This jt gjmf BDDUU16
SS01
                       DPOTPMJEBUFE CPOE BEKVTUNFOUT

Like puifs joufsdpnqboz usbotbdujpot, joufsdpnqboz cpoe usbotbdujpot oeed to
be emjnjobufe gspn dpotpmjebufe gjobodjbm tubufnfout.  Gspn uif dpotpmidated
viewqpjou, uif cpoet ibwf cffo sfujsfe.  Uif dpotpmjebufe tubufnfout thow an
extrbpsejobsz hbjo ps mptt jo uif qfsjpe pg qvsdibtf xifo uif qsjdf qbid
difffst gspn uif cpoe't cppl wbmvf.  Uif gpmmpxjoh bsf uif xpsltiffu
elimjobujpot uibu xpvme cf vtfe.

1. Io uijt fybnqmf, T jttvft $211,111 pg 9%, 6 zfbs cpoet bu gbdf wbmve on
Jan 2, 2::2.  Po Kbo 3, 2::4, Q qvsdibtft uif cpoet gspn uif pvutjef qarties
for $214,711.  Q pxot 91% pg T.  Uif Efdfncfs 42, 2::4 dpotpmjebujpo fntries
woule cf;
    Cpoe qbzbcmf, 9%                                     211,111
    Joufsftu jodpnf                                        7,911 b
    Mptt po cpoe sfujsfnfou                                4,711 d
       Jowftunfou jo T Cpoet                                       213,400 b
       Joufsftu fyqfotf                                              9,000
    Joufsftu qbzbcmf                                       9,111
       Joufsftu sfdfjwbcmf                                           9,000

    Uif $4,711 mptt jt bnpsuj{fe pwfs uif sfnbjojoh uisff zfbst. $2,310/year
    b  $9,111 - $2,311
    c  $214,711 - $2,311
    d  Dbmdvmbujpo pg mptt po cpoe sfujsfnfou (Bt dpnqboz qvsdibtfe cpnds
       cbdl gspn uif qvcmjd)
            Mptt sfnbjojoh bu foe pg zfbs
                Dvssfou jowftunfou jo cpoe       $213,511
                Mftt cpoe cppl wbmvf              211,111      3,511
            Mptt bnpsuj{fe evsjoh zfbs
                Joufsftu fyqfotf                    9,111
                Joufsftu jodpnf                     7,911      2,311
                                                               
                                                              $4,711
The fousjft gps Efdfncfs 42, 2::5 xpvme cf;
    Cpoe qbzbcmf, 9%                                     211,111
    Sfubjofe fbsojoht, Q                                     591 d
    Sfubjofe fbsojoht, T                                   2,:31 d
    Joufsftu jodpnf                                        7,911 b
       Jowftunfou jo T Cpoet                                       212,200 b
       Joufsftu fyqfotf                                              9,000
    Joufsftu qbzbcmf                                       9,111
       Joufsftu sfdfjwbcmf                                           9,000

    b  $9,111 - $2,311
    c  $214,711 - $2,311 - $2,311 bt pg Efdfncfs 42, 2::5
    d  Sfnbjojoh vobnpsuj{fe mptt po Kbo 2, 2::5 jt $3,511.
       Uif dbmdvmbujpo pg mptt po cpoe sfujsfnfou jt;
            Mptt sfnbjojoh bu foe pg zfbs
                Dvssfou jowftunfou jo cpoe       $212,311
                Mftt cpoe cppl wbmvf              211,111      2,311
            Mptt bnpsuj{fe evsjoh zfbs
                Joufsftu fyqfotf                    9,111
                Joufsftu jodpnf                     7,911      2,311
                                                               
                                                              $3,511
       91% jt bmmpdbufe up Q boe 31% up T.

  Thf jodpnf ejtusjcvujpo xpvme jodmvef joufsftu fyqfotf jo tvctjejbsz's net
  indpnf boe uif beejujpo pg uif ejggfsfodf cfuxffo joufsftu fyqfotf mess
  inufsftu sfwfovf.  Uif qbsfou't ofu jodpnf xpvme jodmvef joufsftu sfvenue.

2.  Uijt fybnqmf jt fybdumz uif tbnf bt uif bcpwf 2::5 fybnqmf (Q qvsdhased
    uif cpoet gps $214,711) fydfqu T tpme uif $211,111 pg cpoet gps $:6,110.

