Gabe W. Stewart, Jr., and Doris R. Stewart - Page 5

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          boat with a 115-horsepower outboard motor and a boat trailer.2              
          After petitioner Gabe Stewart (Mr. Stewart) experienced medical             
          problems, petitioners decided to dispose of the boat.                       
          Petitioners were unsuccessful in their attempts to sell the boat.           
               On December 30, 1996, petitioners contributed the boat to              
          The Salvation Army.  Mr. Stewart testified that at the time                 
          petitioners donated the boat to The Salvation Army, “it was in              
          mint condition” and ready for use.  The receipt given to                    
          petitioners from The Salvation Army for their contribution listed           
          the condition of the boat as “good”.  Petitioners did not obtain            
          an appraisal for the boat.                                                  
               On December 30, 1996, Mr. Arthur Morden (Mr. Morden), an               
          employee of The Salvation Army for more than 25 years whose                 
          duties included obtaining appraisals for donated items, had the             
          boat delivered to the owner of Paul’s Repair (boat appraiser), a            
          local boat and motor repair shop, to obtain an appraisal.  Mr.              
          Morden testified that he often used the boat appraiser because he           
          would “try to give me his best and honest appraisal”.  After                
          inspecting the boat, the boat appraiser determined that the boat            
          had previously been sunk.  The boat appraiser specifically                  
          indicated, among other things, that the boat had a rotten                   
          transom, rusty cables, and a locked-up motor.  The boat appraiser           


               2  The boat, motor, and trailer are herein collectively                
          referred to as “the boat”.                                                  





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