Indipay: A Model To Assess And Individual'S Ability To Afford Civil Penalties, Superfund Cleanups, And Pollution Control Expenditures


Training Materials
INDIPAY:
A model to assess an individual's ability
to afford civil penalties, Superfund cleanups,
and pollution control expenditures
Contains Enforcement Sensitive Material
INDIPAY: July 2002

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Confidentiality/Enforcement Sensitive Notice
The attached training materials contain enforcement sensitive and confidential information. They are
covered by one or more of the following Federal disclosure exemptions: attorney work-product,
deliberative processes privilege, and disclosure of enforcement technique's. You may use these
materials during the course, but you may not keep them unless your State is both legally permitted
and willing to protect this document from disclosure to outside parties. ('E.g.. The State of
Wisconsin's laws make it almost impossible to protect a document such as this from disclosure.)
If you are not sure about your State's law on this issue, please take this document for a review by
your State's information law specialists immediately upon your return to your office. If your
information law specialists do not feel your State can adequately protect this document, please mail
it to the following address as soon as possible:
Jonathan D. Libber (2248-A)
US EPA
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460.
Should you have any questions about this note or the EPA's concerns on disclosure, please contact
Jonathan Libber at 202-564-6102, or libber.jonathan@epa.gov.
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INDIPAY: July 2002
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TABLE OF CONTENTS
Page No.
SECTION I: OVERVIEW OF INDIPAY
What Is INDIPAY? 1-1
INDIPAY Data Sources 1-2
Theory and Methodology of ENDIPAY 1-3
SECTION II: USING THE INDIPAY MODEL
Main Screen / Creating a Case II-1
Phase 1 Data Entry D-3
Phase 1 Analysis D-5
Phase 2 Data: Tax Return D-7
Phase 2 Data: Household Income II-9
Phase 2 Data: Living Expenses II-l 1
Phase 2 Data: Net Worth 11-13
Phase 2 Data: Additional Information 11-15
Creating a Phase 2 Ability-to-Pay Run 11-17
Calculating a Phase 2 Ability-to-Pay Run 11-19
SECTION III: ISSUES THAT ARISE WHILE USING INDIPAY
Using the INDIPAY Results m-1
Other Sources of Funds HI-2
INDIPAY in Negotiations III-3
INDIPAY in Hearing and Trial IH-4
SECTION IV: SAMPLE PROBLEM: THE COBBS
Scenario and Assignments IV-1
Solutions IV-3
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INDIPAY: July 2002
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SECTION I:
OVERVIEW OF INDIPAY
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INDIPAY: July 2002
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WHAT IS INDIPAY?
• The INDIPAY Model is a computer program that runs in the Windows™ operating
environment, Windows 95 or higher (e.g., 95, 98, or NT).
• INDIPAY is easy to use, especially with its many available forms of assistance:
• A context-sensitive "help" feature within the model — accessed through the "F1" key
and help buttons — means that assistance is always only a keystroke away.
• These Training Materials provide a "hands-on" tour through the model, while the
User's Manual provides a more in-depth explanation of the model.
• EPA's enforcement economics helpline provides personalized assistance from 8:00
a.m. to 6:00 p.m. (Eastern time) at 888-ECONSPT or benabel@indecon.com.
• For Superfund case support, contact Tracy Gipson at EPA's Office of Site
Remediation Enforcement (OSRE): gipson.tracy@epa.gov or 202-564-4236;
otherwise, contact Jonathan Libber: libber.jonathan@epa.gov or 202-564-6102.
• For Superfund enforcement policy documents, e.g., September 30, 1997 "General
Policy on Superfund Ability to Pay Determinations": www.epa.gov/oeca/osre.
• For Internal Revenue Service forms and publications: www.irs.gov.
• The INDIPA Y User's Manual provides complete installation instructions; you can obtain a
copy of the model from EPA's website (http://es.epa.gov/oeca).
• INDIPAY evaluates the ability to pay of individuals held liable for environmental penalties
or Superfund cleanups.
• INDIPAY is a screening tool in evaluating ability to pay claims made by individuals.
• For trials or administrative hearings, an expert should provide independent financial
analysis (which may or may not include an INDIPAY analysis).
• Requires more data than BEN or ABEL because individual tax returns do not contain
information about the individual's living expenses, assets, or liabilities.
• INDIPAY presents a two-phase analysis of an individual's financial health:
• Phase 1 Analysis: Optional screen to eliminate applicants with no ability to pay.
• Phase 2 Ability to Pay Calculations: Quantifies ability to afford sought amount based
on excess cash flow and debt capacity.
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INDIPAY: July 2002
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INDIPAY DATA SOURCES
• INDIPAY requires one to three years of an individual's tax return data.
• Individual Financial Data Request Form (i.e., questionnaire that you can print out from
within the INDIPAY model, and that the applicant must complete)
• Due to substantial increases in the submission of fraudulent returns, EPA recommends
obtaining summaries of an individual's tax returns directly from the IRS, if possible. To
obtain summaries of returns from the IRS, you should have the individual sign and submit
an IRS Form 8821.
• You must submit Form 8821 to the IRS within 60 days after the form is signed.
• If you cannot wait for the IRS to respond (6-8 weeks), run INDIPAY with the returns
provided by the applicant, but verify the data when you receive the applicant's returns
from the IRS.
• By insisting on filing Form 8821, you will put the applicant on notice that you mean
business. This will greatly reduce the temptation to give us fraudulent returns.
• Under no circumstances should you rely upon a negative or inconclusive
INDIPAY analysis that is based upon unsigned returns. You can run INDIPAY
on the unverified returns as a preliminary matter, and if the model indicates complete
ability to pay, then you can reject the inability to pay claim and move forward. If
INDIPAY is negative or inconclusive, wait for the summaries from IRS to verify the
data you entered. If the data submitted to you is consistent with the data from the
IRS, you can assume the INDIPAY analysis is valid. But as with any INDIPAY
analysis that indicates less than a full ability to pay, you must examine other possible
sources of funds as explained in Section III.
• Always ask the individual to explain the basis of the ability to pay claim. This will allow you
to focus on the key issues.
• No law or regulation requires the EPA to reduce a penalty because the violator cannot afford
it.
• At most the statute will state that the EPA must consider ability to pay.
• EPA policy clearly states that the EPA will not reduce a civil penalty for inability to pay if
the violations are egregious and/or the violator refuses to comply on a timely basis.
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INDIPAY: July 2002
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THEORY AND METHODOLOGY OF INDIPAY
• Financial theory does not precisely define ability to pay.
• INDIPAY may not be the only appropriate analytical tool.
• Professional judgment by the analyst is always necessary.
• Alternative methods of determining ability to pay:
• Liquidity — immediately available cash or other assets.
• Ability to raise funds to finance costs or penalty.
• Solvency — ability to generate cash in excess of expenses.
• INDIPAY performs only very limited data checking; as noted on previous page, up to you
to check data against official IRS summaries, as well as apply common sense to items on
data request form.
• INDIPAY focuses only the latter two items.
• Under Test A, INDIPAY assumes that the individual's income and living expenses
over the recent past are indicative of the immediate future, and calculates the amount
of money ("cash flow") that the individual can generate to pay for the sought penalty
or contribution.
• Under Test B, INDIPAY also calculates the additional debt payments that the
individual could support given current income level and existing debt payments.
• Note that both of these measures are closely tied to the individual's income level:
Test A focuses on the excess of income over living expenses.
Test B focuses on how current debt payments compare to 36% of income.
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INDIPAY: July 2002
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SECTION II:
USING THE INDIPAY MODEL
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IN DIP A Y: July 2002
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MAIN SCREEN / CREATING A CASE
• When you first open INDIPAY the main screen appears, which is where you create cases and
runs. Tab and enter keys move you sequentially through the input areas, but you can also use
your mouse to input data in any order.
• From here you can also access file, window, and help pull-down menus, which allow you to
open, close, create, save, or exit files (which are saved as "*.ind"), as well as modify your
printer setup (just as in most Windows™ applications). The window menu allows you to
shift between multiple open INDIPAY cases. For help, use the help menu, or press F1
anytime.
• The first two inputs on the case screen are analyst name, and office/agency. These appear
on the bottom of result printouts but do not affect the calculations. Analyst name can be any
length and include any characters. Office/agency can be chosen from the pull-down menu,
or entered in a free-form manner.
• The next set of input identifies the applicant. Only the state and county (chosen from a pull-
down menu) affect the results, as they determine household income baselines.
• Other inputs describe the tax return information:
• household members;
• number of years;
• most recent year; then,
• click on the [Tax Return Information] button, which takes you to a separate screen
to specify the applicant's filing status and tax form for each year. (If you revisit a
case after a year has passed and new tax returns have become available, you can
increase the value for number of years and update the value for most recent year.)
• Within the outline for Phase 1, which is optional:
• Clicking the [Data] button takes you to the screen where the financial data is entered.
• Clicking the [Analysis] button takes you to the results.
• To print the form that the applicant must complete for the Phase 2 analysis, under the "File"
pull-down menu you can select "Print Data Request Form."
• To enter Phase 2 data, select the appropriate item from the pull-down menu within the Phase
2 outline, and click the [Go| button.
• Once you have entered all the required case inputs, then you can create Phase 2 ability-to-pay
runs. You will not be able to calculate these runs, however, until you enter all the Phase 2
data. Phase 2 operates independently of the optional Phase 1, so you need not enter any
Phase 1 data or run the Phase 1 analysis to work on Phase 2.
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INDIPAY: July 2002
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I
TEE
DliSlHl 1]
Mr. Ed: Tax Form Selection
OK
El
Year
Filing Status
Applicant
Spouse

|l 999
r- Warded Filing
Separately?
11040
d 1
d
|l 99o
r- Married Filing
Separately"'
11040
d 1
d
|l 337
i— Married Filing
Separately?
11040
d 1
d
i Cancel i
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INDIPAY: July 2002
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PHASE 1 DATA ENTRY
• Phase 1 is optional, and is intended only to screen out those applicants with no ability to pay,
and hence no need to perform a comprehensive Phase 2 assessment.
• This grid-like screen for Phase 1 data displays 10 rows and up to six data entry columns for
the years you specified on the main screen. Depending on your monitor and display settings,
you may need to use the scroll bar to see all the rows and columns. You can also click the
maximize button in the top right of the screen.
• For Phase 1, the only number from the tax returns you must enter is the adjusted gross
income; for the other items, you simple check off whether the condition is present.
• The input labels in the first column stay the same regardless of what tax form and years you
specified on the main screen. The box at the top of the screen provides the tax return line
reference, which varies depending on which tax form you specified, as well as which year
and input item the cursor is on.
• If the line reference box displays "Line reference not yet available," then you are entering tax
return data for a year whose line references are not yet incorporated into INDIPAY's
database. Although locating the correct data from the tax returns may be more difficult, the
model will otherwise work properly.
• Items are occasionally designated "Not Applicable" if they are not recorded on the tax returns
of a specific form. You should not check off these items (e.g., "Business income or loss" for
an applicant filing form 1040A).
• From this screen, you can also print the data that you have entered.
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INDIPAY: July 2002
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H
Mi. Ed: Phase 1 Data
Lme Reference'
Masted gross income entry requires numerical value,
For other items, check off box if present on tax return
Applicant
1999
1998
Spouse
1997 NA NA
Adjusted gross income
$82,5001
$70,900
$97,800
Taxable interest income > $400
r
r
r
Tax-exempt interest income
(7
F
F
Dividend income greater > $400
r
r
r
Business income or loss
r
r
r
Capital gam or loss
|7
r
17
Other gains or losses
r
r
r
Income or loss from rents, royalties, partnerships, estates, or trusts
|7
17
(7
Farm income or loss
r
r
r
IRA deduction claimed
r
r
r
«l I

~
Print | OK. | . Cancel
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PHASE 1 ANALYSIS
• Once you have entered all the Phase 1 data, you can view the Phase I analysis.
• You can view the Phase I analysis before or after you have entered any Phase 2 data or
created/calculated any Phase 2 ability-to pay runs — the two output procedures operate
independently of each other.
• The Phase 1 analysis will conclude that the applicant has no ability to pay if:
• the applicant's weighted-average gross income does not exceed the county- and
household-size-specific low-income level; and,
• if the applicant lacks complex finances.
• If the applicant's:
• income exceeds the low-income level; and/or,
• the applicant's tax returns indicate complex finances . . .
• Then ENDIPAY will determine that a comprehensive Phase 2 ability-to-pay analysis is
necessary, and also list the various indicators that apply to the applicant's's finances.
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INDIPAY: July 2002
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PHASE 1 ANALYSIS
Conduct a comprehensive Phase 2 Ability-to-Pay Analysis:
- The applicant's average income exceeds the 'low income1 threshold
- The applicant has complex personal finances
Income Companson
$82,1-54 = Weighted-average gross income
$42,000 = Low-income level for household size of 2 in MIDDLESEX - Boston
Indicators of Complex Finances that Applvto Applicant
Tax-exempt interest income
Capital gain or loss
Income or loss from rents, royalties, partnerships, estates, or trusts
r Print
Summary I . Detail
<* Printer
C File
Done.
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INDIPAY: July 2002
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PHASE 2 DATA: TAX RETURN
• This grid-like screen for the Phase 2 data tax data displays 26 rows and up to six data entry
columns for the years you specified on the main screen. Depending on your monitor and
display settings, you may need to use the scroll bar to see all the rows and columns. You can
also click the maximize button in the top right of the screen.
• The input labels in the first column stay the same regardless of what tax form and years you
specified on the main screen. The box at the top of the screen provides the tax return line
reference, which varies depending on which tax form you specified, as well as which year
and input item the cursor is on.
• If the line reference box displays "Line reference not yet available," then you are entering tax
return data for a year whose line references are not yet incorporated into INDIPAY's
database. Although locating the correct data from the tax returns may be more difficult, the
model will otherwise work properly.
• Items are occasionally designated "Not Applicable" if they are not recorded on the tax returns
of a specific form. You should not check off these items (e.g., "Business income or loss" for
an applicant filing form 1040A).
• From this screen, you can also print the data that you have entered.
• The printed data will also show you a breakdown of the applicant's income sources across
different categories of income.
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INDIPAY: July 2002
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: Mi. Ed: Phase 2 Tax Return

Line Refetence:
Iriorri Line 7

Applicant

Spouse

1999
1998
1997
NA
NA
NA I
Wage income
60.000 1
48,400
75,300

Taxable interest income

Tax-exempt interest income
5,000
5,000
5,000

Dividend income

Alimony received

Business income or loss

Capital gain or loss
4,000
4,000
4,000

Other gains or loss
0,500

Total IRA distributions

Total pensions or annuities

Farm income or loss

Total social security

Other income
7,000
7,000
7,000

Real estate taxes
600
600
600

Mortgage and investment interest deduction
1,000
1,000
1,000

Depletion

Depreciation/amortization on business accounts

Taxes paid on rental properties

Depreciation or depletion on rental properties

Total income/loss from rental properties/royalties
8,500
8,500
8,500

Partnership/S corporation income or loss

Estate and trust income or loss

QFNAIf mrnrvto or Ince

' »
<1 1

;>r
Punt | OK | Cancel
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INDIPAY: July 2002
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PHASE 2 DATA: HOUSEHOLD INCOME
• This screen requires you to enter information from the applicant's completed financial data
request form.
• If the household comprises more than the applicant and spouse, then click the [More
Members] button to add additional columns for additional income-earning household
members.
• The default period for income is yearly, but you can instead specify quarterly, monthly, or
weekly if the applicant has done so on the financial data request form.
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INDIPAY: July 2002
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¦
Mi. Ed: Phase 2 Household Income
[eE
Household Members' Income
Applicant
Spouse

Name
Mr Ed

Relationship to Applicant
self
spouse

Age
30

Employer
lEc

Years Employed
5.0

Gross (Pre-Tax1) Income

Period
Wages/Salaries
$60,000
Yearly
Sales Commissions

Yearly ~
Investment Income
$4,000
Yearly ~
Net Business Income
$8,000
Yearly ~
Rental Income

Yearly ~
Retirement Income

Yearly 17
Child Support

Yearly
Alimony

Yearly
Other
$7,000
Yearly ;~
Moie Members
Print
DK
Cancel
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INDIPAY: July 2002
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PHASE 2 DATA: LIVING EXPENSES
• This screen requires you to enter information from the applicant's completed financial data
request form.
• The default period for income is yearly, but you can instead specify quarterly, monthly, or
weekly if the applicant has done so on the financial data request form.
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D
! Mr. Ed: Phase 2 Living Expenses
ma
Household Living Expenses

~
Exoense
Amount
Period

Rent

Yearly

Home maintenance
$200
Monthly
,~

Transportation (inc auto maint)
$50
Monthly
~

Home heating oil, gas, etc
"--1
, cn
Monthly
~

Electricity
$25
Monthly

Water & sewer
$50
Monthly
~

Telephone
$50
Monthly
~

Food
$400
Monthly
~

Clothing, personal care
$200
Monthly
1 ~

Medical
$50
Monthly
~

Mortgage payments
$1,500
Monthly
~

Car payments
$400
Monthly

Credit card interest

Yearly
' ~

Educational loan payments

Yearly
~

Other debt payments

Yearly
- ~

Home insurance
$300
Monthly
~

Life insurance
$100
Monthly
~

Auto insurance
$100
Monthly
, ~

Medical insurance

Yearly
~

Property taxes
$600
Monthly
~
~
Print | OK J Cancel
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INDIPAY: July 2002
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PHASE 2 DATA: NET WORTH
• This screen requires you to enter information from the applicant's completed financial data
request form.
• The first column is for descriptive text, and does not affect the INDIPAY results.
• The next two columns for assets and liabilities require numerical entries.
• Areas that appear in gray do not require data.
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INDIPAY: July 2002
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Mi. Ed: Phase 2 Net Woith

Net Worth
Assets
Liabilities
Bank Accounts - Name of Bank
S Balance

First Bank of Localsville
Localsville Credit Union
$2,500;
$1,000.

