Herbert L. Mitchell, deceased, and Ella Marie Mitchell - Page 3

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            the District of Columbia school system for 20 years, as a teacher                          
            and a counselor.  Additionally, for 38 years, she operated a                               
            beauty salon, which employed one other person, who tended the                              
            salon while petitioner was working at the school.  Petitioner did                          
            not maintain the beauty salon’s books or payroll personally;                               
            instead, she engaged others to do so.                                                      
                  At the time of his death, Mr. Mitchell was a teacher and the                         
            Director of Federal Programs for the Charles County, Maryland,                             
            Board of Education.  Mr. Mitchell managed the family’s finances.                           
            He made the decisions with respect to major purchases and                                  
            investments, paid the bills, and engaged an adviser to help him                            
            prepare the tax returns.                                                                   
                  At the beginning of 1991, petitioner and Mr. Mitchell had                            
            three children in college and a fourth living at home.  They were                          
            paying tuition and other expenses of the children in college.                              
            They were barely able to pay the family’s bills.  Their house was                          
            in need of substantial repairs.                                                            
                  Mr. Mitchell had been a member of the Teachers’ Retirement                           
            System of the State of Maryland (Retirement System) until he                               
            transferred to the Teachers’ Pension System (Pension System).                              
            The Retirement System is a qualified defined benefit plan under                            
            section 401(a) requiring mandatory nondeductible employee                                  
            contributions, and the trust maintained as a part of the plan is                           
            exempt from taxes under section 501(a).  The State of Maryland                             

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