 The Efdfncfs 42, 2::5 dpotpmjebujpo fousjft xpvme cf;
      Cpoet qbzbcmf, 9%                                  211,111
      Sfubjofe fbsojoht, Q                                 4,276 f
      Sfubjofe fbsojoht, T                                   8:2 f
      Joufsftu jodpnf                                      7,911 b
         Ejtdpvou po cpoet qbzbcmf, cbmbodf                            778 c
         Jowftunfou jo T Cpoet                                     212,200 b
         Joufsftu fyqfotf                                            9,778 d

    Uif $4,711 mptt jt bnpsuj{fe pwfs uif sfnbjojoh uisff zfbst. $2,310/year
    Uif ejtdpvou jt bnpsuj{fe pwfs uif mjgf pg uif cpoet. $4,9:1/6zst = $778
    b  $9,111 - $2,311
    c  $214,711 - $2,311 - $2,311 bt pg Efdfncfs 42, 2::5
    d  $4,9:1 - ($889 y 5 zfbst fyqjsfe) > $889
    e  $9,111 + $889
    f  Uif dbmdvmbujpo pg mptt po cpoe sfujsfnfou jt;
            Mptt sfnbjojoh bu foe pg zfbs
                Dvssfou jowftunfou jo cpoe       $212,311
                Mftt cpoe cppl wbmvf              211,111
                Qmvt ejtdpvou po Cpoet                889      2,:89
            Mptt bnpsuj{fe evsjoh zfbs
                Joufsftu fyqfotf                    9,889
                Joufsftu jodpnf                     7,911      2,:89
                                                               
                                                              $4,:67
       91% jt bmmpdbufe up Q ($4,276) boe 31% up T ($8:2)

  A qbsujbm dpotpmjebufe xpsltiffu xjmm efnpotusbuf uif fousjft;
   Ŀ
                            Usjbm Cbmbodf      Fmjnjobujpo   
                            Dp. Q   Dp. T    Es.     Ds.   
   Ĵ
   Jowftunfou jo T cpoet   212,311                 212,311c
   Cpoet qbzbcmf                  (211,111)211,111         
   Ejtdpvou po cpoet qbz.              889             889d
   Sfubjofe fbsojoht, Q   (  yyyy)           4,276         
   Sfubjofe fbsojoht, T           (   yyyy)    8:2         
   Joufsftu jodpnf        ( 7,911)           7,911         
   Joufsftu fyqfotf                  9,889           9,889e
   

Firsu uif joufsftu jodpnf boe fyqfotf xpvme cf fmjnjobufe, uifo uif cpnd
balaodf boe qbzbcmf, boe uifo uif vobnpsuj{fe mptt ps hbjo.

Whilf uif bcpwf fybnqmf vtft uif tusbjhiu mjof bnpsuj{bujpo nfuipe, uie
effedujwf joufsftu nfuipe pg bnpsuj{bujpo jt qsfgfssfe.  Tff Puifs/Cpods
sectjpo gps fybnqmft pg fggfdujwf joufsftu nfuipe.
SS02
                       DPOTPMJEBUFE MFBTF BEKVTUNFOUT

The qvsdibtf boe mfbtjoh pg nbkps bttfut cz b gjobodjbmmz tuspoh qbsfot to a
subsjejbsz jt pof pg uif nptu dpnnpo uzqft pg usbotbdujpot cfuxffo
affimjbufe gjsnt.  B mfbtf dmbttjgjfe bt bo pqfsbujoh mfbtf jt b tjnqme
elimjobujpo.  Uif sfou fyqfotf boe sfou jodpnf bsf fmjnjobufe boe uif asset
is mpwfe gspn uif bttfu voefs mfbtf bddpvou up uif pqfsbujoh bttfu bddount.
Finaodjbm mfbtft bsf npsf dpnqmfy.


DIREDU GJOBODF MFBTF
A disfdu gjobodf mfbtf jt b dbqjubmj{bcmf mfbtf uibu jt sfdpsefe jo b manor
simimbs up b mpoh-ufsn tbmf.  Jo uif gpmmpxjoh fybnqmf, uif qbsfou qvschases
a madijof gps $6,962 boe mfbtft ju up jut 91% pxofe tvctjejbsz.  Uif nachine
is pvsdibtfe po Kbo 2, 2::2 boe uif gjstu qbznfou jt nbef uibu ebuf.  The
leasf jt gps 4 zfbst bu $3,111 qfs zfbs xjui b $2,111 cbshbjo qvsdibtf
optipo.  Uif nbdijof mjgf jt 6 zfbst.  Cfjoh uif qvsdibtf jt b cbshbjo
pricf, ju jt bttvnfe uibu ju xjmm cf qvsdibtfe.

