M.J. Wood Associates, Inc. - Page 3

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            income tax deficiency of $486,399 and a section 6662(b)(2)1                                 
            penalty of $97,280 for the Christensens' 1990 taxable year.  A                              
            separate statutory notice of deficiency was mailed to petitioner                            
            M.J. Wood Associates, Inc. (M.J. Wood), on April 14, 1994,                                  
            determining an income tax deficiency of $94,640 and a section                               
            6662(b)(2) penalty of $18,928 for the fiscal year ending                                    
            September 30, 1990.  Petitions were timely filed in both cases.                             
                  Thereafter, petitioners became defendants in the criminal                             
            case captioned United States v. Lonnie C. Christensen Et Al.,                               
            docket No. COMMISSIONER-S-95-74-LDG (LRL) (D. Nev. 1997), which                             
            was commenced on April 7, 1997.  By the parties' choice, the                                
            civil income tax cases pending before this Court were generally                             
            inactive during pendency of the criminal proceedings.                                       
                  Petitioners' criminal indictments were issued on or about                             
            January 17, 1996.  Petitioners were charged with conspiracy,                                
            beginning in 1972 and continuing through February 1994, to                                  
            defraud the United States for the purpose of obstructing the                                
            assessment and collection of individual and corporate income                                
            taxes.  In addition, Mr. Christensen was charged with willfully                             
            filing false individual income tax returns for 1988, 1989, and                              
            1990 under section 7206(1), of which he was found guilty.  Mr.                              

                  1 Unless otherwise indicated, all section references are to                           
            the Internal Revenue Code in effect for the years under                                     
            consideration, and all Rule references are to this Court's Rules                            
            of Practice and Procedure.                                                                  

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