Investment Tvoe (stocks, bonds, etc )
Market Value

Enron stock
DotGone Inc stock
IBM stock
$10
$1
S10.000'

Retirement Funds and Accounts
Market Value

401K
Roth IRA
$20,000
$12,000,
' - • \
Life Insurance Policies
Cash Value

[none - term insurance only]
.

Vehicles Used for Commutinq
Market Value
Loan Balance
Ferrari Testarosa
Yugo
Other Vehicles
$150,000
$2,U00
Market Value
. $145,000:
Loan Balance
Rr>M
t/in nnn
l ~
Print
OK
Cancel
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INDIPAY: July 2002
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PHASE 2 DATA: ADDITIONAL INFORMATION
• This screen requires you to enter information from the applicant's completed financial data
request form.
• Click in the box to the right of any condition that might apply to the applicant, as indicated
on the financial data request form.
• This information will not affect the INDIPAY ability-to-pay results, but it will prompt a
reminder during the Phase 2 analysis.
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INDIPAY: July 2002
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n
Mi. Ed: IPhase 2 Additional Information
HE)
Additional Information (check off box if applicable)
Reason to believe financial situation will change during the next year?
Currently selling or purchasing any real estate?
Property held by other person/entity on applicant's behalf?
Partyjr^pendmg lawsuit (otherjhan this enforcement action)?
Any belongings reposessed in last three years?
Is applicant a Trustee, Executor, or Administrator?
Participant or beneficiary of estate or profit-sharing plan? _ _
Declared bankruptcy in last seven years?
Receive any type of federal aid or public assistance?
Piint
OK
Uancel
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INDIPAY: July 2002
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CREATING A PHASE 2 ABILITY-TO PAY RUN
• You can add, copy, calculate, and remove runs on the right-hand side of the case screen.
• Each case can contain multiple run names, which can be in any format.
• To add a run, enter run name under "New Run:" and press [Add],
• To enter or edit data for a run, select its name and press [Enter/Edit].
• To calculate a run, select its name and press [Calculate].
• To copy a run, select its name and press [Copy],
• To remove a run (permanently!), select its name and press [Remove].
• The only required input on the run screen is the sought penalty or contribution; choose [OK]
to save your inputs or [Options] to view and/or modify the following default parameters.
Interest Rate on Loans is used by Phase 2's Test A to discount the applicant's future cash flow to
a present value, and by Test B to determine interest charges the applicant would pay for a loan.
Change the 14-percent default value only if a higher or lower rate will be necessary for the applicant.
Raising the commercial loan rate will lower the estimate of the applicant's ability to fund a payment
because it lowers the present value of future income and makes borrowing more expensive.
Return on Interest-Bearing Assets checks whether the applicant is under-valuing interest-bearing
assets and/or real estate on the financial data request form. If these items appear to be low,
INDIPAY issues a flag alerting the user to this situation.
Weighted-Average Smoothing Constant assigns weights to different years for averaging. The 0.3
default value weights the most recent year income most heavily. To increase the weight given to the
most recent year, increase the smoothing constant (e.g., from 0.3 to 0.7).
Number o f Years o f Considered Future Cash Flow calculates the total amount of future cash flow
considered available to fund a penalty or contribution under Test A, and determines the loan
repayment period under Test B. INDIPAY calculates the annual weighted-average cash flow based
on past financial information, then projects this into the future for the number of considered years.
Reduce the five-year default to between one and four years only if the case circumstances warrant
a change or if the specific enforcement policy governing the case suggest such a change. Decreasing
the number of years flow decreases the applicant's ability to pay.
Contingency Allowance is added to the living expenses (and sought amount) under Test A. Change
the five-percent default value to increase or decrease the "cushion" around the applicant's stated
living expenses. You can also change the allowance to compensate for perceived over- or
underestimation of the applicant's stated living expenses. A higher contingency allowance will
decrease the estimation of ability to pay.
Maximum Debt Payments as Percent of Income is used by Phase 2's Test B in its debt capacity test.
Change the 36-percent default value, which is based upon commercial lending criteria, only if you
have strong reason to believe that the applicant's finances are capable of supporting a higher debt
burden, or, alternatively, if you believe that the applicant's finances are capable of supporting only
a lower debt burden. A higher maximum percent will increase the estimation of ability to pay.
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Mr. Ed:
Sought Penalty or Contribution; 150000
OK Options | Cancel
run: Optional Inputs
Interest Rate on Loans:
Return on Interest-Bearing Assets:
Weighted-Average SmooHring Constant-
No. of Years of Considered Future Cash Flow:
Contingency Alowance:
Maximum Debt Payments as % of Income:
OK |
0.14
10. OX
0 30
5 0%

3G 0Z
Cancel
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CALCULATING A PHASE 2 ABILITY-TO-PAY RUN
• Enter all inputs on the case screen, Phase 2 data screens (i.e., tax return, household income,
living expenses, net worth, additional information), and run screen before attempting to
calculate an ability-to-pay run:
• To calculate a run, select an existing run from the list and press [Calculate].
• On the calculate screen, [Summary] will print only the ability-to-pay calculations;
[Detail] will print the ability-to-pay calculations plus the data summaries.
• Test A, "Cash Flow," first determines the present value of the applicant's future cash flow,
i.e., the excess of average annual income over annual living expenses:
• INDIPAY projects this annual cash flow out into the future, then discounts it back
to a present value.
• The sum of each year's cash flow present value is the affordable amount.
• Test B, "Debt Capacity," first determines the maximum affordable annual debt payments,
i.e., average annual income multiplied by the maximum debt payment as a % of income:
• The maximum affordable additional debt payments are then equal to the above figure
minus current debt payments.
• This annual payment amount, aggregated over the repayment period (equal to the
number of years of considered cash flow), is the affordable amount.
• Tests A and B operate independently: their results are not additive.
• Generally use the lower figure, adopting a multiple-constraint approach.
• If Test A, but not B, concludes the entire amount is affordable, income would exceed
living expenses, but debt payments would exceed the limit as a percent of income.
• If Test B, but not A, concludes the entire amount is affordable, debt payments would
stay within the limit, but income would fall short of living expenses.
• INDIPAY also projects the impact upon the applicant's financial status.
• The first column displays the applicant's current status, and the next two columns
display the status after payment under Tests A and B.
• INDIPAY also shows how the applicant's income compares to the county- and
household-size-specific median.
• Living expenses are increased by the contingency percent, then added to this amount
is the affordable penalty or contribution:
• To determine net worth INDIPAY subtracts from assets the applicant's liabilities,
which reflect the affordable penalty or contribution.
• Debt payments are increased by the annualized affordable penalty or contribution,
and then divided by the applicant's income.
• INDIPAY also checks for inconsistencies in the information that the applicant provides in
the tax returns and financial data request form, as well as the results. INDIPAY issues
"flags" to alert the user to any such inconsistencies. The on-line help system provides further
information on these flags, and you can contact the helpline for additional assistance.
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4. Mi. Ed: Phase 2 Analysis
BH3Q
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IN DIP AY: July 2002
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SECTION III:
EVALUATING AND USING INDIPAY
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INDIPAY: July 2002
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USING THE INDIPAY RESULTS
• INDIPAY's conclusions are limited to the quality of the inputs taken directly from the
individual's tax returns and data request form: remember that INDIPAY performs only a
very limited evaluations of the data quality.
• INDIPAY generally provides a conservative estimate of ability to pay.
• If INDIPAY's Tests A and B both conclude that an applicant has sufficient resources
to pay for the penalty or contribution, you can be reasonably assured that the sought
amount will not burden the applicant with undue financial hardship.
• If INDIPAY provides a negative or inconclusive result, you should not assume
the individual cannot pay the sought amount without first conducting additional
analysis.
• INDIPAY focuses on only cash flow (i.e., excess of income over living expenses) and debt
capacity (i.e., percent of income devoted to debt repayment). Many other potential sources
of money are available.
Contains Enforcement Sensitive Material
rn-i
INDIPAY: July 2002
-------
OTHER SOURCES OF FUNDS
• Regardless of INDIPAY's conclusions, the individual may have other sources of money,
including, but not limited to:
• Liquid assets (e.g., certificates of deposit, investments).
• Excess or discretionary expenses (i.e., may be reduced or eliminated in future years).
• Non-investment assets that could be liquidated (e.g., luxury automobiles, land,
vacation homes).
• Personal loans to relatives or acquaintances (which may really be an attempt to hide
assets).
• Hidden or understated income (e.g., unreported income such as interest from tax-free
municipal bonds, interest income from personal loans for relatives or acquaintances),
which could have implications not only for the INDIPAY model for also for tax
fraud.
• Monies parked in children's names (though legal issues could pertain to accessing
such funds).
• Be especially alert to INDIPAY's flags noting anomalies in the applicant's finances!
• In general, you should not demand that the applicant use a particular source to pay for the
sought penalty or contribution, but rather just point out that financial sources exist that are
equal to the sought amount.
• For assistance on these issues, use EPA's Economic Support Helpline at 888-ECONSPT
(326-6778) or benabel@indecon.com
Contains Enforcement Sensitive Material IH-2
INDIPAY: July 2002
-------
INDIPAY IN NEGOTIATIONS
• INDIPAY is generally not amenable to negotiations.
• Data inputs are fixed.
• INDIPAY is one of several informational tools available to the enforcement team.
• INDIPAY is designed to be used as a screening tool.
• Watch out for:
• Financial actions that take place after the environmental complaint was issued (e.g.,
rapid outflow of funds). The attorney responsible for the case may wish to pursue a
"fraudulent conveyance" action to reverse these types of financial transactions.
• Applicants that shifted income to spouses to make the applicant appear poorer. Note
whether the applicant and spouse files separate tax returns, and whether the
INDIPAY results fully reflect the spouse's finances.
• Applicants the moved assets out of the country: if so, move quickly for the
appropriate court order, and consult with your legal staff.
• To run INDIPAY, all that is needed are reliable copies of the tax returns, plus a completed
financial data request form and any supporting documentation.
• You may find individuals cooperative for the first information request, but far less
cooperative for subsequent requests.
• For criminal cases, not that once an indictment is filed, no further searches for
evidence (e.g., financial data) can be undertaken unless new crimes are alleged.
• EPA has developed some "canned" interrogatories and requests for production to support this
effort. Contact the Helpline at 888-ECONSPT.
• Should you need to explain to an ALJ or a judge why you are asking each of those items,
EPA has model requests for production (see above). Should the ALJ refuse to order the
individual to provide the data, EPA also has a canned interlocutory brief to be filed with
Environmental Appeals Board.
Contains Enforcement Sensitive Material
III-3
INDIPAY: July 2002
-------
INDIPAY IN HEARING AND TRIAL
• In hearing, and probably in court, the Agency has the burden of proof on the applicant's
ability to pay if the defendant raises ability to pay as an issue.
• The New Waterbury case, decided in 1994, established this burden.
• EPA has the burden of going forward with evidence of ability to pay. The burden
then shifts to the respondent to come up with evidence to the contrary. Then EPA
has the burden of persuasion based on the evidence submitted and the arguments of
the parties.
• EPA is not obligated to perform an INDIPAY analysis and limit itself to the results.
• If you go to court, remember that INDIPAY is merely a screening tool.
• Use an expert to explain where the individual may obtain funds for compliance,
clean-ups, or penalties based on the data you obtained from the individual.
• For assistance in hiring an expert, contact Jonathan Libber at 202-564-6102 or
1 ibber.j onathan@epa.gov.
Contains Enforcement Sensitive Material III-4
INDIPAY: July 2002
-------
SECTION IV:
SAMPLE PROBLEM
Contains Enforcement Sensitive Material
INDIPAY: July 2002
-------
INDIPAY SAMPLE PROBLEM: The Cobbs
Scenario
Eldridge and Pamela Cobb, ages 55 and 50, respectively, are a married couple with two
children from Durham, North Carolina. EPA seeks a $12,000 penalty (reduced during negotiations
from the statutory maximum of SI 25,000) from the Cobbs for a Clean Water Act violation by Choo-
Choo Industries, a partnership in which Eldridge Cobb holds an 80 percent interest.
The Cobbs' individual income tax returns for 1998 through 2000 and the couple's completed
Financial Data Request Form are attached.
Assignments
1. Use the INDIPAY model to conduct an initial ability to pay analysis of the Cobbs.
a. What does the model conclude concerning the Cobbs' ability to pay the $12,000
penalty?
b. What is the $12,000 penalty as a percent of the couple's total average income. Does
this percentage appear high or low?
c. Does the penalty represent a large proportion of the couple's annual available cash
flow? Can they likely pay the penalty in one payment, or do they require a flexible
payment schedule?
d. If they choose to borrow the money to fund the penalty, what are their annual debt
payments as a percentage of average income? Does this percentage seem high?
Reviewing the "Net Worth" section of the INDIPAY results, what assets, if any might be
available for penalty payment?
Contains Enforcement Sensitive Material
IV-1
INDIPAY: July 2002
-------
3. Reviewing the "Current Living Expenses" section of the INDIPAY results:
a. Do the cited expenses appear reasonable given the size of the household?
b. With the available information, might the household's expenses change in coming
years?
c. Suppose that the Cobbs inform you that Mr. Cobb's mother, who has limited
financial capabilities, has recently become incapacitated, and that Mr. Cobb must pay
for nursing home care. How might you incorporate this information into your ability
to pay analysis?
4. Reviewing the "Summary of Applicant's Income Sources" section of the INDIPAY detailed
printouts:
a. Can you identify any large variations in income that may skew the model results?
b. How might you investigate the negative business income generated by the Cobbs in
1998 and 2000? What potential ramifications does this negative income have
concerning the model results?
c. Suppose that the Cobbs inform you that Pamela Cobb has decided to quit working
in order to focus on her household activities, eliminating the $20,000 that she
contributes to the family's annual income. How would you incorporate this
information into your ability-to-pay conclusion?
Contains Enforcement Sensitive Material
rv-2
INDIPAY: July 2002
-------
INDIPAY SAMPLE PROBLEM: The Cobbs
Solutions
1. Reviewing the INDIPAY results:
a. With the currently available information, both Tests A and B conclude that the Cobbs
are able to afford a SI2,000 penalty.
b. The 512,000 penalty represents approximately 15 percent of the Cobbs' average
annual income (i.e., $12,000 divided by 579,826). Whether this is a relatively high
or low percentage is dependent upon the respondent's available annual cash flow,
debt burden, and available assets.
c. The 512,000 penalty represent approximately 52 percent of the Cobbs' annual
average cash flow (i.e., 512,000 divided by 523,216), suggesting that the couple
could fund this penalty with excess cash they are likely to generate over a period of
only six months, a relatively low burden.
d. Should the couple choose to borrow the money to fund the penalty payment, and
repay this loan over a period of five years, the couple's annual debt payments as a
percentage of annual income could increase from 30 percent to 34.4 percent. As a
general rule of thumb, lenders are hesitant to loan individuals additional funds if their
debt payment to income ratio is 36 percent. The Cobbs are pushing up against this
threshold, but still within it.
2. The Cobbs' personal assets, worth $406,500, consist primarily of their personal residence,
outstanding loans receivable, and a checking account. These assets greatly exceed the
Cobbs' 5195,500 in liabilities (comprising mainly a mortgage on their home), yielding a net
worth of over S200,000. The Cobbs could potentially borrow additional funds against their
home. In addition, they have made personal loans of 580,000 to Newtown, Inc. (of which
they are part owners) and 51,500 to Robert Martin. These loans are potentially callable to
fund the penalty. Another possible asset source is their checking account, the current balance
of which is 525,000, although they do have $15,000 in credit card debt to repay. In addition,
for a couple of their age, they have relatively low retirement savings.
Contains Enforcement Sensitive Material IV-3
INDIPAY: July 2002
-------
3. Review of current living expenses:
a. The couple claims approximately 554,000 in necessary annual living expenses. At
first glance, this amount seems reasonable given the size of the household (including
two dependents).
b. The Financial Data Request Form indicates the couple's two children are 20 and 22
years old, suggesting they may be leaving the household in coming years. On the
other hand, the couple cites no education-related expenses, so they may be
understating total expenses if their children are enrolled in college.
c. This scenario is tricky. You may want to get confirmation of the mother's healthcare
requirements and related costs. You may also have to investigate whether she truly
lacks sufficient financial resources to fund these expenses herself. However, if the
Cobbs' clearly must fund these expenses for her well-being, if the expenses represent
a significant burden on the family's financial capabilities, then you may need to
mitigate the penalty by some appropriate amount.
4. Review of income sources:
a. The couple earns an annual average income of $79,826, a figure significantly greater
than the median income for a four-person household in Durham County. The self-
employed Cobb's couple generate most of their income from wages, but this income
varies considerably year-to-year. You may want to investigate which year's income
is likely to be most representative of future years' income.
b. While the Cobbs' business activities are generating income, the couple is also
deducting business expenses related to these activities that are greater than this
income. Do these losses arise from true cash expenses or simply non-cash expenses
related to depreciation or other factors? You may want to investigate this issue to
determine if their average annual income and cash flow is understated as a result.
c. The elimination of this income significantly reduces the couple's annual cash flow.
Determining how to handle this event would be a matter of EPA policy. For
example, can the Agency require Pamela Cobb to continue working to enable the
couple to pay the full penalty? Should EPA mitigate penalty amount in response to
applicants' personal lifestyle choices? How does the Agency determine what level
of financial burden, and thereby standard of living, it should impose on individual
applicants? These difficult questions — with no easy answers — come up in many
individual ability-to-pay cases.
Contains Enforcement Sensitive Material
IV-4
INDIPAY: July 2002
-------
1040
Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return
98
(99) IRS Use Only—Do not write or staple in thts space
For tfie year Jan 1-Dec. 31, 1998. or other tax year beginning
, 1998, ending
19
Label
(See
instructions
on page 18)
Use the IRS
label.
Otherwise,
please print
or type.
Presidential ^—
Election Campaign
(See page 18)
Your first name and initial
Eldridge
If a joint return, spouse s first name and initai
Pamela
OMB No 1545-0074
Last name
Cobb
Last name
Cobb
Your social security number
Spouse's social security number
Home address (number and street) If you have a P 0 box, see page 18
9 Shoelace Lane
Apt no
City, town or post office, state, and ZIP code If you have a foreign address, see page 18
Durham, NC 27707
IMPORTANT! ^
You must enter
your SSN(s) above.
~
Do you want S3 to go to this fund9
If a joint return, does your spouse want $3 to go to this fund?
Yes
No