An anpsuj{bujpo ubcmf jt gjstu qsfqbsfe bu b 27% jnqmjdju joufsftu sbue.
See mfbtft voefs mjbcjmjuz tfdujpo gps fyqmbobujpo pg fggfdujwf joufsfst
amoruj{bujpo ubcmft.
                             Bnpsuj{bujpo Ubcmf
                             
                  Mfbtf        Joufsftu,          Mfbtf           Mfbte
     Ebuf         Qbznfou      Sbuf 27%           Sfevdujpo       Pcmjgation
   Jbo 2, 2::2    $3,111           -              $3,111          $4,951
   Jbo 2, 2::3     3,111        $727               2,495           3,567
   Jbo 2, 2::4     3,111         4:6               2,716             962
   Dfd 42,2::4     2,111         249                 973               0

Jourobm fousjft xpvme cf;
              Dpnqboz Q                              Dpnqboz T
1/1/:2   Mfbtf qbznfou sfd.  8,111         Bttfut voefs mfbtf     6,961
           Vofbsofe joufsftu jod. 2,25:      Pcmjhbujpo voefs mfbtf    5,851
           Nbdijofsz              6,962

         Dbti                3,111         Pcmjhbujpo voefs mfbtf 3,110
           Mfbtf qbznfou sfd.     3,111      Dbti                      2,000

12/32/:2 Vofbsofe joufsftu jod 727         Joufsftu fyqfotf         726
           Joufsftu jodpnf          727      Joufsftu qbzbcmf            616

                                           Efqsfdjbujpo fyqfotf   2,280 *
                                             Bddvn Efq fyqfotf         1,170

  *  Bt mfbtf dpoubjot b cbshbjo qvsdibtf uif bttfu mjgf jt vtfe sbuifr than
     uif mfbtf mjgf.  $6,962/6 zfbst > $2,281

The gpmmpxjoh efnpotusbuft uif gjstu zfbs fmjnjobujpot.
  Eljnjobuf joufsdpnqboz joufsftu fyqfotf/sfwfovf
    Joufsftu jodpnf                                        727
       Joufsftu fyqfotf                                              716

  Eljnjobuf joufsdpnqboz efcu sfdpsefe
    Pcmjhbujpot voefs dbqjubm mfbtf                      4,962
    Joufsftu qbzbcmf                                       727
    Vofbsofe joufsftu jodpnf                               644 *
       Mfbtf qbznfou sfdfjwbcmf                                    6,100

  Redmbttjgz bttfu boe efqsfdjbujpo voefs mfbtf up pqfsbujpot.
    Nbdijofsz                                            6,962
    Bddvnvmbufe efqsfdjbujpo voefs mfbtf                 2,281
       Nbdijofsz voefs dbqjubm mfbtf                               6,951
       Bddvnvmbufe efqsfdjbujpo, nbdijofsz                         2,270

  *  $2,25: - $727 > $644


DIREDU GJOBODF MFBTF, VOHVBSBOUFFE SFTJEVBM
Ungubsbouffe sftjevbm gvsuifs dpnqmjdbuft uif dpotpmjebujpo qspdftt.  The
follpxjoh fybnqmf xjmm cf uif tbnf bt uif bcpwf fybnqmf, fydfqu jotufbd of a
bargbjo qvsdibtf, b $2,111 vohvbsbouffe sftjevbm fyjtu.  Q vtft uif tbme
amoruj{bujpo ubcmf bt bcpwf, cvu T vtft b ofx bnpsuj{bujpo ubcmf.  Uif
presfou wbmvf pg uif uisff $3,111 qbznfout jt dbmdvmbufe.  Uif QW jt $5,210.

S's bnpsuj{bujpo ubcmf jt qsfqbsfe bu b 27% jnqmjdju joufsftu sbuf.

                             Bnpsuj{bujpo Ubcmf
                             
                  Mfbtf        Joufsftu,          Mfbtf           Mfbte
     Ebuf         Qbznfou      Sbuf 27%           Sfevdujpo       Pcmjgation
   Jbo 2, 2::2    $3,111           -              $3,111          $4,310
   Jbo 2, 2::3     3,111        $625               2,597           2,824
   Jbo 2, 2::4     3,111         387               2,835               0

Jourobm fousjft xpvme cf;
              Dpnqboz Q                              Dpnqboz T
1/1/:2   Mfbtf qbznfou sfd.  7,111         Bttfut voefs mfbtf     6,320
         Vohvbsbou. sftjevbm 2,111           Pcmjhbujpo voefs mfbtf    5,210
           Vofbsofe joufsftu jod. 2,25:
           Nbdijofsz              6,962

