Law Offices--Richard Ashare, P.C. - Page 4




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          Bess.  Petitioner has two officers:  Mr. Ashare (president and              
          treasurer) and Mrs. Ashare (secretary).  Mr. Bess is petitioner's           
          (and Mr. Ashare's) principal tax adviser; among other things, Mr.           
          Bess advised Mr. Ashare on petitioner's incorporation in 1974.              
               Mr. Ashare has focused almost exclusively on one case (the             
          Gentile case) during his employment by petitioner.  In that case,           
          Mr. Ashare, on behalf of petitioner, represented a class of 9,000           
          to 10,000 persons known as the Policeman and Fireman Retirement             
          System of the City of Detroit.  The class retained petitioner on            
          a contingent fee basis to sue the city of Detroit (the city) for            
          a correct computation of employee pension benefits.                         
               In 1989, following prolonged litigation, the city agreed to            
          pay the class $70 million to settle the Gentile case.  The court            
          overseeing the litigation awarded petitioner $12,567,623 of the             
          settlement proceeds as legal fees.  Petitioner received these               
          fees from 1989 through 1992.  Petitioner reportedly paid                    
          compensation of $10,492,500 to Mr. Ashare during the same years.            
          Except for its work on the Gentile case, petitioner's workload in           
          and after 1990 was and is minimal.  Petitioner generally began to           
          wind down its business after it settled the Gentile case, and its           
          only case as of December 31, 1993, was the Gentile case.                    
               Petitioner reported on its 1993 Form 1120, U.S. Corporation            
          Income Tax Return, that it paid Mr. Ashare $1,750,000 in                    
          compensation.  Mr. Ashare lent petitioner $916,756, and                     





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