X
Note- Chocking
'Yes' will not
change your tax or
redur.fi your refund
Filing Status
Check only
one box
Single
Married filing joint return (even if only one had income)
Married filing separate return Enter spouse's social secunty no above and full name here ~
Head of household (with qualifying person) (See page 18 ) If the qualifying person is a child but not your dependent,
enter this child's name here. ~
Qualifying widow(er) with dependent child (year spouse died ~ 19
(See page 18)
Exemptions
If more than six
dependents,
see page 19.
6a
Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax '
return, do not check box 6a
Dependents:
(1) First name
Last name
(2) Dependent's
social security number
(3) Dependent's
relationship to
VOll
(4)V if qualifying
child (or child
credit (see woe 19)
Caroline

daughter
~
John C

son
~

~
d Total number of exemptions claimed
No. of boxes
checked on
6a and 6b _
No. of your
children on 6c
who:
• lived with you _
• did not live with
you due to divorce
or separation
(see page 19)
Dependents on 6c
not entered above _
Add numbers
entered on
lines above

Income
Attach
Copy B of your
Forms W-2,
W-2G, and
1099-R here.
If you did not
get a W-2,
see page 20
Enclose, but do
not staple, any
payment Also,
please use
Form 1040-V.
7
8a
b
9
10
11
12
13
14
15a
16a
17
18
19
20a
21
22
8b
Wages, salaries, tips, etc Attach Form(s) W-2 .
Taxable interest Attach Schedule B if required
Tax-exempt interest DO NOT include on line 8a .
Ordinary dividends Attach Schedule B if required
Taxable refunds, credits, or offsets of state and local income taxes (see page 21)
Alimony received ;
Business income or (loss). Attach Schedule C or C-EZ
Capital gain or (loss) Attach Schedule D
Other gains or (losses). Attach Form 4797 .
Total IRA distributions .
Total pensions and annuities
15a
16a
b Taxable amount (see page 22)
b Taxable amount (see page 22)
Rental real estate, royalties, partnerships, S corporations, trusts, etc Attach Schedule E
Farm income or (loss). Attach Schedule F
Unemployment compensation
Social security benefits . I 20a I 1 I b Taxable amount (see page 24)
Other income. List type and amount—see page 24
Add the amounts in the far right column for lines 7 through 21 This is your total income ~
8a
10
11
12
13
14
15b
16b
17
18
19
20b
21
22
92110
10064
5002
-3000
787
1812
106775
Adjusted
Gross
Income
If line 33 is under
$30,095 (under
$10,030 if a child
did not live with
you), see ElC
inst. on page 36
23
24
25
26
27
28
29
30
31a
32
33
IRA deduction (see page 25)
Student loan interest deduction (see page 27),
Medical savings account deduction. Attach Form 8853 .
Moving expenses Attach Form 3903
One-half of self-employment tax. Attach Schedule SE
Self-employed health insurance deduction (see page 28)
Keogh and self-employed SEP and SIMPLE plans . .
Penalty on early withdrawal of savings
Alimony paid b Recipient's SSN ~ ; '¦
Add lines 23 through 31a . ... ...
23
24
25
26
27
28
29
30
31a
67
M
'Ml#
SI
jt
32
67
Subtract line 32 from line 22. This is
your adjusted gross income
33
106,708
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 51.
Cat No 11320B
Form 1040 (1998)
-------
Form 1040 (1998)
Page 2
Tax and
Credits
Standard
Deduction
for Most
People
Single:
$4,250
Head of
household:
S6.250
Married filing
jointly or
Qualifying
widow(cr)
S7.100
Married
filing
separately:
S3,550
34
35a
36
37
38
39
40
41
42
43
44
45
46
47
48
49
Amount from line 33 (adjusted gross income)
Check if CD You were 65 or older. CI Blind: CD Spouse was 65 or older, CD Blind
Add the number of boxes checked above and enter the total here . . . . ~ 35a
If you are married filing separately and your spouse itemizes deductions or
you were a dual-status alien, see page 29 and check here ~ 35b D
Enter the larger of your itemized deductions from Schedule A, line 28, OR standard
deduction shown on the left. But see page 30 to find your standard deduction if you
checked any box on line 35a or 35b or if someone can claim you as a dependent .
Subtract line 36 from line 34
If line 34 is $93,400 or less, multiply $2,700 by the total number of exemptions claimed on
line 6d If line 34 is over $93,400, see the worksheet on page 30 for the amount to enter .
Taxable income. Subtract line 38 from line 37 If line 38 is more than line 37, enter -0-
Tax. See page 30 Check if any tax from a CD Form(s) 8814 b CD Form 4972 . , ^
Credit for child and dependent care expenses Attach Form 2441
Credit for the elderly or the disabled. Attach Schedule R . .
Child tax credit (see page 31)
Education credits. Attach Form 8863
Adoption credit Attach Form 8839
Foreign tax credit. Attach Form 1116 if required ....
Other. Check if from a CD Form 3800 b CD Form 839B
c CD Form 8801 d CD Form (specify)
P-riSc.
y v
vfi'cO
'0§
36
38
41
42
43
44
45
46
47
gsgi
$0*
w&'ir
Add lines 41 through 47. These are your total credits
Subtract line 48 from line 40 If line 48 is more than line 40, enter -0-
37
39
40
48
49
Other
Taxes
50
51
52
53
54
55
56
Self-employment tax Attach Schedule SE
Alternative minimum tax Attach Form 6251
Social security and Medicare tax on tip income not reported to employer Attach Form 4137
Tax on IRAs, other retirement plans, and MSAs Attach Form 5329 if required
Advance earned income credit payments from Form(s) W-2
Household employment taxes. Attach Schedule H
Add lines 49 through 55 This is your total tax ~
50
51
52
53
54
55
56
Payments
Attach
Forms W-2
and W-2G
on the front.
Also attach
Form 1099-R
if tax was
withheld.
58
r&v'i
59a
57 Federal income tax withheld from Forms W-2 and 1099 . .
58 1998 estimated tax payments and amount applied from 1997 return .
59a Earned income credit Attach Schedule EIC if you have a qualifying
child b Nontaxable earned income, amount ~ I I I
and type ~
60 Additional child tax credit Attach Form 8812
61 Amount paid with Form 4868 (request for extension) . . .
62 Excess social security and RRTA tax withheld (see page 43)
63 Other payments Check if from a CI Form 2439 b CD Form 4136
64 Add lines 57. 58. 59a. and 60 through 63. These are your total payments
57
60
61
62
63

64
65 If line 64 is more than line 56, subtract line 56 from line 64 This is the amount you OVERPAID
66a Amount of line 65 you want REFUNDED TO YOU ~
Refund
Have it
directly
deposited!
See page 44
and fill in 66b
66c, and66d 67 Amount of line 65 you want ftPPLlED TO YOUR 1999 ESTIMATED TftX ~ | 67
65
66a
~ b Routing number

~ c Type CD Checking CD Savings
~ d Account number

AmOUnt " 'me ^ ls rnore ^an 'lne subtract line 64 from line 56 This is the AMOUNT YOU OWE.
YOU Owe ^or details on how 10 P3^' see ^
69 Estimated tax penalty Also include on line 68 I 69 | 1

i '•*&
id.
68

Sign
Here
Joint return?
See page 18.
Keep a copy
for your
records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, ard to the best of my knowledge and
belief, they are tiue. correct, and complete Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge
~
Your signature
Spouse's signature If a joint return. BOTH must sign
Date
Date
Your occupation
Spouse's occupation
Daytime telephone
number (optional)
(
)
Paid
Preparer's
signature
~
Preparer s Firm.s name (or yours.
Use Onlv if self-employed) and i
3 aQdress f
Date
Check if _
self-employed LJ
Preparer's social secunty no
EIN
ZIP code
©
-------
SCHEDULES A&B
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Schedule A—Itemized Deductions
(Schedule B is on back)
~ Attach to Form 1040. ~ See Instructions for Schedules A and B (Form 1040).
OMB No 1545-0074
98
Attachment
Sequence No 07
Name(s) shown on Form 1040
Eldridge and Pamela Cobb
1

Your social security number
Medical
and
Dental
Expenses
Caution: Do not include expenses reimbursed or paid by others
Medical and dental expenses (see page A-1) . . . „
Enter amount from Form 1040, line 34I 2 | |_
Multiply line 2 above by 7.5% (.075) . ....
Subtract line 3 from line 1. If line 3 is more than line 1, enter
0-
4
Taxes You
Paid
(See
page A-2.)
State and local income taxes . . .
Real estate taxes (see page A-2) . .
Personal property taxes
Other taxes List type and amount ~ .
4945
1940
9 Add lines 5 through 8.
i
V-i'i'
.5 J'
- M"
9
6885
Interest
You Paid
(See
page A-3 )
Note:
Personal
interest is
not
deductible
10
11
12
13
14
Home mortgage interest and points reported to you on Form 1098
Home mortgage interest not reported to you on Form 1098 If paid
to the person from whom you bought the home, see page A-3
and show that person's name, identifying no , and address ~
Points not reported to you on Form 1098. See page A-3
for special rules
Investment interest Attach Form 4952 if required (See
page A-3.)
Add lines 10 through 13 .
10
11
12
13
16986
•Y'f J>J
14
15
1500

16
600

16986
15
Gifts to
Charity
if you made a 16
gift and got a
benefit for it, ^ ^
see paqe A-4
3 18
Gifts by cash or check. If you made any gift of $250 or
more, see page A-4
Other than by cash or check. If any gift of $250 or more,
see page A-4. You MUST attach Form 8283 if over $500
Carryover from prior year
Add lines 15 through 17
18
2100
Casualty and
Theft Losses 19
Casualty or theft loss(es). Attach Form 4684 (See page A-5)
19
Job Expenses 20
and Most
Other
Miscellaneous
Deductions
(See
page A-6 for
expenses to
deduct here.)
21
22
23
24
25
26
Unreimbursed employee expenses—job travel, union
dues, job education, etc. You MUST attach Form 2106
or 2106-EZ if required. (See page A-5 ) ~
Tax preparation fees .
Other expenses—investment, safe deposit box, etc. List
type and amount ~
Add lines 20 through 22 . . .
Enter amount from Form 1040, line 34.
Multiply line 24 above by 2% (.02)
24
'a. -

25
2398

Subtract line 25 from line 23. If line 25 is more than line 23, enter -0-
26
2869
Other 27
Miscellaneous
Deductions
Other—from list on page A-6 List type and amount ~
27
Total 28 Is Form 1040, line 34, over $124,500 (over $62,250 if married filing separately)''
Itemized NO. Your deduction is not limited. Add the amounts in the far right column
Deductions for lines 4 through 27. Also, enter on Form 1040, line 36, the larger of i
this amount or your standard deduction.
YES. Your deduction may be limited See page A-6 for the amount to enter.
28

