Shigenori Kudo and Motomi Kudo, et al. - Page 17

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          Berkeley restaurant in June 1989.  In 1990 and 1991, Toraya                 
          operated only the Post Street restaurant.                                   
               During 1988 through 1991, Akiko worked at the Post Street              
          restaurant, usually as a hostess.  When the restaurant was busy,            
          however, she would write orders.  During 1988 through 1991,                 
          Yoshinori worked mostly at the Post Street restaurant, as a chef,           
          although he sometimes worked also at the Berkeley restaurant.  In           
          1990 and 1991, Akiko or Motomi handled the cash at the Post                 
          Street restaurant.                                                          
               During the years in issue, the Takaos owned a two-thirds               
          interest in the Toraya Apartments.                                          
               The Takaos' tax returns for 1989 through 1991 indicate                 
          Yoshinori's occupation as "Retired".  The Takaos' tax returns for           
          1990 and 1991 indicate Akiko's occupation as "Retired".                     
               The Takaos reported the following items of taxable income              
          (or loss) on their tax returns for the years 1988 through 1991:             
                          Amount                                                      
          Item                 1988       1989       1990       1991                  
          Wages               $7,675     $6,440     $5,000     $4,800                 
          Interest            45,299     50,643     46,553     40,999                 
          Dividends             --         --         --         --                   
          Refunds              2,388       --          528        264                 
          Sch. C income         (159)       699        857    (14,150)                
          Capital gain                                                                
          (or loss)         (3,000)      --       (3,000)    (3,000)                  
          Other gains                                                                 
          (or losses)         --         --         --      (12,500)                  
          IRA distributions                                     3,371                 
          Sch. E income       15,230        174     (7,116)     5,317                 
          Social security       --         --           87       --                   
          Total             67,433     57,956     42,909     25,101                   





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