as of the                  
          beginning of their taxable years in issue.                                  
               In the statutory notice of deficiency, respondent determined           
          that Michael contributed $35,800, $68,413.75, and $43,696 with              
          respect to his stock in the corporation during 1992, 1993, and              
          1994, respectively, and has since conceded that Michael                     
          contributed an additional $12,964 during 1992.  Jody and David              
          made no contributions with respect to their stock.  Petitioners             
          have not disproved respondent's determinations of their                     
          contributions with respect to their stock.  The amounts                     
          determined by respondent will, therefore, be used in the Rule 155           
          computation.                                                                
               Michael caused the corporation to regularly issue checks               
          from its bank account in payment of the family members' personal            
          expenses.  Relying on the corporation's bank statements,                    
          respondent determined that the following amounts were paid to or            
          on behalf of the corporation's shareholders:                                
                    Year      Michael      Jody       David                           
                    1992    $83,526.53     ---    $25,784.81                          
                    1993     98,515.43   $19,224      ---                             
                    1994     65,082.10    23,415      ---                             






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