28400
-i. •r' r'->- ** «•
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11330X
Schedule A (Form 1040) 1998
-------
Schedules A&B (Form 1040) 1998
OMB No 1545-0074
Page 2
Name(s) shown on Form 1040 Do not enter name and social security number if shown on other side
Your social secuity number
Schedule B—Interest and Ordinary Dividends
Part I
Interest
(See paqes 20
and B-1.)
Note: If you
received a Form
1099-INT, Form
1099-OID. or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the total interest
shown on that
form.
List name of payer. If any interest is from a seller-financed mortgage and the
buyer used the property as a personal residence, see page B-1 and list this
interest first Also, show that buyer's social security number and address ~
2 Add the amounts on line 1
3 Excludable interest on series EE U.S savings bonds issued after 1989 from Form
8815, line 14. You MUST attach Form 8815 to Form 1040
4 Subtract line 3 from line 2 Enter the result here and on Form 1040, line 8a ~
Attachment
Sequence No 08
Note: If you had over $400 in taxable interest income, you must also complete Part III
Amount
Part II
Ordinary
Dividends
(See pages 21
and B-1 )
Note: If you
received a Form
1099-DIV or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the ordinary
dividends shown
on that form
Note: If you had over $400 in ordinary dividends, you must also complete Part III
List name of payer. Include only ordinary dividends. Report any capital gain
distributions on Schedule D, line 13 ~
6 Add the amounts on line 5. Enter the total here and on Form 1040, line 9
Amount
Part III
Foreign
Accounts
and Trusts
(See
page B-2)
You must complete this part if you (a) had over $400 of interest or ordinary dividends, (b) had a foreign
account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
7a At any time during 1998, did you have an interest in or a signature or other authority over a financial
account in a foreign country, such as a bank account, securities account, or other financial
account7 See page B-2 for exceptions and filing requirements for Form TD F 90-22 1 . . . .
b If "Yes," enter the name of the foreign country ~
8 During 1998, did you receive a distribution from, or were you the grantor of, or transfeior to, a
foreign trust7 If "Yes," you may have to file Form 3520. See page B-2 .... . . . .
Yes
No

ifcKSK

n
IIS
For Paperwork Reduction Act Notice, see Form 1040 instructions.
©
Schedule B (Form 1040) 1998
-------
SCHEDULE C
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Profit or Loss From Business
(Sole Proprietorship)
~ Partnerships, joint ventures, etc., must file Form 1065 or Form 106S-B.
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule C (Form 1040).
OMB No 1545-0074
11198
Attachment
Sequence No 09
Name of proprietor
Eldridge Cobb
Social security number (SSN)
A Principal business or profession, including product or service (see page C-1)
1099- MISC NEC
B Enter NEW code from pages C-8 & 9
~I I I M I
C Business name. If no separate business name, leave blank
E. L. Cobb
D Employer ID number (EIN), if any
E Business address (including suite or room no.) ~ .._?.?hoeJace Road
City, town or post office state, and ZIP code Durham, NC 27707
F Accounting method- (1) E Cash (2) CD Accrual (3) EH Other (specify) ~
G Did you "materially participate" in the operation of this business during 19987 If "No," see page C-2 for limit on losses H Yes CH No
H If you started or acquired this business during 1998. check here
Income
~ ~
Gross receipts or sales Caution: If this income was reported to you on Form W-2 and the "Statutory
employee" box on that form was checked, see page C-3 and check here
Returns and allowances
Subtract line 2 from line 1
Cost of goods sold (from line 42 on page 2)

Gross profit. Subtract line 4 from line 3
Other income, including Federal and state gasoline or fuel tax credit or refund (see page C-3)
Gross income. Add lines 5 and 6 ....
5002
5002
5002
5002
Part II
Expenses. Enter expenses for business use of your home only on line 30
8
9
10
11
12
13
14
15
16
a
t
17
18
Advertising
Bad debts from sales or
services (see page C-3) .
Car and truck expenses
(see page C-3) .
Commissions and fees
Depletion
Depreciation and section 179
expense deduction (not included
in Part III) (see page C-4) . .
Employee benefit programs
(other than on line 19) .
Insurance (other than health) .
Interest.
Mortgage (paid to banks, etc ) .
Other
Legal and professional
services
Office expense
8

Jir'.b--
16a

16b

19 Pension and profit-sharing plans
20 Rent or lease (see page C-5)
a Vehicles, macnmery, and equipment
b Other business property
21 Repairs and maintenance
22 Supplies (not included in Part
23 Taxes and licenses .
24 Travel, meals, and entertainment
a Travel
b Meals and en-
tertainment .
c Enter 50% of
line 24b subject
to limitations
(see page C-6) .
d Subtract line 24c from line 24b
25 Utilities
26 Wages (less employment credits) .
27 Other expenses (from line 48 on
page 2)
19
20a
20b
21
22
23
24a
24d
25
26
27
28 Total expenses before expenses for business use of home Add lines 8 through 27 in columns
28
29
30
31
32
Tentative profit (loss) Subtract line 28 from line 7 ...
Expenses for business use of your home Attach Form 8829 ...
Net profit or (loss). Subtract line 30 from line 29.
• If a profit, enter on Form 1040, line 12, and ALSO on Schedule SE, line 2 (statutory employees,
see page C-6). Estates and trusts, enter on Form 1041, line 3.
• If a loss, you MUST go on to line 32
If you have a loss, check the box that describes your investment in this activity (see page C-6).
• If you checked 32a, enter the loss on Form 1040, line 12, and ALSO on Schedule SE, line 2
(statutory employees, see page C-6) Estates and trusts, enter on Form 1041, line 3
• If you checked 32b, you MUST attach Form 6198.
29
30
31
5002
5002
32a ~ All investment is at risk
32b [Z] Some investment is not
at risk
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11334P
Schedule C (Form 1040) 1998
-------
Schedule C (Form 1040) 1998
Page 2
Part III
Cost of Goods Sold (see page C-7)
~ Yes CU No
33 Method(s) used to
value closing inventory a LI Cost b LJ Lower of cost or market c C] Other (attach explanation)
34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory7 If
"Yes," attach explanation
35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation .
36 Purchases less cost of items withdrawn for personal use
37 Cost of labor. Do not include any amounts paid to yourself
38 Materials and supplies
39 Other costs
40 Add lines 35 through 39
41 Inventory at end of year
42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on page 1. line 4 . .
Part IV
35

Information on Your Vehicle. Complete this part ONLY if you are claiming car or truck expenses on
line 10 and are not required to file Form 4562 for this business See the instructions for line 13 on page
C-4 to find out if you must file
43 When did you place your vehicle in service for business purposes? (month, day, year) /. /,
44 Of the total number of miles you drove your vehicle during 1998, enter the number of miles you used your vehicle for.
a Business b Commuting c Other
45 Do you (or your spouse) have another vehicle available for personal use7 D Yes
46 Was your vehicle available for use during off-duty hours'' dl Yes
47a Do you have evidence to support your deduction? . . ... dl Yes
b If "Yes." is the evidence written' .... ... ... ~ Yes
~ No
~ No
~ No
~ No
Other Expenses. List below business expenses not included on lines 8-26 or line 30.
48 Total other expenses. Enter here and on page 1. line 27 48
©
-------
SCHEDULE D
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Capital Gains and Losses
~ Attach to Form 1040. ~ See Instructions for Schedule D (Form 1040).
~ Use Schedule D-1 for more space to list transactions for lines 1 and 8.
OMB No 1545-0071
98
Attachment
Sequence No 12
Name(s) shown on Form 1040
Eldridge & Pamela Cobb
Part I
Your social security number
Short-Term Capital Gains and Losses—Assets Held One Year or Less
(a) Description of property
(Example 100 sh XYZ Co)
"i nonbusiness
bad debt
—nonbusiness
bad debt
call Glaxo Hldgs
-------
Schedule D (Form 1040) 1998
Part III
Page 2
Summary of Parts I and II
17 Combine lines 7 and 16 If a loss, go to line 18. If a gain, enter the gain on Form 1040, line 13
Next: Complete Form 1040 through line 39. Then, go to Part IV to figure your tax if.
• Both lines 16 and 17 are gains, and
• Form 1040, line 39, is more than zero.
18 If line 17 is a loss, enter here and as a (loss) on Form 1040, line 13. the smaller of these losses.
• The loss on line 17; or
• ($3,000) or, if married filing separately, ($1,500)
Next: Complete Form 1040 through line 37. Then, complete the Capital Loss Carryover
Worksheet on page D-6 if:
• The loss on line 17 exceeds the loss on line 18, or
• Form 1040, line 37, is a loss.
Part IV
Tax Computation Using Maximum Capital Gains Rates
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
20

45
46
47
48
49
50
51
52
53
54
-------
SCHEDULE E
(Form 1040)
Department of the Treasury
internal Revenue Service (99;
Supplemental Income and Loss
(From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule E (Form 1040).
0MB No 1545-0074
1198
Attachment
Sequence No 13
Name(s) shown on return
Eldridge arid Pamela Cobb
Your social security number
Part 1
| Income or Loss From Rental Real Estate and Royalties Note: Report income and expenses from your business of renting
personal property on Schedule C or C-EZ (see page E-1), Report farm rental income or loss from Form 4835 on page 2, line 39.
1
Show the kind and location of each rental real estate property:
2 For each rental real estate property

Yes
No
A
Office
listed on line 1, did you or your family
use it during the tax year for personal
purposes for more than the greater of'
• 14 days, or
• 10% of the total days rented at
fair rental value?
(See page E-1 )
A

Durham NC
B

Properties
Totals
(Add columns A, B, and C )
income:

A
B
C
3 Rents received
3
6590

3
6590

4 Royalties received
4

Expenses:
5 Advertising
5

6 Auto and travel (see page E-2) .
7 Cleaning and maintenance. . .
8 Commissions
6

9 Insurance
9

10 Legal and other professional fees
11 Management fees
10

12 Mortgage interest paid to banl;s,
etc (see page E-2)
12

12
13 Other interest
13

;>'
-------
Schedule £ (Form 1040) 1998
Attachment Sequence No 13
Page 2
Namc(s) shown on return Do not enter name and social security number if shown on other side
Your social security number
Note: If you report amounts from farming or fishing on Schedule E, you must enter your gross income from those activities on line
4 7 below Real estate professionals must complete line AZ below
Part II
Income or Loss From Partnerships and S Corporations Note: if you report a loss from an at-risk activity, you must check
either column (e) or (f) on line 21 to desenbeyour investment in the activity See page E-5 If you check column (f), you must attach Form 6198.
27 (a) Name
(b) Enter P for
partnership S
for 5 corporation
(c) Check if
foreign
partnership
(d) Employer
identification
number
investmc
(e) All is
at nsk
nt At Risk?
(f) Some is
not at nsk
A
Choo-Choo Industrial Center
p

B
Ninus Corporation
s

Passive Income and Loss
Non
passive Income and Loss
<9> Passive loss allowed
(attach Form 8582 if required)
(h) Passive income
from Schedule K-1
(i) Nonpassive loss
from Schedule K-1
(j) Section 179 expense
deduction
from Form 4562
(k) Nonpassive income
from Schedule K-1
28a Totals
b Totals
29 Add columns (h) and (k) of line 28a
30 Add columns (g), (i). and ()) of line 28b
31 Total partnership and S corporation income or (loss). Combine lines 29 and 30. Enter the result
here and include in the total on line 40 below
Part III
29
1409
30
( 7060
31
-5651
Income or Loss From Estates and Trusts
32
(a) Name
(b) Employer
identification number
Passive Income and Loss
(c) Passive deduction or loss allowed
(attdch Form 8582 if required)
(d) Passive income
from Schedule K-1
(e) Deduction or loss
from Schedule K-1
(0 Other income from
Schedule K-1
A

873

33a Totals
b Totals

873

34 Add column^ (d) and (f) of line 33a
35 Add columns (c) and (e) of line 33b
36 Total estate and trust income or (loss
in the total on line 40 below . .

34
873

35
(
)
) Combine lines 34 and 35. Enter the result here and include
36
873

Nonpassive Income and Loss
Part IV
Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)—Residual Holder
37
(a) Name
(b) Employer
identification number
(c) Excess inclusion from
Schedules Q, line 2c (see
page E-(3)
(d) Taxable income Inet loss)
from Schedules Q, line lb
(e) income from Schedules Q,
line 3b
38 Combine columns (d) and (e) only. Enter the result here and include in the total on line 40 below
Part V
38
Summary
39 Net farm rental income or (loss) from Form 4835. Also, complete line 41 below
40 TOTAL income or (loss) Combine lines 26, 31, 36, 38, and 39 Enter the result here and on Form 1040, line 17 ~
41
42
Reconciliation of Farming and Fishing Income. Enter your gross
farming and fishing income reported on Form 4835, line 7; Schedule
K-1 (Form 1065), line 15b, Schedule K-1 (Form 1120S), line 23, and
Schedule K-1 (Form 1041), line 14 (see page E-6)
Reconciliation for Real Estate Professionals. If you were a real estate
professional (see page E-4), enter the net income or (loss) you reported
anywhere on Form 1040 from all rental real estate activities in which
you materially participated under the passive activity loss rules. . .
41
42
39
40
1812
©
-------
1040
Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return
99
(99)
IRS Use Only—Do not write or staple in this space
For the year Jan 1-Dec 31. 1999. or other tax year beginning
1999, ending
Label
(See
instructions
on page 18)
Use the IRS
label.
Otherwise,
please print
or type
Presidential v<—
Election Campaign
(See page 18)
OMB No 1545-0074
Your first name and initial
Eldridge
If a joint return, spouse's first name and initia!
Pamela
Last name
Cobb
Last name
Cobb
Your social security number
Spouse's social security number
Home address (number and street) If you have a P 0 box, see page 16
9 Shoelace Lane
Apt no
Crty, town or post office, state, and ZIP code If you have a foreign address, see page 18
Durham, NC 27707
^ IMPORTANT! ^
You must enter
your SSN(s) above
~
Do you want $3 to go to this fund? ... .
If a joint return, does your spouse want $3 to go to this fund9
Yes
No

X
Note. Checking
"Yes" will not
change your tax or
reduce vour refund
Filing Status
Check only
one box.
Single
Married filing joint return (even if only one had income)
Marned filing separate return Enter spouse's social security no. above and full name here ~
Head of household (with qualifying person). (See page 18 ) If the qualifying person is a child but not your dependent.
enter this child's name here. ~
Qualifying widow(er) with dependent child (year spouse died ~ 19 ) (See page 18)
Exemptions
If more than six
dependents,
see page 19
6a
b
c
K] Yourself. If your parent (or someone else) can claim you as a dependent on his or her tax
return, do not check box 6a
Dependents:
(1) First name Lasl name
(2) Dependent's
social security number
(3) Dependent's
relationship to
YOU
(4]V it qualrlyng
child lor child tax
credi: (see pane 19)
Caroline

