Charles H. Addis and Cindi Addis - Page 6




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          life insurance policy premium.  Also on that day, NHF paid its              
          $36,000 portion of the life insurance policy premium to                     
          Commercial Union Life.                                                      
               NHF sent a receipt for the 1997 contribution on behalf of              
          the Addis family foundation which stated:  “In accordance with              
          IRS regulations, the National Heritage Foundation did not provide           
          any goods or services to the donor in return for the                        
          contribution.”                                                              
               On October 21, 1998, petitioners paid $36,000 to NHF.  The             
          payment was in form unrestricted.  Also on that day, petitioners            
          paid Commercial Union Life their $4,000 portion of the life                 
          insurance policy premium.  On October 27, 1998, NHF credited the            
          Addis family foundation account with $36,000 and debited the                
          account in the same amount to pay NHF’s portion of the premium              
          for the life insurance policy.  Also on that day, NHF paid its              
          $36,000 portion of the life insurance policy premium to                     
          Commercial Union Life.  NHF provided petitioners with a receipt             
          which stated that NHF provided no goods or services to                      
          petitioners in exchange for the payment.                                    
               Petitioners would have stopped making payments to NHF if NHF           
          had not used petitioners’ $36,000 payments to pay the premiums              
          for the life insurance policy on Mrs. Addis.                                










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