Leema Enterprises, Inc. - Page 30




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          losses of $4,307,515.  They offset his long-term capital gain of            
          $2,668,910 incurred in the previous January, leaving him with a net         
          capital loss of $1,826,589.  This amount was used to offset other           
          capital gains and to add to his capital loss carryover.                     
               Dr. Richartz also retained and carried unrealized income of            
          $1,857,057 in the "gain" legs of his 1982 stock forwards into his           
          next taxable year or the year following.                                    
               Dr. Richartz's reported ordinary losses from Merit stock               
          forwards in 1982, compared to his taxable income in the same year,          
          were as follows:                                                            
               T.I.           Merit     A.G.I.    Loss % of A.G.I.                    
          Per Return     Losses            w/o Loss    w/o Merit Loss                 
          $2,8871      ($191,792)      $194,679        99%                            
               1  Dr. Richartz's adjusted gross income was $208,894.  He              
          deducted Merit stock forwards cancellation fees of $191,792 for             
          that year, however, reducing his income by that amount.                     
                    (3)  1983 Merit Transactions                                      
               In 1983, Dr. Richartz neither added to nor subtracted from his         
          cash account for the stock forwards account.  He engaged in no              
          taxable transactions until July.  At that time he began trading,            
          and by November he had realized net short-term capital gains of             
          $736,285 and long-term capital gains of $1,437,766.  In December            
          1983, however, he incurred cancellation losses of $65,448 and               
          short-term capital losses of $2,234,054.  In that month, he                 
          realized an additional $55,342 in long-term capital gains, but the          
          overall effect of these trades (including "other" income of $8,301)         
          was to leave him with a net loss of $61,807 at the end of 1983.             


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