daughter
~
John C

son
~

~
d Total number of exemptions claimed
No. of boxes
checked on
6a and 6b
No. of your
children or 6c
who:
• lived with you _
• did not live with
you due to divorce
or separation
(see page 19)
Dependents on 6c
not entered above _
Add numbers
entered on
lines above ~
~
Income
Attach
Copy B of your
Forms W-2 and
W-2G here.
Also attach
Form(s) 1099-R
if tax was
withheld.
If you did not
get a W-2,
see page 20
Enclose, but do
not staple, any
payment. Also,
please use
Form 1040-V.
7
8a
b
9
10
11
12
13
14
15a
16a
17
18
19
20a
21
22
I 8b |
Wages, salaries, tips, etc Attach Form(s) W-2 .
Taxable interest Attach Schedule B if required
Tax-exempt interest. DO NOT include on line 8a
Ordinary dividends. Attach Schedule B if required
Taxable refunds, credits, or offsets of state and local income taxes (see page 21) .
Alimony received
Business income or (loss) Attach Schedule C or C-EZ
Capital gain or (loss) .Attach Schedule D if required. If not required, check here ~
Other gains or (losses) Attach Form 4797
Total IRA distributions .
Total pensions and annuities
~
15a
16a
b Taxable amount (see page 22)
b Taxable amount (see page 22)
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E
Farm income or (loss). Attach Schedule F
Unemployment compensation
Social security benefits . 1 20a I I I b Taxable amount (see page 24)
Other income List type and amount (see page 24)
Add the amounts in the fat right column for lines 7 through 21 This is your total income ~
8a
Shi
10
11
12
13
14
15b
16b
17
18
19
20b
21
22
95059
4869
10326
-3000
819
-41,746
66,327
Adjusted
Gross
Income
23
24
25
26
27
28
29
30
31a
32
33
IRA deduction (see page 26)
Student loan interest deduction (see page 26) .
Medical savings account deduction Attach Form 8853 .
Moving expenses Attach Form 3903
One-half of self-employment tax. Attach Schedule SE
Self-employed health insurance deduction (see page 28)
Keogh and self-employed SEP and SIMPLE plans . .
Penalty on early withdrawal of savings
Alimony paid b Recipient's SSN ~ i !
Add lines 23 through 31a .
23
24
25
26
27
28
29
30
31a
139
Vf'Vrl-
' r. '
Mfe'
i'W
3
-------
Form 1040 (1999)
Page 2
Tax and
Credits
Standard
Deduction
for Most
People
Single:
$4,300
Head of
household
S6.350
Married Tiling
jointly or
Qualifying
widow(cr)-
S7.200
Marned
filing
separately-
S3,600
34
35a
36
37
38
39
40
41
42
43
44
45
46
47
48
49
Amount from line 33 (adjusted gross income)
Check if- CH You were 65 or older, ED Blind, CI Spouse was 65 or older, CH Blind.
Add the number of boxes checked above and enter the total here . . . ~ 35a
If you are married filing separately and your spouse itemizes deductions or
you were a dual-status alien, see page 30 and check here ~ 35b D
Enter your itemized deductions from Schedule A, line 28, OR standard deduction
shown on the left. But see page 30 to find your standard deduction if you checked any
box on line 35a or 35b or if someone can claim you as a dependent
Subtract line 36 from line 34
If line 34 is $94,975 or less, multiply $2,750 by the total number of exemptions claimed on
line 6d If line 34 is over $94,975, see the worksheet on page 31 for the amount to enter .
Taxable income. Subtract line 38 from line 37. If line 38 is more than line 37. enter -0-
Tax (see page 31), Check if any tax is from a CH Form(s) 8814 b CH Form 4972 . . ~
Credit for child and dependent care expenses Attach Form 2441
Credit for the elderly or the disabled. Attach Schedule R .
Child tax credit (see page 33)
Education credits. Attach Form 8863
Adoption credit Attach Form 8839
Foreign tax credit Attach Form 1116 if required
Other Check if from a d Form 3800 b CD Form 8396
cCH Form 8801 d CD Form (specify)
36
41
42
43
44
45
46
47
f;-s£5f
Add lines 41 through 47. These are your total credits . . .
Subtract line 48 from line 40. If line 48 is more than line 40, enter -0-
34
37
38
39
40
$0
48
49
Other
Taxes
50
51
52
53
54
55
56
Self-employment tax. Attach Schedule SE
Alternative minimum tax. Attach Form 6251
Social security and Medicare tax on tip income not reported to employer Attach Form 4137
Tax on IRAs, other retirement plans, and MSAs Attach Form 5329 if required .....
Advance earned income credit payments from Form(s) W-2
Household employment taxes Attach Schedule H
Add lines 49 through 55 This is your total tax ~
50
51
52
53
54
55
56
Payments 57
58
59a
b
60
61
62
63
64
59a
Federal income tax withheld from Forms W-2 and 1099 . .
1999 estimated tax payments and amount applied from 1998 return .
Earned income credit. Attach Sch EIC if you have a qualifying child
Nontaxable earned income amount . .. ~ I I I
and type ~
Additional child tax credit Attach Form 8812
Amount paid with request for extension to file (see page 48)
Excess social security and RRTA tax withheld (see page 48)
Other payments. Check if from a CD Form 2439 b CD Form 4136
Add lines 57. 58. 59a. and 60 through 63 These are your total payments
57
58
60
61
62
63
.'J &
v-.Cf
wn
64
Refund
Have it
directly
deposited1
See page 48
and fill in 66b,
66c, and 66d
65 If line 64 is more than line 56. subtract line 56 from line 64. This is the amount you OVERPAID
66a Amount of line 65 you want REFUNDED TO YOU ~
65
66a
Routing number
Account number

~ c Type r~| Checking [~~] Savings

67 Amount of line 65 you want APPLIED TO YOUR 2000 ESTIMATED TAX ~ | 67
AmOUnt 'me ls more ttlan 'ine 64. subtract line 64 from line 56 This is the AMOUNT YOU OWE,
You Owe For deta'ls on how t0 P3^' see Pa9e • ^
69 Estimated tax penalty Also include on line 68 I 69 | |
p;
-i'Sl.
68

Sign
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and
belief, they are true correct, and complete Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge
Joint return?
See page 18.
Your siqnature
i
Date
Your occupation
Daytime telephone
number (optional)
( )
Keep a copy
for your
records.
Spouse's signature If a joint return, BOTH must sign
Date
Spouse's occupation

Paid
Preparer's
Use Only
Preparer's ^
signature W

Date
Check if
snff-umploytid LJ
Preparer's SSN or PTIN
Firm's name (or yours L

EIN ;
adcress f

ZIP code
Form 1040 (1999)
©
-------
SCHEDULES A&B
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Schedule A—Itemized Deductions
(Schedule B is on back)
~ Attach to Form 1040. ~ See Instructions for Schedules A and B (Form 1040).
OMB No 1545-0074
99
Attachment
Sequence No 07
Name(s) shown
Eldrigde
on Form 1040
and Pamela Cobb
Your social security number

Medical
and
Dental
Expenses
Caution. Do not include expenses reimbursed or paid by others
Medical and dental expenses (see page A-1) . . . .
Enter amount from Form 1040, line 34. I 2 | [_
Multiply line 2 above by 7.5% (075)
Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-
Taxes You
Paid
(See
page A-2.)
5 State and local income taxes . . .
6 Real estate taxes (see page A-2) . .
7 Personal property taxes
8 Other taxes. List type and amount ~ .
5238
2141
t, ,Vr
•r J-
;t • •'
$3'
Add lines 5 through
7379
Interest
You Paid
(See
page A-3.)
Note.
Personal
interest is
not
deductible.
10
11
12
13
14
Home mortgage interest and points reported to you on Form 1098
Home mortgage interest not reported to you on Form 1098. If paid
to the person from whom you bought the home, see page A-3
and show that person's name, identifying no , and address ~
Points not reported to you on Form 1098. See page A-3
for special rules
Investment interest Attach Form 4952 if required. (See
page A-3.)
Add lines 10 through 13 . .... ...
10
11
12
13
16863
26
** 1
14
16889
15
Gifts to
Charity
If you made a 16
gift
-------
Schedules A&B (Form 1040) 1999
OMB No 1545-0074
Page 2
Name(s) shown on Form 1040 Do not enter name and social security number if shown on other side
Your social security number
Schedule B—Interest and Ordinary Dividends
Attachment
Sequence No 08
Part I
Interest
(See page B-1
and the
instructions for
Form 1040,
line 8a )
Note. If you
received a Form
1099-INT, Form
1099-OID, or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the total interest
shown on that
form
Note. If you had over $400 in taxable interest, you must also complete Part
List name of payer. If any interest is from a seller-financed mortgage and the
buyer used the property as a personal residence, see page B-1 and list this
interest first. Also, show that buyer's social security number and address ~
2 Add the amounts on line 1
3 Excludable interest on series EE and I U.S. savings bonds issued after 1989
from Form 8815, line 14. You MUST attach Form 8815
4 Subtract line 3 from line 2 Enter the result here and on Form 1040. line 8a ~
Amount
Part II
Ordinary
Dividends
(See page B-1
dnd the
instructions for
Form 1040,
line 9)
Note. If you
received a Form
1099-DIV or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the ordinary
dividends shown
on that form.
Note. If you had over $400 in ordinary dividends, you must also complete Part
List name of payer. Include only ordinary dividends If you received any capital
gain distributions, see the instructions for Form 1040, line 13 ~
6 Add the amounts on line 5 Enter the total here and on Form 1040, line 9 . ~
Amount
Part III
Foreign
Accounts
and Trusts
(See
page B-2.)
You must complete this part if you (a) had over $400 of interest or ordinary dividends, (b) had a foreign
account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
7a At any time during 1999, did you have an interest in or a signature or other authority over a financial
account in a foreign country, such as a bank account, securities account, or other financial
account7 See page B-2 for exceptions and filing requirements for Form TD F 90-22 1 . . . .
b If "Yes," enter the name of the foreign country ~
8 During 1999, did you receive a distribution from, or were you the grantor of, or transferor to, a
foreign trust7 If "Yes." you may have to file Form 3520 See page B-2
Yes
No

l§

i!
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Schedule B (Form 1040) 1999
©
-------
SCHEDULE C
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Profit or Loss From Business
(Sole Proprietorship)
~ Partnerships, joint ventures, etc., must file Form 1065 or Form 1065-B.
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule C (Form 1040).
OMB No 1545-0074
1199
Attachment
Sequence No 09
Name of proprietor
Eldridge Cobb
Social security number (SSN)
A Principal business or profession, includinq product or service (see paqe C-1)
1099 MISC NEC
B Enter code from pages C-S & 9
~I I I II I
C Business name. If no separate business name, leave blank
E L Cobb
D Employer ID number (EiN), if any
Business address (including suite or room no) ~ _9_ShP_G}3_ce.Lane
City, town or post office, state, and ZIP code Durham, NC 27707
F Accounting method (1) I I Cash (2) ~ Accrual (3) O Other (specify) ~
G Did you "materially participate" in the operation of this business during 1999? If "No," see page C-2 for limit on losses _ CH Yes d No
H If you started or acquired this business during 1999. check here . . . .
Income
. ~ ~
Gross receipts or sales. Caution: If this income was reported to you on Form W-2 and the "Statutory I--1
employee" box on that form was checked, see page C-2 and check here ~ ' I
Returns and allowances ....
Subtract line 2 from line 1
Cost of goods sold (from line 42 on page 2) .
Gross profit. Subtract line 4 from line 3
Other income, including Federal and state gasoline or fuel tax credit or refund (see page C-3) .
Gross income. Add lines 5 and 6 ... .... . ~
17326
17326
2000
15326
15326
Part II
Expenses. Enter expenses for business use of your home only on line 30
8
9
10
11
12
13
14
15
16
2
t
17
18
Advertising
Bad debts from sales or
services (see page C-3) .
Car and truck expenses
(see page C-3)
Commissions and fees
Depletion
Depreciation and section 179
expense deduction (not included
in Part 111) (see page C-3) . .
Employee benefit programs
(other than on line 19) .
Insurance (other than health) ..
Interest.
Mortgage (paid to banks, etc ) .
Other
Legal and professional
services
Office expense
8

16a

16b

1P Pension and profit-sharing plans
20 Rent or lease (see page C-4)
a Vehicles, machinery, and equipment .
b Other business property
21 Repairs and maintenance .
22 Supplies (not included in Part III) .
23 Taxes and licenses ....
24 Travel, meals, and entertainment:
a Travel
b Meals and en-
tertainment .
c Enter nondeduct-
ible amount in-
cluded on line 24b
(see page C-5) .
d Subtract line 24c from line 24b
25 Utilities
26 Wages (less employment credits) .
27 Othei expenses (from line 48 on
page 2)
19
20a
20b
21
22
23
24a
24d
25
26
27
3000
2000
28 Total expenses before expenses for business use of home. Add lines 8 through 27 in columns
28
29
30
31
32
Tentative profit (loss) Subtract line 28 from line 7
Expenses for business use of your home Attach Form 8829
Net profit or (loss). Subtract line 30 from line 29.
• If a profit, enter on Form 1040, line 12, and ALSO on Schedule SE, line 2 (statutory employees,
see page C-6) Estates and trusts, enter on Form 1041. line 3.
• If a loss, you MUST go on to line 32
If you have a loss, check the box that describes your investment in this activity (see page C-6)
• If you checked 32a. enter the loss on Form 1040, line 12, and ALSO on Schedule SE, line 2
(statutory employees, see page C-6). Estates and trusts, enter on Form 1041, line 3
• If you checked 32b. you MUST attach Form 6198.
29
30
31
5000
10326
10326
32a CD All investment is at risk
32b (HI Some investment is not
at risk
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 1 1334P
Schedule C (Form 1040) 1999
-------
Schedule C (Form 1040) 1999
Part III
Page 2
Cost of Goods Sold (see page C-6)
33 Method(s) used to
value closing inventory a LJ Cost
b O Lower of cost or market
c CI Other (attach explanation)
34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If
"Yes." attach explanation CI Yes CH No
35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation .
36 Purchases less cost of items withdrawn for personal use
37 Cost of labor Do not include any amounts paid to yourself
38 Materials and supplies
39 Other costs
40 Add lines 35 through 39
41 Inventory at end of year I
42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on page 1, line 4
Part IV
35

37
1000

38
2000

40
3000

41
1000

42
2000

Information on Your Vehicle. Complete this part ONLY if you are claiming car or truck expenses on
line 10 and are not required to file Form 4562 for this business. See the instructions for line 13 on page
C-3 to find out if you must file.
43 When did you place your vehicle in service for business purposes7 (month, day, year) ~ /. /.
44 Of the total number of miles you drove your vehicle during 1999, enter the number of miles you used your vehicle for.
a Business b Commuting c Other
45 Do you (or your spouse) have another vehicle available for personal use7 dl Yes
46 Was your vehicle available for use during off-duty hours? d Yes
47a Do you have evidence to support your deduction? ... CH Yes
b If "Yes." is the evidence written? . . . d Yes
~ No
~ No
~ No
~ No
I3STTM Other Expenses. List below business expenses not included on lines 8-26 or line 30.

I
48 Total other expenses. Enter here and on page 1, line 27 .
48

Schedule C (Form 1040) 1999
-------
SCHEDULE D
(Form 1040)
Department of ihe Treasury
Iniernal Revenue Service (99)
Capital Gains and Losses
~ Attach to Form 1040. ~ See Instructions for Schedule D (Form 1040).
~ Use Schedule D-1 for more space to list transactions for lines 1 and 8.
OMB No 1545-0074
99
Attachment
Sequence No 12
Name(s) shown on Form 1040
Eldridge and Pamela Cobb
Part I
Your social security number
Short-Term Capital Gains and Losses—Assets Held One Year or Less
(a) Description of property
(Example 100 sh XYZCo)
(b) Date
acquireo
(Mo , day, yr)
(c) Date sold
(Mo , day, yr)
(d) Sales price
(see page D-5)
(e) Cost or
otfier basis
(see page D-5)
2 Enter your short-term totals, if any, from
Schedule D-1, line 2
3 Total short-term sales price amounts.
Add column (d) of lines 1 and 2
4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684,
6781, and 8824
5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts
from Schedule(s) K-1
6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your
1998 Capital Loss Carryover Worksheet
7 Net short-term capital gain or (loss). Combine lines 1 through 6 in column (f) ~
Part II
(0 GAIN or (LOSS)
Subtract (e) from (d)

, ' iv -/A-
'I

;Y- ¦
( 32449 : )
-32449
p.1 '*mL'V>
rSFsv
?i=2p

lISfSA
wills\

..i-.iAf..
Long-Term Capital Gains and Losses—Assets Held More Than One Year
(a) Description of property
(Example 100 sn XYZCo)
(b) Date
acquired
(Mo . gay, yr)
(c) Datu sold
(Mo . day, yr)
(d) Sales price
(see page D-5)
(e) Cost or
other basis
(see page D-5)
(0 GAIN or (LOSS)
Subtract (e) from (d)
(g) 28% RATE GAIN
, or (LOSS)
(see instr, below)
10
9 Enter your long-term totals, if any, from
Schedule D-1, line 9
10 Total long-term sales price amounts.
Add column (d) of lines 8 and 9
11 Gain from Form 4797, Part I, long-term gain from Forms 2439 and 6252, and
long-term gain or (loss) from Forms 4684, 6781, and 8824
12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts
from Schedule(s) K-1
13 Capital gain distributions See page D-1
14 Long-term capital loss carryover. Enter in both columns (f) and (g) the amount, if
any, from line 13 of your 1998 Capital Loss Carryover Worksheet
15 Combine lines 8 through 14 in column (g)
16 Net long-term capital gain or (loss). Combine lines 8 through 14 in column (f) ~
Next: Go to Part Sli on the back.
r
,¦ u-i f}-
it
Mb
11
12
13
14
( 83091 : j
( 83091 : )
15
-83091 :
16
-83091
'---cS.
V"-viW,w

28% Rate Gain or Loss includes all "collectibles gains and losses" (as defined on page D-5) and up to 50% of the eligible gain
on qualified small business stock (see page D-4)
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11338H
Schedule D (Form 1040) 1999
-------
Schedule 0 (Form 1040) 1999
Part III
Page 2
Summary of Parts I and II
17 Combine lines 7 and 16 If a loss, go to line 18 If a gain, enter the gain on Form 1040, lire 13
Next: Complete Form 1040 through line 39. Then, go to Part IV to figure your tax if-
• Both lines 16 and 17 are gains, and
• Form 1040. line 39. is more than zero.
18 If line 17 is a loss, enter here and as a (loss) on Form 1040, line 13, the smaller of these losses-
• The loss on line 17, or
• ($3,000) or, if married filing separately, ($1,500)
Next: Skip Part IV below. Instead, complete Form 1040 through line 37 Then, complete the
Capital Loss Carryover Worksheet on page D-6 if
• The loss on line 17 exceeds the loss on line 18, or
• Form 1040, line 37, is a loss.
17
-115,540