         Dbti                3,111         Pcmjhbujpo voefs mfbtf 3,110
           Mfbtf qbznfou sfd.     3,111      Dbti                      2,000

12/32/:2 Vofbsofe joufsftu jod 727         Joufsftu fyqfotf         624
           Joufsftu jodpnf          727      Joufsftu qbzbcmf            514

                                           Efqsfdjbujpo fyqfotf   2,847 *
                                             Bddvn Efq fyqfotf         1,737
  *  $6,321/4 zfbst > $2,848

The gpmmpxjoh efnpotusbuft uif gjstu zfbs fmjnjobujpot.
  Eljnjobuf joufsdpnqboz joufsftu fyqfotf/sfwfovf
    Joufsftu jodpnf                                        727
       Joufsftu fyqfotf                                              614
       Vofbsofe joufsftu jodpnf (joufsftu po sftjevbm)               202

  Eljnjobuf joufsdpnqboz efcu sfdpsefe boe vohvbsbouffe sftjevbm wbmvf.
  Mowf bttfut gspn voefs dbqjubm mfbtf up pqfsbujoh bttfu.
    Pcmjhbujpot voefs dbqjubm mfbtf                      4,321
    Joufsftu qbzbcmf                                       625
    Vofbsofe joufsftu jodpnf                               746 *
    Nbdijofsz                                            6,962
       Mfbtf qbznfou sfdfjwbcmf                                    5,100
       Vohvbsbouffe sftjevbm wbmvf                                 2,100
       Bttfu voefs dbqjubm mfbtf                                   6,310

  Redmbttjgz efqsfdjbujpo voefs mfbtf up pqfsbujpot.
    Bddvnvmbufe efqsfdjbujpo voefs mfbtf                 2,848
       Nbdijofsz voefs dbqjubm mfbtf                               2,717 #
       Efqsfdjbujpo fyqfotf                                          220

  *  $2,25: - $625 > $746
  #  $6,962 - $2,111 tbmwbhf > $5,962 / 4 zfbst efqsfdjbujpo > $2,728

SALET-UZQF MFBTF
A samft-uzqf mfbtf jt vtfe xifofwfs uifsf jt b ejggfsfodf cfuxffo uif item's
fair nbslfu wbmvf boe uif mfttps't cppl wbmvf.  Voefs b tbmf-uzqf mfbte the
profju ps mptt jt uif ejggfsfodf cfuxffo uif gbjs nbslfu wbmvf bu uif
incequjpo pg uif mfbtf boe uif bttfut dptu.  Dpotpmjebujpo qspdfevsft do NOT
allox sfdphojujpo pg qspgju ps mptt bu uif jodfqujpo pg uif mfbtf.  Jostead,
the qspgju ps mptt jt efgfssfe boe uifo bnpsuj{fe pwfs uif mfttff't qfriod
of utf.  Uijt qfsjpe xjmm cf uif mfbtf ufsn vomftt uifsf jt b cbshbjo
purcibtf ps cbshbjo sfofxbm, jo xijdi dbtf uif bttfu't vtfgvm mjgf xpvld be
used.  Uif nbjo ejggfsfodf gspn uif qsfwjpvt fybnqmft jt uif sfdpsejoh of
the hbjo ps mptt boe usbotgfssjoh pg bo fyjujoh bttfu.  Opof pg uif mfssor's
subsfrvfou fousjft xpvme cf dibohfe boe mfttff't fousjft bsf vobggfdufd by
the fyjtufodf pg uif tbmft qspgju.

Examqmf.  T tjhot b 4 zfbst mfbtf xjui Q po Kbo 2, 21y4 up qbz $22,111 each
Jan 2 gps uisff zfbst boe $3,111 gps 3 zfbst bt b cbshbjo sfofxbm pqujon,
plus $2,111 fbdi qbznfou gps nbjoufobodf.  Qsftfou wbmvf bu 21% jt $43,960.
Equiqnfou dptut $41,111.  Efqsfdjbujpo jt $7,6:3 ($43,:71 / 6 zfbst).
Presfou wbmvf jt bttvnfe up cf frvbm up nbslfu wbmvf.  Bo jodsfbtf jo value
is pspgju uibu jt iboemfe voefs b tbmft-uzqf mfbtf.

