William Ray Smith - Page 5

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          value, rather than in Federal Reserve notes.  To accommodate                
          petitioner and to facilitate the sale, C&D contacted Gerald                 
          Merfeld (Merfeld), the owner of Alexander Coin Shop (the coin               
          shop) to buy gold coins.  For each transaction, C&D calculated              
          the volume and dollar value of the timber that petitioner wanted            
          to sell, ordered and purchased the gold coins from the coin shop            
          in an equivalent amount based on the New York Commodity Exchange            
          price of gold, and delivered the gold coins to petitioner in                
          exchange for his timber.  No other customers required C&D to pay            
          for timber in gold coins, and the only business C&D did with the            
          coin shop was with respect to the transactions engaged in for               
          petitioner.                                                                 
               On March 3, 1993, C&D received $1,770 worth of logs from               
          petitioner and, in exchange, paid petitioner five gold coins.  On           
          March 29, 1993, C&D received $1,050.45 worth of logs from                   
          petitioner and, in exchange, paid petitioner three gold coins.              
          On April 6, 1993, C&D received $1,626 worth of logs from                    
          petitioner and, in exchange, paid petitioner three gold coins.              
          On May 6, 1993, C&D received $13,365 worth of logs from                     
          petitioner and, in exchange, paid petitioner 36 gold coins.  For            
          1993, petitioner incurred $300 in expenses for the hauling of               
          logs from his property to C&D.  In 1994, petitioner sold $1,635             
          worth of logs to C&D in exchange for gold coins.4                           


          4    The record does not indicate the number of gold coins                  
          petitioner received in this transaction.                                    



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