- '
18
( 3000
)
ssseitaMls
MS&iS&ms&S
Part IV
Tax Computation Using Maximum Capital Gains Rates
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
20

Enter your taxable income from Form 1040, line 39
Enter the smaller of line 16 or line 17 of Schedule D
If you are filing Form 4952, enter the amount from Form 4952, line 4e
Subtract line 21 from line 20. If zero or less, enter -0-
Combine lines 7 and 15. If zero or less, enter -0-
Enter the smaller of line 15 or line 23, but not less than zero . . ,
Enter your unrecaptured section 1250 gain, if any, from line 16 of the
worksheet on page D-7
Add lines 24 and 25
Subtract line 26 from line 22. If zero or less, enter -0-
Subtract line 27 from line 19 If zero or less, enter -0-
Enter the smaller of.
• The amount on line 19, or i
• $25,750 if single; $43,050 if married filing jointly or qualifying widow(er), \
$21,525 if married filing separately, or $34,550 if head of household
Enter the smaller of line 28 or line 29 30
Subtract line 22 from line 19 If zero or less, enter -0-
Enter the larger of line 30 or line 31 ~
Figure the tax on the amount on line 32. Use the Tax Table or Tax Rate Schedules, whichever applies
Note. If line 29 is less than line 28, go to line 38
Enter the amount from line 29
Enter the amount from line 28
Subtract line 35 from line 34 If zero or less, enter -0- .... ~
Multiply line 36 by 10% (.10)
Note. If line 27 is more than zero and equal to line 36. go to line 52.
Enter the smaller of line 19 or line 27
Enter the amount from line 36
Subtract line 39 from line 38 ~
Multiply line 40 by 20% ( 20)
31
32
34
35
36
38
39
40
43
44
42
45
46
Note. If line 25 is zero or blank, skip lines 42 through 47 and read the note above line 48
Enter the smaller of line 22 or line 25 .
Add lines 22 and 32
Enter the amount from line 19 . .
Subtract line 44 from line 43 If zero or less, enter -0-
Subtract line 45 from line 42 If zero or less, enter -0-
Multiply line 46 by 25% (.25)
Note. If line 24 is zero or blank, go to line 52
Enter the amount from line 19
Add lines 32, 36, 40, and 46
Subtract line 49 from line 48
Multiply line 50 by 28% ( 28)
48
49
50
Add lines 33. 37. 41, 47, and 51
Figure the tax on the amount on line 19 Use the Tax Table or Tax Rate Schedules, whichever applies
Tax on all taxable income (including capital gains). Enter the smaller of line 52 or line 53 here
and on Form 1040, line 40. .......
:1®
19
27
28
29
-_r
33
-i.,1
37
rc^'
41
rj&V>L
%s
'¦vfX-
47
.TV.
51
52
53
54
©
Schedule D (Form 1040) 1999
-------
SCHEDULE E
(Form 1040)
Department of the Treasury
Internal Revenue Service (99;
Supplemental Income and Loss
(From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule E (Form 1040).
0MB No. 1545-0074
1®99
Attachment
Sequence No 13
Name(s) shown on return
Eldridge & Pamela Cobb
Your social security number
Part I
| Income or Loss From Rental Real Estate and Royalties Note: Report income and expenses from your business of renting
personal property on Schedule C or C-EZ (see page E- 7/ Report farm rental income or loss from Form 4835 on page 2, line 39
1
Show the kind and location of each rental real estate property:
2 Far each rental real estate property

Yes
No
A
Office
listed on line 1, did you or your family
use it during the tax year for personal
purposes for more than the greater of:
• 14 days, or
• 10% of the total days rented at
fair rental value9

Durham, NC
A

(See page E-1 )
C

Properties
Totals
(Add columns A. B, and C )
income:

A
B
C
3 Rents received
3
6550

3
6550

4 Royalties received
4

Expenses:
5 Advertising
5

s
?|!j'V

6 Auto and travel (see page E-2) .
7 Cleaning and maintenance. . .
8 Commissions
6

9 Insurance
10 Legal and other professional fees
11 Manaqement fees
9

12 Mortgage interest paid to banks, •
etc (see page E-2)
13 Other interest
12

12
13

'x , _v. =r
sf&ii:
18
'(^yvVi3

14 Repairs
14

15 Supplies
15

16 Taxes
16

17 Utilities
17

18 Other (list) ~
18

19 Add lines 5 through 18 . . . .
20 Depreciation expense or depletion
(see page E-3)
21 Total expenses. Add lines 19 and 20
22 Income or (loss) from rental real
estate or royalty properties
Subtract line 21 from line 3 (rents)
or line 4 (royalties) If the result is
a (loss), see page E-3 to find out
if you must file Form 6198. . .
23 Deductible rental real estate loss
Caution: Your rental real estate
loss on line 22 may be limited See
page E-3 to find out if you must
file Form 8582 Real estate
professionals must complete line
42 on page 2
24 Income. Add positive amounts shov
19

19
20

s'Yjlrfa"
<£?•'}? Z*m
c,i
Si
24
6550

22
6550

23
( o
)
(
)
(
)
vn on line 22 Do not include anv losses
25 Losses. Add royalty losses from line 22 and rental real estate losses from line 23 Enter total losses here
25
( 0
)
26 Total rental real estate and royalty income or (loss) Combine lines 24 and 25 Enter the result here.
If Parts II. III. IV. and line 39 on page 2 do not apply to you, also enter this amount on Form 1040.
line 17 Otherwise, include this amount in the total on line 40 on page 2
26
6550

For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 113441
Schedule E (Form 1040) 1999
-------
Schedule E (Form 1040) 1999
Attachment Sequence No 13
Page 2
Name(s) shown on return Do not enter name and social security number if shown on other side
Eldridge & Pamela Cobb
Your social security number
Note: If you report amounts from farming or fishing on Schedule E, you must enter your gross income from those activities on line
47 below. Real estate professionals must complete line 42 below.
Part II
Income or Loss From Partnerships and S Corporations Note: if you report a loss from an at-risk acwity. you must check
either column (e) or (f) on line 27 to desenbe your investment in the activity. See page E-5 If you check column (f), you must attach Form 6198.
27 (a) Name
(b) Enter P for
partnership, S
for S corporation
(c) Check if
forefgn
partnership
(d) Employer
identification
number
Investme
(e) All is
at nsk
sit At Risk?
(0 Some is
not nt nsk
A
Choo-Choo Industrial Center
p

B
Ninux Corporation
s

C
Newtown, Inc.
s

Passive Income and Loss
Nonpassive Income and Loss
(g) Passive loss allowed
(attach Form 85B2 if required)
(h) Passive income
from Schedule K-1
(i) Nonpassive loss
from Schedule K-1
(D Sccuon 179 expense
deduction
from Form 4562
(k) Nonpassive income
from Schedule K-1
9227
93
38976
28a Totals
b Totals
29
30
31
48296
Add columns (h) and (k) of line 28a
Add columns (g), (i), and (j) of line 28b
Total partnership and S corporation income or (loss) Combine lines 29 and 30. Enter the result
here and include in the total on line 40 below
29
30
48296
31
-48296
Part III
Income or Loss From Estates and Trusts
32
(a) Name
(b) Employer
identification number
Passive Income and Loss
(c) Passive deduction or loss allowed
(attach Form 8582 if required)
(d) Passive income
from Schedule K-1
(e) Deduction or loss
from Schedule K-1
(0 Other income from
Schedule K-1
A

33a Totals
b Totals

Nonpassive Income and Loss
34 Add columns (d) and (f) of line 33a
35 Add columns (c) and (e) of line 33b
36 Total estate and trust income or (loss) Combine lines 34 and 35 Enter the result here and include
in the total on line 40 below
Part IV
34
35
36
Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)—Residual Holder
37
(a) Name
(b) Employer
identification number
-------
1040
Department of the Treasury—Internal Revenue Service
U.S. Individual Income Tax Return
00
(99) IRS Use Only—Do not wnio or staple in this space
For the year Jan 1-Dec 31, 2000, or otfier tax year beginning
, 2000. ending
. 20
Label
(See
instructions
on page 19}
Use the IRS
label.
Otherwise,
please print
or type.
Presidential
Election Campaign
(See page 19.)
OMB No 1545-0074
Your first name and initial
Eldrige
Last name
Cobb
Your social security number
If a joint return, spouse's first name and initial
Pamela
Last name
Cobb
Spouse's social security number
Home address (number and street) If you have a P 0 box, see page 19
9 Shoelace Lane
Apt no
A Important! A
You must enter
your SSN(s) above
City, town or post office, state, and ZIP code tf you have a foreign address, see page 19
Durham, NC 27707 J
~
Note. Checking "Yes" will not change your tax or reduce your refund
Do you, or your spouse if filing a joint return, want $3 to go to this fund?
You Spouse
~ Yes Hno CNes E No
Filing Status
Check only
one box.
Single
Married filing joint return (even if only one had income)
Married Tiling separate return Enter spouse's social security no above and full name here ~
Head of household (with qualifying person). (Seepage 19.) If the qualifying person is a child but not your dependent.
enter this child's name here. ~
Qualifying widow(er) with dependent child (year spouse died ~
). (See page 19.)
Exemptions
If more than six
dependents,
see page 20
6a
£] Yourself. If your parent (or someone else) can claim you as a dependent on his or her lax
return, do not check box 6a
Dependents:
(1) First name Last name
(2) Dependent s
social security number
(3) Dependent's
relationship 10
vou
(4)v it qualifyng
child lor child tax
credr (see woe 20)
John C.

Child
~

. ~

~
d Total number of exemptions claimed
No. of boxes
checked on 2
6a and 6b
No. of your
children on 6c
who:
• lived with you
• did not live with
you due to divorce
or separation
(see page 20)
Dependents on 6c
not entered above
Add numbers
entered on
lines above ~
E2
Income
Attach
Forms W-2 and
W-2G here.
Also attach
Form(s) 1099-R
if tax was
withheld.
If you did not
get a W-2,
see page 21.
Enclose, but do
not attach, any
payment. Also,
please use
Form 1040-V.
7
8a
b
9
10
11
12
13
14
15a
16a
17
18
19
20a
21
22
8b
Wages, salaries, tips. etc. Attach Form(s) W-2
Taxable interest. Attach Schedule B if required
Tax-exempt interest Do not include on line 8a
Ordinary dividends Attach Schedule B if required ....
Taxable refunds, credits, or offsets of state and local income taxes (see page 22) .
Alimony received
Business income or (loss). Attach Schedule C or C-EZ ....
Capital gain or (loss) Attach Schedule D if required. If not required, check here ~ ~
Other gains or (losses). Attach Form 4797
Total IRA distributions .
Total pensions and annuities
15a
16a
b Taxable amount (see page 23)
b Taxable amount (see page 23)
Rental real estate, royalties, partnerships, S corporations, trusts, etc Attach Schedule E
Farm income or (loss). Attach Schedule F
Unemployment compensation
Social security benefits . I ^Oa I I I b TaxaDle amount (see page 25)
Other income List type and amount (see page 25)
8a
10
11
12
13
14
15b
16b
17
18
19
20b
21
22
137468 04
3664
"BBSS"
-3000
849
-57,456
88193
04
Adjusted
Gross
Income
23
24
25
26
27
28
29
30
31a
32
33
IRA deduction (see page 27) . . ....
Student loan interest deduction (see page 27) ....
Medical savings account deduction Attach Form 8853 ..
Moving expenses Attach Form 3903 ....
One-half of self-employment tax Attach Schedule SE
Self-employed health insurance deduction (see page 29)
Self-employed SEP, SIMPLE, and qualified plans
Penalty on early withdrawal of savings
Alimony paid b Recipient's SSN ~ ! I
Add lines 23 through 31a
23

27
90

31a

90
Subtract line 32 from line 22. This ts your adjusted gross income
33
88103 04
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page 56.
Cat No 11320B
Form 1040 (2000)
-------
Form 1040 (2000)
Pago 2
Tax and
Credits
Standard
Deduction
for Most
People
Single:
$4,400
Head of
household
$6,450
Married Tiling
jointly or
Qualifying
widow(er)
57,350
Mamed
Tiling
separately
53,675
34
35a
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
Amount from line 33 (adjusted gross income)
Check if, d You were 65 or older, Q Blind. D Spouse was 65 or older, [H Blind.
Add the number of boxes checked above and enter the total here . . . . ~ 35a
If you are married filing separately and your spouse itemizes deductions, or
you were a dual-status alien, see page 31 and check here ~ 35b O
Enter your itemized deductions from Schedule A, line 28, or standard deduction shown
on the left. But see page 31 to find your standard deduction if you checked any box on
line 35a or 35b or if someone can claim you as a dependent
Subtract line 36 from line 34
If line 34 is $96,700 or less, multiply $2,800 by the total number of exemptions claimed on
line 6d. If line 34 is over $96,700, see the worksheet on page 32 for the amount to enter .
Taxable income. Subtract line 38 from line 37 If line 38 is more than line 37, enter -0-
Tax (see page 32). Check if any tax is from a CD Form(s) 8814 b IZ1 Form 4972
Alternative minimum tax. Attach Form 6251
Add lines 40 and 41
Foreign tax credit Attach Form 1116 if required ....
Credit for child and dependent care expenses Attach Form 2441
Credit for the elderly or the disabled. Attach Schedule R .
Education credits. Attach Form 8863
Child tax credit (see page 36)
Adoption credit. Attach Form 8839
Other. Check if from a d Form 3800 b EH Form 8396
c ~ Form 8801 d IZI Form (specify)
Add lines 43 through 49 These are your total credits ....
Subtract line 50 from line 42. If line 50 is more than line 42, enter -0-
43

34
37
38
39
51
Other
Taxes
52
53
54
55
56
57
Self-employment tax. Attach Schedule SE
Social security and Medicare tax on tip income not reported to employer. Attach Form 4137
Tax on IRAs, other retirement plans, and MSAs. Attach Form 5329 if required ....
Advance earned income credit payments from Form(s) W-2
Household employment taxes Attach Schedule H
Add lines 51 through 56. This is your total tax ~
52
53
54
55
56
57
Payments 58
59
If you have a
qualifying
child, attach
Schedule EIC
"V
60a
b
61
62
63
64
65
Federal income tax withheld from Forms W-2 and 1099 . .
2000 estimated tax payments and amount applied from 1999 return
Earned income credit (EIC)
Nontaxable earned income, amount .. ~ I I
and type ~
Excess social security and RRTA tax withheld (see page 50)
Additional child tax credit. Attach Form 8812
Amount paid with request for extension to file (see page 50)
Other payments Check if from a CH Form 2439 b [U Form 4136
Add lines 58. 59. 60a, and 61 through 64 These are your total payments
58

60a

i!
61

Refund
66
67a
Have it
directly
deposited! ~ b
See page 50
and fill in 67b. ^ ^
67c, and 67d 68
If line 65 is more than line 57, subtract line 57 from line 65 This is the amount you overpaid
Amount of line 66 you want refunded to you ~
66
Routing number
Account number
Amount ot line 66 you want applied to your 2001 estimated tax
~ c Type ~ Checking ~ Savings
68
Amount
You Owe
69
70
If line 57 is more than line 65, subtract line 65 from line 57 This is the amount you owe.
For details on how to pay, see page 51 ~
Estimated tax penalty Also include on line 69 I 70 | |
Sign
Under penalties of perjury,! declare that I have examined this return and accompanying schedules and statements, and to tlx? best of my knowledge and
belief, they are true, correct, and complete Declaration of preparer (other than taxpayer) is based on all information of which preparer nas any knowledge
Joint return9 k
See page 19 1
Your signature
i
Date
Your occupation
Daytime phone number
( )
Keep a copy 1
for your 1
records '
W Spouse's signature If a joint return, both must sign
Date
Spouse's occupation
May rne IRS discuss this return wtth the preparer
shown below (see page 52}? D Yes D No
Paid
Preparer's
Use Only
Preparer's W
signature j

