Walter L. Medlin - Page 91

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          1987:                                                                       
          Stipulated Income:                                                          
               Income Item                             Amount                         
          Miscellaneous Sch. C income             $24,000                             
          Gains from property sales               946,649                             
          Interest income                              9,084                          
          Total stipulated income            979,733                                  

          Disputed Income:                                                            
               Income Item                             Amount                         
          Installment gain from Silver Lake sale  $24,577                             
          Interest income from Silver Lake mortgage    5,488                          
          Total disputed income                        30,065                         

          Total income relied upon by respondent (stipulated income +                 
          disputed income):  $1,009,798                                               
          Less reconstructed Sch. C expenses                                          
          (after concessions on brief):  $265,076                                     
          Less itemized deductions:  $43,561                                          
          Less personal exemptions:  $3,800                                           
          Taxable income:  $697,361                                                   
          Tax liability (based on head of household filing status):                   
          $259,934                                                                    
          Plus self-employment tax:  $5,387                                           
          Less tax per return:  $12,902                                               
          CLAIMED UNDERPAYMENT FOR 1987:  $252,419                                    

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