Estate of Charles a. Boratello, Deceased, C. Norman Borgatello and Josephine E. Donnelly, Co-Executors, and C. Norman Borgatello, Successor Trustee to the Charles A. Borgatello Living Trust - Page 2

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          82.76-percent interest in Valley Improvement Co., Inc. (VIC)1 as            
          of January 12, 1994.  To value the 82.76-percent shareholder's              
          interest in VIC, we must first decide the fair market value of              
          two shopping centers owned by VIC, Montecito Village North (MVN)            
          and Montecito Village South (MVS), as of January 12, 1994.  The             
          parties agreed on the value of VIC's other assets.  Some of the             
          facts have been stipulated and are incorporated herein by this              
          reference.  Unless otherwise noted, all section references are to           
          the Internal Revenue Code, and all Rule references are to the Tax           
          Court Rules of Practice and Procedure.  Charles Borgatello died a           
          resident of California.  Mr. Borgatello died on July 12, 1993.              
               For the purpose of valuing Mr. Borgatello's assets, the                
          estate's executors elected the alternate valuation date of                  
          January 12, 1994.  On the alternate valuation date, VIC owned 100           
          percent of MVN and MVS.  VIC also owned other assets with a total           
          value (pursuant to the parties' stipulations) of $3,188,000                 
          (rounded).2  Per the parties' stipulations, on the alternate                

          1    Valley Improvement Co. is a California C corporation.                  
          2    The value of the other assets is as follows:                           
          Real Property                                    Fair Market Value          
          550 Santa Angela Lane                             $425,000                  
          Monterey county Ranch (remainder interest)        325,000                   
          15.8 acres of vacant land outside Solvang (50% interest)170,000                   

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