Date
Check if
self-employed LJ
Preparer's SSN or PTIN
Firm's name (or W

ein ¦
address, and ZIP code f

Phone no ( )
Form 1040 (2000)
-------
SCHEDULES A&B
(Form 1040)
Department or iho Treasury
Internal Revenue Service (99)
Schedule A—Itemized Deductions
(Schedule B is on back)
~ Attach to Form 1040. ~ See Instructions for Schedules A and B (Form 1040).
OMB No 1545-0074
00
Attachment
Sequence No 07
Name(s) shown on Form 1040
Eldrige & Pamela Cobb
Your social security number
Medical
and
Dental
Expenses
Caution. Do not include expenses reimbursed or paid by others.
Medical and dental expenses (see page A-2) . . . .
Enter amount from Form 1040, line 34. I 2 I I
Multiply line 2 above by 7 5% (075)
Subtract line 3 from line 1. If line 3 is more than line 1, enter -0
1

5
8672

Taxes You
Paid
(See
page A-2)
5 State and local income taxes . . .
6 Real estate taxes (see page A-2) . .
7 Personal property taxes . . . .
8 Other taxes. List type and amount ~ .
9 Add lines 5 through 8.
10
16728

i
ii

8672
Interest
You Paid
(See
page A-3.)
Note.
Personal
interest is
not
deductible.
10 Home mortgage interest and points reported to you on Form 1098
11 Home mortgage interest not reported to you on Form 1098 If paid
to the person from whom you bought the home, see page A-3
and show that person's name, identifying no , and address ~
12 Points not reported to you on Form 1098. See page A-3
for special rules ....
13 Investment interest Attach Form 4952 if required. (See
page A-3.)
14 Add lines 10 through 13 .
15
1368

16728
Gifts to
Charity
If you made a
gift and got a
benefit for it,
see page A-4
15
16
17
18
Gifts by cash or check If you made any gift of $250 or
more, see page A-4
Other than by cash or check If any gift of $250 or more,
see page A-4. You must attach Form 8283 if over $500
Carryover from prior year
Add lines 15 through 17
1368
Casualty and
Theft Losses
19
Casualty or theft loss(es) Attach Form 4684. (See page A-5 J
Wa
Unreimbursed employee expenses—job travel, union
dues, job education, etc. You must attach Form 2106
or 2106-EZ if required (See page A-5.) ~
none
Job Expenses
and Most
Other
Miscellaneous
Deductions
20
(See
page A-5 for
expenses to
deduct here.)
21
22
23
24
25
26
Tax preparation fees
Other expenses—investment, safe deposit box, etc List
type and amount ~
24
Add lines 20 through 22 .
Enter amount from Form 1040, line 34.
Multiply line 24 above by 2% (02)
Subtract line 25 from line 23 If line 25 is more than line 23, enter -0-
23
25
none
Other
Miscellaneous
Deductions
27 Other—from list on page A-6 List type and amount ~
none
Total
Itemized
Deductions
28 Is Form 1040, line 34, over $128,950 (over $64,475 if married filing separately)?
~ No. Your deduction is not limited. Add the amounts in the far right column
for lines 4 through 27. Also, enter this amount on Form 1040, line 36.
D Yes. Your deduction may be limited. See page A-6 for the amount to enter.
26,768
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11330X
Schedule A (Form 1040) 2000
-------
Schedules A&B (Form 1040) 2000
OMB No 1545-0074 Page 2
Your social security number
Name(s) snown on Form 1040 Do not enter name and social security number if shown on other side
Schedule B—Interest and Ordinary Dividends
Attachment
Sequence No 08
Part I
interest
(See page B-1
and the
instructions for
Form 1040,
line 8a.)
Note. If you
received a Form
1099-INT, Form
1099-OID. or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the total interest
shown on that
form
Note. If you had over $400 in taxable interest, you must also complete Part III.
1 List name of payer. If any interest is from a seller-financed mortgage and the
buyer used the property as a personal residence, see page B-1 and list this
interest first. Also, show that buyers social security number and address ~
2 Add the amounts on line 1
3 Excludable interest on series EE and I U.S. savings bonds issued after 1989
from Form 8815, line 14. You must attach Form 8815
4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 8a ~
Note. If you had over $400 in ordinary dividends, you must also complete Part
Amount
Part II
Ordinary
Dividends
(See page B-1
and the
instructions for
Form 1040,
line 9.)
Note. If you
received a Form
1099-DIV or
substitute
statement from
a brokerage firm,
list the firm's
name as the
payer and enter
the ordinary
dividends shown
on that form.
List name of payer Include only ordinary dividends. If you received any capital
gain distributions, see the instructions for Form 1040, line 13 ~
6 Add the amounts on line 5 Enter the total here and on Form 1040, line 9 . ~
Amount
Part III
Foreign
Accounts
and Trusts
(See
page B-2.)
You must complete this part if you (a) had over $400 of interest or ordinary dividends; (b) had a foreign
account, or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
7a At any time during 2000, did you have an interest in or a signature or other authority over a financial
account in a foreign country, such as a bank account, securities account, or other financial
account? See page B-2 for exceptions and filing requirements for Form TD F 90-22.1 . . . .
b If "Yes," enter the name of the foreign country ~
8 During 2000, did you receive a distribution from, or were you the grantor of, or transferor to, a
foreign trust? If "Yes." you may have to file Form 3520 See page B-2 . .
For Paperwork Reduction Act Notice, see Form 1040 instructions.
©
Schedule B (Form 1040) 2000
-------
SCHEDULE C
(Form 1040)
Department of the Treasury
Internal Revenue Service (99)
Profit or Loss From Business
(Sole Proprietorship)
~ Partnerships, joint ventures, etc., must file Form 1065 or Form 1065-B.
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule C (Form 1040).
OMB No, lWb-OOM
»00
Attachment
Sequence No 09
Name of proprietor
Eldridge Cobb
Social security number (SSN)
A Principal business or profession, including product or service (see page C-1 of the instructions)
1099- MISC. NEC
B Enter code from pages C-7 & 8
~I I I I I I
C Business name. If no separate business name, leave blank.
E.L. Cobb
0 Employer ID number (EIN), if any
I i I II I I I
E Business address (including suite or room no) ~ . 9.Sh06laC6_Lane
City, town or post office, state, and ZIP code Durham, NC 27707
F Accounting method. (1) ED Cash (2) CD Accrual (3) ED Other (specify) ~
G Did you "materially participate" in the operation of this business during 2000'' If "No." see page C-2 for limit on losses . CD Yes CD No
H If you started or acquired this business during 2000. check here ~ Q
Income
Part I
1 Gross receipts or sales Caution. If this income was reported to you on Form W-2 and the "Statutory
employee" box on that form was checked, see page C-2 and check here
2 Returns and allowances
3 Subtract line 2 from line 1
4 Cost of goods sold (from line 42 on page 2)
zn
Gross profit. Subtract line 4 from line 3
Other income, including Federal and state gasoline or fuel tax credit or refund (see page C-2)
Gross income. Add lines 5 and 6
13,668
0
13,668
2.000
11,668
11.668
Part II
Expenses. Enter expenses for business use of your home only on line 30
8

16a

16b

8
9
10
11
12
13
14
15
16
e
t
17
18
Advertising
Bad debts from sales or
services (see page C-3) .
Car and truck expenses
(see page C-3) . .
Commissions and fees . .
Depletion
Depreciation and section 179
expense deduction (not included
in Part III) (see page C-3) . .
Employee benefit programs
(other than on line 19) . . .
Insurance (other than health) .
Interest.
Mortgage (paid to banks, etc) .
Other
Legal and professional
services
Office expense . .
19 Pension and profit-sharing plans
20 Rent or lease (see page C-4)
a Vehicles, machinery, and equipment ..
b Other business property
21 Repairs and maintenance . _
22 Supplies (not included in Part III) .
23 Taxes and licenses ....
24 Travel, meals, and entertainment,
a Travel
b Meals and
entertainment
c Enter nondeduct-
ible amuunt in-
cluded on line 24b
(see page C-5) .
d Subtract line 24c from line 24b
25 Utilities
26 Wages (less employment credits) .
27 Other expenses (from line 48 on
page 2)
19
vm.
20a
20b
21
22
23
WW,
24a
24d
25
26
27
3000
2000
28 Total expenses before expenses for business use of home. Add lines 8 through 27 in columns
28
29
30
31
32
Tentative profit (loss). Subtract line 28 from line 7 . . .
Expenses for business use of your home. Attach Form 8829
Net profit or (loss). Subtract line 30 from line 29.
• If a profit, enter on Form 1040, line 12, and also on Schedule SE, line 2 (statutory employees,
see page C-5) Estates and trusts, enter on Form 1041, line 3
• If a loss, you must go to line 32
If you have a loss, check the box that describes your investment in this activity (see page C-5).
• If you checked 32a. enter the loss on Form 1040, line 12, and also on Schedule SE, line 2
(statutory employees, see page C-5) Estates and trusts, enter on Form 1041. line 3
• If you checked 32b. you must attach Form 6198.
29
30
31
5000
6668
6668
32a CD All investment is at risk.
32b ~ Some investment is not
at risk
For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11334P
Schedule C (Form 1040) 2000
-------
Schedule C (Form 1040) 2000
Part III
Page 2
Cost of Goods Sold (see page C-6)
~ Yes ~ No
33 Method(s) used to
value closing inventory a LJ Cost b LH Lower of cost or market c LJ Other (attach explanation)
34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If
"Yes." attach explanation ....
35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation . .
36 Purchases less cost of items withdrawn for personal use ....
37 Cost of labor. Do not include any amounts paid to yourself
38 Materials and supplies
39 Other costs ...
40 Add lines 35 through 39
41 Inventory at end of year
42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on page 1. line 4 . . ,
35

37
1000

38
2000

40
3000

41
1000

42
2000

Part IV
Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on
line 10 and are not required to file Form 4562 for this business See the instructions for line 13 on page
C-3 to find out if you must file.
43 When did you place your vehicle in service for business purposes? (month, day, year) ~ ]. J.
44 Of the total number of miles you drove your vehicle during 2000, enter the number of miles you used your vehicle for.
a Business b Commuting c Other
45 Do you (or your spouse) have another vehicle available for personal use9 .... ~ Yes
46 Was your vehicle available for use during off-duty hours? ... CI Yes
47a Do you have evidence to support your deduction? CH Yes
b If "Yes," is the evidence written? ~ Yes
~ No
~ No
~ No
~ No
li/iTl&'J Other Expenses. List below business expenses not included on lines 8-26 or line 30

48 Total other expenses. Enter here and on page 1, line 27
48

Schedule C (Form 1040) 2000
-------
SCHEDULE D
(Form 1040)
Department of ifte Treasury
iniernal Revenue S«-vicft (99)
Capital Gains and Losses
~ Attach to Form 1040. ~ See Instructions for Schedule D (Form 1040).
~ Use Schedule D-1 for more space to list transactions for lines 1 and 8.
OMB No 1545-0074
®00
Attachment
Sequence No 12
Name(s) shown on Form 1040
Eldridge and Pamela Cobb
Your social security number
Short-Term Capital Gains and Losses—Assets Held One Year or Less
(a) Description of property
(Example 100 sh XYZCo)
(b) Date
acquired
(Mo , day, yr)
(c) Date sold
(Mo , day. yr)
(d) Sales price
(see page D-6)
(e) Cost or
other basis
(see page D-6)
2 Enter your short-term totals, if any, from
Schedule D-1, line 2
3 Total short-term sales price amounts.
Add column (d) of lines 1 and 2
4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684,
6781, and 8824
5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts
from Schedule(s) K-1
6 Short-term capital loss carryover Enter the amount, if any, from line 8 of your
1999 Capital Loss Carryover Worksheet . . , .
7 Net short-term capital gain or (loss). Combine column (f) of lines 1 through 6 ~
Part II
(0 Gain or (loss)
Subtract (e) from (d)
m
( 29449
Long-Term Capital Gains and Losses—Assets Held More Than One Year
(a) Description of property
(Example 100 sh XYZCo)
(b) Date
acquired
(Mo , day, yr)
(c) Date sold
(Mo , day, yr)
(d) Sales price
(s>ee page D-6)
-------
Schedule D (Form 1040) 2000
Part III
Page 2
Summary of Parts I and II
17 Combine lines 7 and 16. If a loss, go to line 18. If a gain, enter the gain on Form 1040, line 13
Next: Complete Form 1040 through line 39 Then, go to Part IV to figure your tax if-
• Both lines 16 and 17 are gains and
• Form 1040, line 39, is more than zero.
Otherwise, stop here.
18 If line 17 is a loss, enter here and as a (loss) on Form 1040, line 13, the smaller of these losses
• The loss on line 17 or
• ($3,000) or, if married filing separately, ($1,500)
Next: Skip Part IV below Instead, complete Form 1040 through line 37 Then, complete the
Capital Loss Carryover Worksheet on page D-6 if:
• The loss on line 17 exceeds the loss on line 18 or
• Form 1040, line 37, is a loss
-103,070
3000
Part IV
Tax Computation Using Maximum Capital Gains Rates
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
Enter your taxable income from Form 1040, line 39
Enter the smaller of line 16 or line 17 of Schedule D
If you are filing Form 4952, enter the amount from Form 4952, line 4e
Subtract line 21 from line 20. If zero or less, enter -0- ...
Combine lines 7 and 15. If zero or less, enter -0-
Enter the smaller of line 15 or line 23, but not less than zero . . .
Enter your unrecaptured section 1250 gain, if any, from line 17 of the
worksheet on page D-8 ...
Add lines 24 and 25. . ...
Subtract line 26 from line 22. If zero or less, enter -0-
Subtract line 27 from line 19. If zero or less, enter -0-
Enter the smaller of:
• The amount on line 19 or
• $26,250 if single: $43,850 if married filing jointly or qualifying widow(er);
$21,925 if married filing separately: or $35,150 if head of household
30
20

-0-
31
32
34
35
Enter the smaller of line 28 or line 29 . . .
Subtract line 22 from line 19 If zero or less, enter
Enter the larger of line 30 or line 31 . . .... . ~
Figure the tax on the amount on line 32 Use the Tax Table or Tax Rate Schedules, whichever applies
Note. If the amounts on lines 29 and 30 are the same, skip lines 34 through 37 and go to line 38
Enter the amount from line 29
Enter the amount from line 30
Subtract line 35 from line 34 ~
Multiply line 36 by 10% (.10)
Note. If the amounts on lines 19 and 29 are the same, skip lines 38 through 51 and go to line 52.
Enter the smaller of line 19 or line 27 . 38
Enter the amount from line 36
Subtract line 39 from line 38
Multiply line 40 by 20% (.20)
Note. If line 26 is zero or blank, skip lines 42 through 51 and go to line 52
36
39
40
43
44
Enter the smaller of line 22 or line 25 .
Add lines 22 and 32
Enter the amount from line 19
Subtract line 44 from line 43 If zero or less, enter -0-
Subtract line 45 from line 42 If zero or less, enter -0-
Multiply line 46 by 25% (.25)
42
46
49
50
Note. If line 24 is zero or blank, skip lines 48 through 51 and go to line 52.
Enter the amount from line 19 48
Add lines 32, 36, 40, and 46
Subtract line 49 from line 48
Multiply line 50 by 28% (28)
Add lines 33, 37, 41, 47, and 51
Figure the tax on the amount on line 19 Use the Tax Table or Tax Rate Schedules, whichever applies
Tax on all taxable income (including capital gains). Enter the smaller of line 52 or line 53 here
and on Form 1040, line 40
19
28
52
53
54
©
Schedule D (Form 1040) 2000
-------
SCHEDULE E
(Form 1040)
Department of the Treasury
Internal Revenue Service (99]
Supplemental Income and Loss
(From rental real estate, royalties, partnerships,
S corporations, estates, trusts, REMICs, etc.)
~ Attach to Form 1040 or Form 1041. ~ See Instructions for Schedule E (Form 1040).
0MB No 1545-0074
!©00
Attachment
SequRncG No 13
Name(s) shown on return
Eldridge and Pamela Cobb
Your social security number
Part I
| Income or Loss From Rental Real Estate and Royalties Note. Report income and expenses from your business of renting
personal property on Schedule C or C-EZ (see page E-1) Report farm rental income or loss from Form 4835 on page 2. line 39.
1
Show the kind and location of each rental real estate property:
2 For each rental real estate property

