Mark D. Pridgen and Kay D. Pridgen - Page 6




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                               Net Income of Beaufort Leaf                            
                 Year      Gaskins        Pridgen        Roberts          Total       
                 1988    $3,111.53   $3,111.53    $3,111.51    $9,334.57              
                 1989    7,270.12    7,270.12     7,270.12     21,810.36              
                 1990    15,734.87   15,734.87    15,734.86    47,204.60              
                 1991    16,746.20   16,746.20    16,746.20    50,238.60              
                 1991    10.11       10.11        10.11        30.33                  
                         42,872.83   42,872.83    42,872.80    128,618.46             

             For 1991, the second of the 2 years in issue, the above                  
             net income, $50,238.60, is composed of ordinary income                   
             from trade or business activity of $46,952.60 and interest               
             income of $3,286.                                                        
                 Beaufort Leaf's returns report the following with-                   
             drawals and distributions:                                               

                              Withdrawals and Distributions                           
                 Year      Gaskins         Pridgen        Roberts         Total       
                                                                                     
                 1988    $11,414.60  $10,000.00   $10,546.70   $31,961.30             
                 1989    3,111.53    3,111.53     2,500.00     8,723.06               
                 1990    7,270.12    19,270.12    22,220.15    48,760.39              
                 1991    32,481.07   20,481.07    16,746.20    69,708.34              
                 1992    -0-         -0-          -0-          -0-                    
                         54,277.32   52,862.72    52,013.05    159,153.09             

                 Set out below is a summary of the income and deduc-                  
             tions reported on Beaufort Leaf's income tax returns for                 
             the years in issue, 1990 and 1991:                                       












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