William Ray Smith - Page 4

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          approximately $250 per year.  Petitioner's family living expenses           
          during the years in issue were approximately $6,300 per year,               
          which included property taxes of $1,272, $1,034, and $874 for               
          1992, 1993, and 1994, respectively, as well as the cost of food,            
          clothing, oil and fuel for lights and transportation, and other             
          miscellaneous expenses.                                                     
               Petitioner wishes to live on the gold standard and                     
          calculates his living expenses and income on the basis of the               
          American Eagle gold coin.  A 1-ounce American Eagle gold coin has           
          a face value of $50 and is legal tender at its $50 face value               
          amount.3  However, the coin's fair market value greatly exceeds             
          the $50 legal tender amount and will fluctuate with the price of            
          gold.  Occasionally, petitioner is forced to use ordinary                   
          currency, as in dealing with merchants in town, paying property             
          taxes, and ordering his daughter's textbooks.  On such occasions,           
          petitioner converts the gold coins into Federal reserve notes and           
          pays with cash or a money order.                                            
               Before the years in issue, petitioner purchased some gold-             
          mining claims and does mining on his own.  In 1993 and 1994,                
          petitioner earned a living by selling timber from the mining land           
          which he cut and sold to C&D Lumber Co. in Riddle, Oregon (C&D).            
          Petitioner insisted that he be paid in gold coins with a $50 face           


          3    Petitioner conceded that at the time of trial the gold                 
          price in Federal Reserve notes was approximately $350 per ounce             
          and that one American Eagle gold coin with a face value of $50              
          weighs 1 ounce.                                                             



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