Frank W. George - Page 5




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               On November 10, 1993, Jones-George deeded to petitioner her             
          one-half community property interest in the Scottsdale residence.            
          On November 27, 1993, petitioner deeded the Scottsdale residence             
          to Stepping Stone.  Petitioner received 100 capital units in                 
          trust property for the residence.                                            
               Petitioner lived in the Scottsdale residence with Jones-                
          George until she moved out late in 1993.  Petitioner lived in the            
          Scottsdale residence until it was sold after the years in issue.             
          He paid the monthly mortgage on the residence both before and                
          after he transferred the residence to Stepping Stone.  He did not            
          pay rent to, or have a lease or rental agreement with, Stepping              
          Stone for the use of the residence.  He did not use the                      
          Scottsdale residence differently after he transferred it to                  
          Stepping Stone.                                                              
          C.   Arivada Health Enterprises Trust                                        
               1.   Formation of Arivada                                               
               Petitioner and Chisum met several times in 1992 and 1993.               
          Chisum gave petitioner information about forming and using                   
          trusts.  Arivada was formed on June 26, 1993.  Chisum signed                 
          documents naming him trustee of Arivada beginning in 1993.                   
          Chisum was not an osteopathic or homeopathic physician.                      
               Petitioner did not consult an accountant or attorney to                 
          discuss the validity of the trust before he entered into the                 
          trust agreement.  Jones-George did not participate in the trust              






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