Neonatology Associates, P.A., et al - Page 10





                                               - 10 -                                                  
            1993                                                                                       
            10/1991  12/1991      1992  (As amended)                                                   
                                                                                                      
            Total income                        $2,303,425 $403,869 $2,411,265 $2,286,460              
            Officers’ compensation                 987,554  350,000  1,171,931    940,895              
            Salaries & wages                       148,750   29,167    200,565    303,750              
            Pension, profit-sharing, plans          46,907   25,000    132,428    169,170              
            Employee benefit programs                 -0-      -0-       -0-        -0-                
            Other deductions (VEBA contribution)   480,901     -0-     209,869    296,056              
            Taxable income (loss)                    3,664 (103,857)   (23,325)    (7,796)             
            Income tax                               1,246     -0-       -0-        -0-                
            Alt. minimum tax                          -0-      -0-       -0-       20,531              
            It filed its 1992 Federal corporate income tax return untimely on                          

            May 28, 1993.                                                                              

                  Marlton is a sole proprietorship owned by Wan B. Lo (Dr.                             

            Lo), and he reports Marlton’s income and expenses on his personal                          

            Schedule C, Profit or Loss from Sole-Proprietor Business, using                            

            the cash receipts and disbursements method and the calendar year.                          

            Dr. Lo reported the following amounts for Marlton on Schedules C                           

            of his joint 1993 and 1994 Federal individual income tax returns:                          

                  1993      1994                                                                       

                  Gross income            $875,477   $868,275                                          
                  Wages       130,944    124,939                                                       
                  Pension, profit-sharing, plans    16,920     17,396                                  
                  Employee benefit programs           100,000    120,000                               
                  Net profit                     406,863    381,122                                    

            Dr. Lo and his wife, Cecilia (Ms. Lo) (collectively, the Los),                             

            resided in New Jersey when we filed their petition.                                        

            II. The Subject VEBA’s                                                                     

                  Pacific Executive Services (PES) was a California                                    

            partnership formed by two insurancemen named Stephen R. Ross (Mr.                          











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