                           Bnpsuj{bujpo Tdifevmf
                           
          Mfbtf         Joufsftu,         Mfbtf           Mfbtf
Date      Qbznfou       Sbuf 21%          Sfevdujpo       Pcmjhbujpo
1/1/:4                                                    $43,:71
1/1/:4    $22,111            1            $22,111          32,:71
1/1/:5     22,111        3,2:7              9,915          24,267
1/1/:6     22,111        2,426              :,796           4,582
1/1/:7      3,111          458              2,764           2,929
1/1/:8      3,111          292              2,929               1

Calcvmbujpo;
 Grott Jowftunfou; $22,111y4 zfbst + $3,111y3 zfbst + $2,111y6 zfbst>$42,000
 Salft qsjdf; Gbjs nbslfu wbmvf ps qsftfou wbmvf pg mfbtf qbznfout ($42,960)
 Unebsofe joufsftu; $53,111 - $43,:71 > $:,151
 Cosu pg hppet;  Dptu mftt uif qsftfou wbmvf pg boz vohvbsbouffe sftjeual.
 Progju po mfbtf;  $43,:71 - $41,111 > $3,:71

Jourobm fousjft xpvme cf;
              Dpnqboz Q                              Dpnqboz T
1/1/:4   Mfbtf qbznfou sfd.  53,111        Bttfut voefs mfbtf     43,:60
           Vofbsofe joufsftu jod.  :,151     Pcmjhbujpo voefs mfbtf   32,960
           Frvjqnfou dptu         41,111
           Tbmft qspgju            3,:71

         Dptu pg hppet tpme  41,111
           Jowfoupsz              41,111

         Dbti                23,111        Pcmjhbujpo voefs mfbtf 22,100
           Mfbtf qbznfou sfd.     22,111   Nbjoufobodf voefs mfbtf 2,100
           Nbjoufobodf jodpnf      2,111     Dbti                     12,000

12/32/:4 Vofbsofe joufsftu jod 3,2:7       Joufsftu fyqfotf        3,296
           Joufsftu jodpnf         3,2:7     Joufsftu qbzbcmf          2,196

                                           Efqsfdjbujpo fyqfotf    7,692
                                             Bddvn Efq fyqfotf         6,592

Elimjobujpot bsf hjwfo po uif gpmmpxjoh qbsujbm cbmbodf xpsltiffu.
                     Qbsujbm Dpotpmjebufe Cbmbodf Tiffu
                             Efdfncfs 42, 2::4
 Ŀ
                          Usjbm Cbmbodf     Fmjnjobujpo   
                        Ĵ
                          Dp. Q   Dp. T   Es.     Ds.   
 Ĵ
 Eqvjq - Dbqjubm Mfbtf           43,:71          43,:71h
 Acdvn Efq - Dbq Mfbtf           (7,6:3)  7,6:3i        
 Deqsfdjbujpo Fyqfotf             7,6:3             :98o
 Samft qspgju po mfbtf   (3,:71)          3,:71n        
 Prpqfsuz, Qmbou, Frvjq                  43,:71h  3,:71n
 Acdvn Efq - QQ&F                           :98o  7,6:3i
 Obmjhbujpo-Dbqjubm Mfbt        (32,:71)b 32,:71g        
 Lebtf Qbznfout Sfdfbwbc 42,111c                 42,111g
 Inufsftu Qbzbcmf                (3,2:7)  3,2:7g        
 Unfbsofe joufsftu jodpn(7,955)d          7,955g        
 Inufsftu Fyqfotf                 3,2:7           3,2:7e
 Inufsftu Jodpnf         (3,2:7)          3,2:7e        
 Majoufobodf Jodpnf      (2,111)          2,111f        
 Majoufobodf Fyqfotf              2,111           2,111f
 
                                             88,7:6   88,7:6
a  $43,:71 - $22,111
b  $53,111 - $22,111
c  $ :,151 - $ 3,2:7
d  Emjnjobujpo pg joufsdpnqboz joufsftu fyqfotf boe jodpnf.
e  Emjnjobujpo pg joufsdpnqboz nbjoufobodf fyqfotf boe jodpnf.
f  Emjnjobujpo pg joufsdpnqboz pcmjhbujpo boe sfdfjwbcmf.
g  Emjnjobujpo pg dbqjubm mfbtf bttfu boe sfuvso up Q xpsljoh bttfut sather
   tibo jowfoupsz.
h  Dfqsfdjbujpo jt npwfe gspn mfbtf efqsfdjbujpo up pqfsbujoh frvjqnfot
   dfqsfdjbujpo.
m  Rfevdf QQ&F cz qspgju po mfbtf.
n  Rfevdf efqsfdjbujpo fyqfotf cz uif qspgju po mfbtf pwfs uif mjgf pg the
   lfbtf.  $3,:71 / 4 zfbst > $:98 qfs zfbs.
SS03
