Bill J. Malone, Jr. and Sarah J. Malone - Page 4

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          entertained, usually on a no fee basis, at local hospitals,                 
          senior citizen facilities, etc.  Malone Music’s primary activity,           
          however, involves providing music lessons to students drawn                 
          usually from the ranks of the Malone children’s friends,                    
          neighbors, or classmates.  H and R are Malone Music’s only music            
          instructors, and together they provide all of the musical                   
          instrument lessons.  On a more limited basis, Malone Music also             
          offers instructions in music theory taught by B.  H primarily               
          teaches piano and harp; R primarily teaches violin.  H and R also           
          conduct the Melody Makers summer music camp.  According to                  
          petitioner, a “fair description of the teaching services”                   
          typically offered by Malone Music includes piano lessons offered            
          by H and/or violin lessons provided by R.  Substantially all, if            
          not all, of the music lessons provided by H and R through Malone            
          Music take place in designated rooms in petitioners’ residence.             
               In 1998, H became seriously ill and was unable to devote               
          significant time to Malone Music until mid-1999.  According to              
          petitioner, H’s medical problems restricted Malone Music’s                  
          potential “to take off faster and further”.                                 
               Susan Groves (Ms. Groves) is a piano teacher.  As of the               
          date of trial, she had been giving lessons for almost 20 years.             
          She taught piano to several of the Malone children over the                 
          years, but, prior to the trial in this case, she had never heard            
          of the name “Malone Music”.  Ms. Groves spoke to petitioners and            

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