V.R. DeAngelis M.D.P.C. & R.T. Domingo M.D.P.C., V. R. DeAngelis M.D.P.C., Tax Matters Partner, et al. - Page 10

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          or at any time after July 1, 1996.  The partnership agreement               
          provided for payments to be made to a doctor’s PC in case the               
          doctor became disabled.                                                     
          IV.  STEP                                                                   
               A.  Overview                                                           
               STEP purports to provide eligible employees with severance             
          benefits, funded entirely by their participating employer through           
          the purchase of whole life insurance policies, and, if elected,             
          an employer-provided optional life insurance benefit payable upon           
          the death of a covered employee or an alternate insured.5  STEP             
          invested the contributions made to the STEP plan in whole life              
          insurance policies issued by eight insurance companies; namely,             
          Metropolitan Life Insurance Co. (MetLife), Allmerica Financial              
          Life Insurance and Annuity Co., National Life Insurance Co. of              
          Vermont, Prudential Life Insurance Co. of America, Equitable Life           
          Assurance Society of the United States, ITT Hartford Life                   
          Insurance Co., New York Life Insurance and Annuity Corp., and               
          Massachusetts Mutual Life Insurance Co.  The life insurance                 
          policies insured the individuals covered by the STEP plan, and              
          the STEP plan assets, as reported, consisted largely of the cash            
          values of those policies.  Insurance agents earned substantial              

               5 An employee’s severance benefits were paid from the cash             
          value of his or her whole life insurance policy.                            

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