Rountree Cotton Co. - Page 4




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          Tharp--14.5 percent, Charles Tharp--29 percent, Claudia Keith--9            
          percent, Claud Tharp--33 percent, and the Estate of Glenda                  
          Tharp--14.5 percent; (3) capital and profit interests in the                
          Tharp Family Partnership were owned, as follows:  William Tharp--           
          10 percent, Charles Tharp--10 percent, Claudia Keith--10 percent,           
          and each child of William, Charles, and Claudia owned a 10-                 
          percent interest, accounting for the remaining 70 percent; (4)              
          capital and profit interests in the Tharp Farms Partnership were            
          owned as follows:  William Tharp--30 percent, Charles Tharp--30             
          percent, Claudia Keith--20 percent, Claud Tharp--20 percent; and            
          (5) capital and profit interests in the Tharp Enterprises                   
          Partnership were owned as follows:  William Tharp--25 percent,              
          Charles Tharp--25 percent, Claudia Keith--25 percent, and Claud             
          Tharp--25 percent.  The various interests of petitioner’s                   
          shareholders and of other family members in the entities to which           
          indirect loans were made are reflected in a chart attached to               
          this opinion as an appendix.                                                
               The following interest-free loans were made by petitioner              
          directly to shareholders:                                                   
                         Demand Note                                                  
          Borrower            Dated             Amount                                
          Charles Tharp     Aug. 31, 1994       $29,978.74                            
          William Tharp     Aug. 31, 1994        11,100.00                            
          William Tharp     Aug. 31, 1994        28,113.21                            
          Respondent’s agent computed interest at the applicable Federal              
          rate on the loans directly to shareholders in the aggregate                 






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