Keith R. Basham - Page 3

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          W-2 issued to petitioner by Swink.  Apparently, petitioner was              
          required to reimburse Swink for certain trading losses and                  
          customer bad debts.  It is unclear whether the compensation                 
          reported on the Form W-2 is net of reimbursements petitioner made           
          to Swink for trading losses and customer bad debts.  Sometime in            
          1992 or 1993, petitioner discarded all records relating to 1989             
          that he might have kept.                                                    
               Respondent's Information Returns Master File transcript                
          indicates that two payors issued information returns to                     
          petitioner for 1989, one from Swink and the other from Worthen              
          Bank and Trust Co.                                                          
               The notice of deficiency upon which this case is based was             
          issued and mailed to petitioner on September 18, 1996.  In that             
          notice of deficiency, adjustments to petitioner's 1989 income               
          were made as though he did not file a Federal income tax return             
          for that year.  Specifically, respondent (1) increased                      
          petitioner's income by the amount of compensation reported on the           
          W-2 issued to petitioner by Swink; (2) increased petitioner's               
          income by $44 attributable to a distribution from Worthen Bank              
          and Trust Co.; (3) allowed petitioner a personal exemption                  
          deduction; and (4) allowed petitioner the standard deduction                
          applicable to a single individual.  Also in the notice of                   
          deficiency, respondent determined that the additions to tax under           
          sections 6651(a)(1) and 6654 are applicable.                                

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