New York Guangdong Finance, Inc. - Page 9




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          A.  GITIC                                                                   
                                                            General                   
           Payment date       Lender          Amount         ledger acct.             
          2/22/95             GITIC     $102,222.22      Interest paid                
          8/23/95             GITIC         74,788.19      Interest paid              
                                   177,010.41                                         
          2/23/96             GITIC          70,916.67      Interest paid             
          8/23/96             GITIC         68,881.94      Interest paid              
                                   1139,798.61                                        
               1Petitioner also paid $65,000 by wire transfer to or for the           
          benefit of GITIC on May 29, 1996, and contends that the payment             
          was an interest payment.  However, it does not appear from the              
          record as a whole that petitioner included this payment in                  
          computing the amount identified in the Sept. 8, 1998, letter or             
          in its 1996 Form 5472, nor does it appear that respondent                   
          included this amount in calculating the 1996 deficiency.                    
          Consequently, we do not consider this payment in our analysis.              
          B.  GXE                                                                     
                                                            General                   
           Payment date       Payee           Amount         ledger acct.             
          3/31/95             GXE           1$33,475.15     From EB MMA               
          3/31/95             GXE            248,228.68     Interest paid             
          9/21/95             GXE           83,058.25      Interest paid              
                                   164,762.08                                         
          3/21/96             GXE            77,099.91      Interest paid             
               1The last digit of this entry does not appear on the                   
          exhibit, but we infer that it must be as reflected above because            
          petitioner apparently included this amount in calculating the               
          total amount of interest paid on the GXE loan during 1995 as                
          reflected in the Sept. 8, 1998, letter.                                     
               2We cannot tell from an examination of the general ledger              
          whether the $33,475.15 payment is included in the $48,228.68                
          entry.  However, because petitioner apparently treated it as a              
          separate and additional interest payment and because the total              
          coincides with the total interest amount in the Sept. 8, 1998,              
          letter, we shall also treat the $33,374.15 payment recorded in              
          the general ledger as a separate payment for purposes of our                
          analysis.                                                                   






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