Dale H. Sundby and Edith Littlefield Sundby - Page 5

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          Attached to the letter was a document titled “An Estimate to                
          NAVIS Communications”, which spelled out in detail the proposal             
          being offered by EDS to Navis.  In May 1994, petitioner prepared            
          proposals for Goldman Sachs and Sprint concerning products in               
          development; both of these proposals indicated that they were               
          from Navis, and both named petitioner as the CEO thereof.  On               
          September 1, 1994, Price Waterhouse, L.L.P., sent a letter to               
          petitioner as CEO of Navis.  This letter stated that “Navis                 
          Communications has asked Price Waterhouse to conduct a market               
          evaluation study of its new product SEARCHNET, to be launched in            
          November 1994”, and the letter concluded by stating that “we are            
          confident that we can successfully help Navis determine the                 
          market penetration and initial marketing program required for a             
          successful launch of SEARCHNET.”  Throughout 1994, Navis also               
          entered into a variety of confidentiality and nondisclosure                 
          agreements with a number of individuals and business entities.              
          There is no evidence in the record indicating that a tax return             
          was filed for Navis with respect to 1994 or any other taxable               
          year.                                                                       
               Petitioner gained a business advantage from the                        
          incorporation of Navis insofar as the corporation gave petitioner           
          “a more legitimate base, versus Dale Sundby the sole proprietor”            
          in his business dealings.                                                   







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