AJF Transportation Consultants, Inc. - Page 4




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          1954.  They separated in the fall of 1985, and on April 6, 1989,            
          they entered into a Separation Agreement, Support and Property              
          Settlement (Separation Agreement).                                          
               Under the Separation Agreement, Ferrentino was obligated to            
          pay Carol $376,000 over 8 years.  Specifically, Ferrentino was              
          required to pay Carol Ferrentino $22,000 per year from 1989 to              
          1992, and was thereafter obligated to pay at least $22,000 per              
          year until the remainder of the obligation was satisfied.                   
          Ferrentino has not paid all the amounts reflected in the                    
          Separation Agreement.  At various times between 1989 and 1991,              
          Ferrentino asked Carol to modify their Separation Agreement, or             
          forbear his obligation to pay the required amounts.  Ferrentino             
          told Carol that she would recognize a greater return on her money           
          if she allowed Ferrentino to keep the funds owed invested in AJF.           
          Their divorce became final on May 4, 1990.                                  
               AJF is a New York corporation with principal offices in                
          Williamsville, New York, at the time the petitions were filed.              
          AJF is involved in the business of furniture delivery and is a              
          cash receipts and disbursement method taxpayer.  AJF's employees            
          were mainly drivers, helpers for loading, helpers for drivers of            
          home deliveries, and tractor-trailer drivers.                               
               During the years in issue, AJF earned income by performing             
          services for J.C. Penney Company, Inc. (J.C. Penney), pursuant to           
          a Delivery Service Agreement (Contract) dated March 6, 1987.  The           
          Contract required AJF to deliver furniture to customers of J.C.             
          Penney and transport furniture for J.C. Penney from various                 

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