Wagner Construction, Inc. - Page 17






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                  Petitioner's financial statements and Forms 1120, U.S.                                       

             Corporation Income Tax Return (Forms 1120 or returns), for the                                     

             years ending October 31, 1986 through 1996, show the following                                     

             income:                                                                                            

                                                    10/31/86                     10/31/87                       
                                          Financial                     Financial                               
                                           Statement       Return        Statement      Return                  
             General & contract revenue   $2,135,832     $2,108,148     $3,666,642    $3,359,825                
             Operating expenses           (2,009,634)    (2,005,650)    (3,409,657)   (3,327,492)               
             Income from operations       126,198        102,498        256,985       32,333                    
             Other income/(loss)             20,805         1,239          57,384         37,038                
             Net income before taxes      147,003        103,737        314,369       69,371                    
             Taxes                           (37,689)       (27,469)       (46,141)      (13,481)               
             Net income                   109,314        76,268         268,228       55,890                    
                                                    10/31/88                     10/31/89                       
                                          Financial                     Financial                               
                                           Statement       Return        Statement      Return                  
             General & contract revenue   $4,416,990     $3,910,680     $4,423,002    $4,489,886                
             Operating expenses           (4,318,785)    (3,847,599)    (3,986,317)   (4,351,131)               
             Income from operations       98,205         63,081         436,685       138,755                   
             Other income/(loss)             45,745          21,225       50,024         21,629                 
             Net income before taxes      143,950        84,306         486,709       160,384                   
             Provision for taxes             (42,960)       (16,914)      (195,995)      (54,825)               
             Net income                   100,990        67,392         290,714       105,559                   
                                                    10/31/90                     10/31/91                       
                                          Financial                     Financial                               
                                           Statement       Return        Statement      Return                  
             General & contract revenue   $6,746,331     $6,014,515     $5,156,266    $5,581,672                
             Operating expenses           (5,008,338)    (5,269,014)    (4,812,253)   (5,141,657)               
             Income from operations       1,737,993      745,501        344,013       440,015                   
             Other income/(loss)           58,139           59,876         203,106       149,527                
             Net income before taxes      1,796,132      805,377        547,119       589,542                   
             Provision for taxes           (723,300)       (272,170)      (212,070)     (193,077)               
             Net income                   1,072,832      533,207        335,049       396,465                   
                                                    10/31/92                     10/31/93                       
                                          Financial                     Financial                               
                                           Statement       Return        Statement      Return                  
             General & contract revenue   $7,442,762     $7,388,353     $5,090,933    $5,088,511                
             Operating expenses           (6,503,283)    (6,809,208)    (4,983,762)   (5,174,854)               
             Income from operations       939,479        579,145        107,171       (86,343)                  
             Other income/(loss)           176,050        524,359          130,396       593,430                
             Net income before taxes      1,115,529      1,103,504      237,567       507,087                   
             Provision for taxes           (392,845)       (375,191)      (160,001)     (172,410)               
             Net income                   722,684        728,313        77,566        334,677                   









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