Frank and Virginia Muhich - Page 9

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          services.  The Asset Trust was to receive $3,000 per month, plus            
          additional consideration based upon company performance.                    
          Operation and Tax Reporting of the Five Trusts                              
               Upon creation of the trusts, the Muhichs hired Aegis Co.               
          (Aegis) to help operate them.  Aegis was affiliated with                    
          Heritage.  Regarding the Asset Trust, the Muhichs named                     
          themselves as executive trustees and executive secretaries,                 
          charging themselves with the duty to manage the trust.  In                  
          return, the Asset Trust agreed to pay the Muhichs' housing,                 
          transportation, health care, and education expenses.                        
               The Asset Trust did not engage in the active conduct of any            
          trade or business at any time during the years at issue.  For               
          1994 and 1995, the Asset Trust had approximately $114,370 and               
          $202,242 in available funds deposited into its accounts over                
          which the Muhich's had signatory authority.  The funds included             
          $100,820 and $130,193 for 1994 and 1995, respectively, in                   
          "consulting fees" received by the Asset trust for the services of           
          petitioner.  The balance of the funds for each year was composed            
          primarily of transfers from Midwest and other trusts                        
          characterized by the Muhichs as loans, and a small amount of                
          interest income that was payable to petitioner.                             
               From the available funds for 1994 and 1995, the Asset Trust            
          paid the Muhichs' housing, transportation, health care,                     
          education, and miscellaneous expenses.  These payments included:            

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