Stephanie Jane Hauge - Page 9

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          expressly denied fault and liability; (b) the agreement was a               
          release and settlement of disputed claims; (c) the payment was              
          provided solely to buy peaceful continued business operations for           
          petitioner and to avoid further litigation; and (d) nothing in              
          the agreement was a release of any claim against the defendants             
          under the Internal Revenue Code; (4) the Government agreed not to           
          criminally prosecute the defendants, to refrain from any further            
          investigation of the claims raised in the lawsuit, and to release           
          claims for suspension or debarment by the Agriculture Department            
          against the defendants and OMCC; and (5) Bob, Byron, Ann, and               
          Cook Farms stipulated that they had no interest in petitioner’s             
          property or assets or in OMCC.                                              
          G.   Payment of the Settlement and Legal and Professional Fees              
               On December 23, 1997, petitioner and Mildred, as general               
          partners of OMCC with a 99.5- and a .5-percent interest,                    
          respectively, each signed and submitted to The Commercial Bank              
          (the bank) written authorization for OMCC to borrow up to $1                
          million.  On December 23, 1997, petitioner and OMCC, identified             
          in the loan documents as coborrowers, borrowed $550,000 from the            
          bank.  As security for this loan, petitioner, as grantor,                   
          transferred to the bank a deed of trust on her residence.  In               
          addition to the loan described above, OMCC borrowed $75,000 from            
          the bank pursuant to a line of credit.  Late in December 1997,              







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