Estate of Melvin W. Ballantyne, Deceased, Jean S. Ballantyne, Independent Executrix, and Jean S. Ballantyne - Page 14

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          50-percent distributive shares of income from BBP in 1994 from              
          the sale of grain.  Alternatively, respondent contends that the             
          grain sold in 1994 was owned solely by Russell, and, thus, he had           
          additional gross income of $751,988 in 1994.  Respondent also               
          argues that, to the extent the distribution of grain sales                  
          proceeds and other money to Russell exceeded his adjusted basis             
          in BBP, Russell had gain on the distribution pursuant to section            
          731(a).  Finally, respondent contends that Russell and Clarice              
          are liable for the accuracy-related penalties for 1994 and 1995             
          with respect to the grain sales income item and certain erroneous           
          deduction items.                                                            
               Russell contends that he is responsible for only 50 percent            
          of the income tax on the grain sales income for 1994 because he             
          and Melvin agreed to share equally all the income and expenses of           
          BBP.  Russell relies on the fact that tax returns filed by BBP              
          for the taxable years 1980 through 1994 show that all the income            
          and expenses were shared equally by the partners for income tax             
          purposes.  Russell also contends that he possessed sufficient               
          basis to withdraw the cash from the grain sales without incurring           
          any additional tax liability.  Finally, Russell and Clarice claim           
          that they are not liable for the accuracy-related penalties for             

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