Robert and Karen O'Connor - Page 4




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          treasurer since 1982.  Unrelated parties have also served on                
          CBR’s board of directors.                                                   
               In 1987, CBR purchased from Ben Larralde (Larralde) an                 
          1,800-acre ranch property in Corning, California.  Three hundred            
          acres of the ranch consisted of an almond orchard.  During the              
          years in issue, the orchard was not irrigated, and most of the              
          almond trees were either dead or stunted from lack of                       
          maintenance.  During the years in issue, petitioners maintained             
          their residence on the ranch property.                                      
               On May 1, 1990, Omega and CBR entered into a 5-year                    
          agreement under which Omega leased from CBR approximately 1,400             
          acres of ranchland that included the 300-acre almond orchard.               
          Petitioners signed the agreement as officers of both CBR and                
          Omega.  In turn, Larralde then leased the 1,400 acres from Omega            
          for use as grazing land for cattle.  Larralde’s rent was based on           
          the number of head of livestock grazing on the property.  To                
          accommodate Larralde, Omega built fences, graded roads, and                 
          enlarged ponds. From 1990 through 1995, Omega paid rent to CBR as           
          follows:                                                                    
                           Year               Rent                                    
                           1990              $9,000                                   
                           1991              11,515                                   
                           1992              21,951                                   
                           1993              31,865                                   
                           1994              31,020                                   
                           1995              43,000                                   







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