Sam F. and Ingrid D. Ford - Page 8

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          Minervini, Appeals Officer.  The memorandum indicated that                  
          District Counsel's office had reviewed a proposed notice of                 
          deficiency with respect to petitioners for their taxable year               
          1986.  District Counsel's memorandum advised:                               
                    We discovered errors in your calculation of the                   
               capital gains adjustments as set forth on exhibit A                    
               attached to the notice.  The capital gains adjustments                 
               are based entirely upon an exhibit used in connection                  
               with the criminal case at docket no. 90-CR-777-1.                      
               Reliance on this document is necessary at this point                   
               because all of the supporting documentation is grand                   
               jury material and unavailable to the IRS until a rule                  
               6(e) Order is obtained.  Consequently, without the                     
               supporting documentation, it is imperative that your                   
               computation match the numbers contained on exhibit #3.                 
               Accordingly, we have circled the numbers on your work                  
               paper (copy attached) that we think are incorrect and                  
               ask that you verify the accuracy of the numbers by                     
               comparing them to exhibit #3.                                          
               Attached to the memorandum were workpapers that reflected              
          the capital gain totals that had been set forth in the 30-day               
          letter.  District Counsel had made minor changes to the gains               
          determined in two corporate brokerage accounts--a $3 change for             
          "Black Bird Investments" and a $60 change for "Tornado                      
          Resources".  When these changes had been made, the totals for               
          those two entities, as well as the overall totals, exactly                  
          matched those derived, for the year 1986, from exhibit 3, the               
          "Corporate Brokerage A/C's Gains & Losses 1985-86".                         

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