Yes
No
A
Corn Last Securities
listed on line 1, did you or your family
use it during the tax year for personal
purposes for more than the greater of-
• 14 days or
• 10% of the total days rented at
fair rental value7
(See page E-1.)
A

Properties
Totals
(Add columns A, B, and C ]
income:

A
B
C
3 Rents received .
4 Royalties received
3

4
1704

Expenses:
5 Advertising
5

6 Auto and travel (see page E-2) .
7 Cleaning and maintenance. . .
8 Commissions
6

9 Insurance
9

10 Legal and other professional fees
11 Manaqement fees . .
10

12
12 Mortgage interest paid to banks,
etc. (see page E-2)
13 Other interest ... ...
12

14 Repairs
14

15 Supplies
15

16 Taxes . .
16

17 Utilities
17

18 Other (list) ~
18

19
19 Add lines 5 through 18 ... .
20 Depreciation expense or depletion
(see page E-3)
21 Total expenses Add lines 19 and 20
22 Income or (loss) from rental real
estate or royalty properties.
Subtract line 21 from line 3 (rents)
or line 4 (royalties). If the result is
a (loss), see page E-3 to find out
if you must file Form 6198. . .
23 Deductible rental real estate loss.
Caution. Your rental real estate
loss on line 22 may be limited. See
page E-3 to find out if you must
file Form 8582. Real estate
professionals must complete line
42 on Daae 2
19

1704

22
1704

23
(
)
(
)
(
)
24 Income. Add positive amounts shown on line 22. Do not include any losse
25 Losses. Add rovaltv losses from line 22 and rental real estate losses from line 2
>s
24
3. Enter total losses here
25
( 0
)
26 Total rental real estate and royalty income or (loss). Combinie lines 24 and 25. Enter the result here
If Parts II, III. IV, and line 39 on page 2 do not apply to you, also enter this amount on Form 1040,
line 17 Otherwise, include this amount in the total on line 40 on page 2 . .
26
1704

For Paperwork Reduction Act Notice, see Form 1040 instructions.
Cat No 11344L
Schedule E (Form 1040) 2000
-------
Schedule E (Form 1040) 2000
Attachment Sequence No 13
Page 2
Namc(s) shown on return, Do not enter name and social security number if shown on other side
Eldridge and Pamela Cobb
Your social security number
Note. If you report amounts from farming or fishing on Schedule E, you must enter your gross income from those activities on line
41 below Real estate professionals must complete line 42 below.
Part II
Income or Loss From Partnerships and S Corporations Note, if you report a loss from an at-risk activity, you must check
either column (e) or (f) on line 27 to describe your investment in the activity See page E-5 If you check column (I), you must attach Form 6198.
27 (a) Name
(b) Enter P for
partnership. S
for S corporation
(c) Check if
foreign
partnership
(d) Employer
idenufication
number
Inveslmc
(e) All is
at risk
sit At Risk?
(f) Some is
not at risk
A
Choo-Choo Industrial Center
p

B
Ninus Corporation
s

C
Newtown. Inc
s

D
Brooklyn Publishing Group
s

Passive Income and Loss
Nonpassive Income and Loss
(g) Passive loss allowed
(attach Form 8582 if required)
(h) Passive income
from Schedule K-1
(0 Nonpassive loss
from Schedule K-1
(j) Section 179 expense
deduction
from Form 4562
(k) Nonpassive income
from Schedule K-1
A_

20,841

41,377

28a Totals

w$<
97

b Totals I

I 62.218

29
Add columns (h) and (k) of line 28a . . .

29
97

30
Add columns (a), (i). and (i) of line 28b . .

30
( 62,218
)
31
Total partnership and S corporation income or (loss). Combine lines 29 and 30. Enter the result
here and include in the total on line 40 below
31
-62,121

Part III
Income or Loss From Estates and Trusts
32
(a) Name
(b) Employer
identification number
Passive Income and Loss
Nonpassive Income and Loss
(c) Passive deduction or loss allowed
(attach Form B582 if required)
(d) Passive income
from Schedule K-1
(e) Deduction or loss
from Schedule K-1
(0 Other income from
Schedule K-1
2961
B
33a Totals
b Totals
34 Add columns (d) and (f) of line 33a
35 Add columns (c) and (e) of line 33b
36 Total estate and trust income or (loss) Combine lines 34 and 35. Enter the result here and include
in the total on line 40 below
Part IV
34
35
36
2961
2961
Income or Loss From Real Estate Mortgage Investment Conduits (REMICs)—Residual Holder
37
(a) Name
(b) Employer
identification number
(c) Excess inclusion from
Schedules Q, line 2c (see
page E-6)
(d) Taxdble income (net loss)
from Schedules Q, line lb
(e) Income from Schedules Q,
line 3b
38 Combine columns (d) and (e) only Enter the result here and include in the total on line 40 below
Summary
38
Part V
39 Net farm rental income or (loss) from Form 4835 Also, complete line 41 below
40 Total income or (loss). Combine lines 26, 31, 36, 38, and 39 Enter the result here and on Form 1040, line 17 ~
41
42
Reconciliation of Farming and Fishing Income. Enter your gross
farming and fishing income reported on Form 4835, line 7; Schedule
K-1 (Form 1065), line 15b, Schedule K-1 (Form 1120S), line 23; and
Schedule K-1 (Form 1041), line 14 (see page E-6)
Reconciliation for Real Estate Professionals. If you were a real estate
professional (see page E-4), enter the net income or (loss) you reported
anywhere on Form 1040 from all rental real estate activities in which
you materially participated under the passive activity loss rules. . ..
41
42
©
Schedule E (Form 1040) 2000
-------
INDIVIDUAL ABILITY TO PAY CLAIM
Financial Data Request Form
This form requests information regarding your financial status. The data will be used to evaluate your ability
to pay for environmental cleanup or penalties. If you need more space for your answers, please attach
additional sheets of paper. Note that further documentation may be requested of any of your responses. Any
other information you wish to provide supporting your case is welcome, particularly if you feel your situation
is not adequately described through the information requested here.
Certification
Under penalties of perjury, I declare that this statement of assets, liabilities, and other information is true,
correct, and complete to the best of my knowledge and belief. I further understand that I will be subject to
prosecution by the U.S. Environmental Protection Agency to the fullest extent possible under the law should I
provide any information that is not true, correct, and complete to the best of my knowledge.
Signature: Date:
Name: Eldridge Cobb
Spouse's Name: Pamela Cobb
Names of Additional Household Members:
John C
Street Address: 9 Shoelace Lane
City: Durham State: NC Zip: 27707
County: Durham County
Household Members' Income
List all income that household members earn.
Name
Eldridge Pamela John
self spouse
55 50 20
Self Spouse
25 5
Relationship to Applicant
Age
Employer
Years Employed
Gross (Tre-Tax) Income
Wages/Salaries
Sales Commissions
Investment Income
Net Business Income
Rental Income
Retirement Income
Child Support
Alimony
Other (attach description)
120,000 20,000
For income
period, specify
either Weekly,
Monthly,
Quarterly, or
Zearly.
W M Q Y
X
1 of 4
-------
Household Living Expenses
List household living expenses typical of last year, indicating if any are likely to change significantly in the
current year. If you own an operating business, exclude any business expenses; instead, attach any available
financial statements for your business.
Period
Expense Amount W M Q Y
Rent
Home maintenance 100 X
Transportation (inc. auto maint.)
Home heating oil, gas, etc.
Electricity 100 X
Water & sewer 20 X
Telephone 80 X
Food 600 X
Clothing, personal care 100 X
Medical
Mortgage payments 2000 X
Car payments
Credit card interest
Educational loan payments
Other debt payments
Home insurance 900 X
Life insurance
Auto insurance 1200 X
Medical insurance
Property taxes 12,815 X
Federal income taxes 3,000 X
State & local income taxes
FICA
Other taxes
Childcare
Tuition
Legal or professional fees
Other (attach description)
2 of 4
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Net Worth
Provide the following information to the best of your ability. Data should be as current as possible Estimates
are acceptable; if you wish note such items with an "E" If you are the sole proprietor of a business, please list
business assets and liabilities to the extent that the information sought is not already provided in your tax
returns, in addition to personal assets and liabilities. Mark these entries with a "B" to identify them as
business assets and liabilities.
Assets
Bank Accounts - Name of Bank Balance
Checking, NOW, Savings, Money Market, CDs etc.
Corn Last Southern Pines NC - Checking 25,000
Liabilities
Comments
Investment Tvpe (stocks, bonds, etc.1
Market Value
Retirement Funds and Accounts Market Value
IRA, 401 (k), Keogh, vested interest in company retirement fund, etc
Life Insurance Policies
Whole life, universal life, etc.
Cash Value
Vehicles Used for Commuting Market Value Loan Balance
Cars, trucks, motorcycles, etc.: list up to two vehicles used for commuting purposes.
Other Vehicles Market Value Loan Balance
Cars, trucks, motorcycles, recreational vehicles, motor homes, boats, airplanes.
Primary Residence Market Value
Home 300,000
Other Real Estate Market Value
Lands, buildings, land with buildings.
Mortgage Balance
180,000
Mortgage Balance
3 Of 4
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Personal Property Market Valu?
Household Goods and Furniture, Jewelry, Art, Antiques, Collections,
with a value greater than S500.
Debt Balance mm
Precious Metals, etc.; list only items
Credit Cards and Lines of Credit
Visa Gold Card
Balance Due
15,000
Other Debts and/or Assets
Market Value
Debt Balance
Any other assets and any debts on those assets, plus any other debts owed to individuals, fixed obligations,
taxes owed, overdue alimony or child support, etc
For any question that you check off as applicable, provide additional information below or on separate pages.
Reason to believe financial situation will change during the next year?
Currently selling or purchasing any real estate?
Property held by other person/entity on applicant's behalf?
Party in pending lawsuit (other than this enforcement action)?
Any belongings repossessed in last three years?
Is applicant a Trustee, Executor, or Administrator?
Participant or beneficiary of estate or profit-sharing plan?
Declared bankruptcy in last seven years?
Receive any type of federal aid or public assistance?
Loan made to Newtown Inc.
Loan made to Robert Martin
Bills owed to Misc.
80,000
1,500
500
Additional Information
4 of 4
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PHASE 1 ANALYSIS
Conduct a comprehensive Phase 2 Ability-to-Pay Analysis:
- The applicant's average income exceeds the 'low income' threshold.
- The applicant has complex personal finances.
Income Comparison
$85,183 = Weighted-average gross income
$43,100 = Low-income level for household size of 3 m Durham County
Indicators of Complex Finances that Apply to Applicant
Business income or loss
Capital gain or loss
Income or loss from rents, royalties, partnerships, estates, or trusts
Name = Eldridge Cobb; Analyst = Matthew, Region 5; 7/3/2002 INDIPAY v. 3.2, 2002.b; Page 1 of 1
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PHASE 2 CALCULATION
Sought Amount: $12,000
Abilitv-lo-Pav Test A - Cash Flow
Present value of 5-years' cash flow (discounted at 14%) S274,050
Affordable penalty/contribution (reduced for 5% contingency) 512,000
Under Test A, the entire sought amount is affordable.
Abilitv-io-Pav Test B - Debt Capacity
Maximum affordable annual debt payments (at 36% limit) S28,737
Maximum affordable additional debt payments (at 14% interest rale) S4,737
Affordable penalty/contribution (based on 5-year debt repayment) SI2,000
r Test B, the entire sought amount is affordable.
Impact on Applicant's Financial Status
Before After Payment, Using.
Payment Test A TestB
Income (using 0.3 smoothing constant)
579,826
S79,826
$79,826

167% of $47850 median for household of 3 in Durham
Living expenses (w/ 5% contingency)
$56,611
$60,281
$60,281
Available cash flow
S23,216
SI 9,545
$19,545
Assets
$406,500
$406,500
$406,500
Liabilities
$195,000
$195,000
$195,000
Net worth
$211,500
$211,500
$211,500
Annual debt payments
$24,000
$27,495
S27,495
Debt payments as percent of income
30.1%
34 4%
34.4%
Issues Affecting Applicant's Ability to Pay (press F1 for further information)
Applicant is Married Filing Separately, verify that you have data for applicant & spouse.
Financial Data Request Form income is > 10% different from latest tax return.
Applicant's total income varies significantly from year to year.
Name = Eldridge Cobb; Analyst = Matthew, Region 5; Run = $12k; 7/3/2002
INDIPAY v. 3.2, 2002.b; Page 1 of 6
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PHASE 2 CALCULATION
Sought Amount: $50,000
Abilitv-to-Pav Test A - Cash Flow
Present value of 5-years' cash flow (discounted at 14%) S274,050
Affordable penalty/contribution (reduced for 5% contingency) 550,000
Under Test A, the entire sought amount is affordable.
Abilitv-to-Pav Test B - Debt Capacity
Maximum affordable annual debt payments (at 36% limit) S28.737
Maximum affordable additional debt payments (at 14% interest rate) S4,737
Affordable penalty/contribution (based on 5-year debt repayment) $16,264
ly a portion of the sought amount is affordable.
Impact on Applicant's Financial Status
Before After Payment, Using.
Payment Test A Test B
Income (using 0.3 smoothing constant)
S79,826
S79,826
S79.826

167% of $47850 median for household of 3
in Durham
Living expenses (w/ 5% contingency)
S56.611
S71,903
S61,585
Available cash flow
S23.216
57,923
518,241
Assets
5406,500
S406,500
5406,500
Liabilities
5195,000
SI 95,000
5195,000
Net worth
S211.500
S211.500
5211.500
Annual debt payments
S24,000
S38,564
S28.737
Debt payments as percent of income
30 1%
48 3%
36.0%
Issues Affecting Applicant's Ability to Pay (press F1 for further information)
Applicant is Mamed Filing Separately: verify that you have data for applicant & spouse.
Financial Data Request Form income is > 10% different from latest tax return
Applicant's total income vanes significantly from year to year.
Debt payments will exceed limit for percent of income if payment is made under Test A.
Name = Eldridge Cobb; Analyst = Matthew, Region 5, Run = $50k, 7/3/2002
INDIPAY v. 3.2, 2002.b; Page 1 of 6
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Phase 2 Tax Return Data Inputs
Applicant
2000 1999
Wage income 137.468 95.059
Taxable interest income
Tax-exempt interest income
Dividend income
Alimony received
Business income or loss 6,668 10,326
Capital gain or loss -3,000 -3,000
Other gains or loss
Total IRA distributions
Total pensions or annuities 849 819
Farm income or loss
Total social security
Other income
Real estate taxes 2,141
Mortgage and investment interest deduction 16,728 16.889
Depletion
Depreciation/amortization on business accounts
Taxes paid on rental properties
Depreciation or depletion on rental properties
Total income/loss from rental properties/royalties 1,704 6,550
Partnership/S corporation income or loss -62,121 -48,296
Estate and trust income or loss 2.961
REM1C income or loss
Farm rental income or loss
Depreciation on farm property
Depreciation on farm rental property
Summary of Applicant's Income Sources (as reported on tax returns)
2000 1999
Wages and salaries
137,468
163%
95,059
155%
Interest and dividends

0%
Capital gains/losses
-3,000
-4%
-3.000
-5%
Retirement-related
849
1%
819
1%
Business
-50.788
-60%
-31,420
-51%
Farm

0%
Other

0%
Total
84,529

61,458

Weight
0 46

0.32

Weighted Income
38,883

19,667

Spouse
1998 NA NA NA
92,110
5.002
-3,000
787
1,940
16,986
6.590
-5,651
873
1998

Average

92.110
95%
108,212
134%

0%
0
0%
-3,000
-3%
-3,000
-4%
787
1%
818
1%
6,814
7%
-25,131
-31%

0%
0
0%

0%
0
0%
96,711

80,899

0 22 weight denominator- 0.6570
21,276 79,826
Name = Eldridge Cobb; Analyst = Matthew, Region 5; Run = $50k; 7/3/2002
INDIPAY v. 3.2, 2002 b; Page 2 of 6
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Household Members' Income

(based on data request form)
Applicant
Spouse
Add'l
Membe Add'l Membe Add'l Member

Name
Eldndge Cob
Pamela Cobb

Relationship to Applicant
self
spouse

Age
55
50

Employer
Self
Spouse

Years Employed
25.0
5.0
0.0
0.0
0.0

Annualized
Gross (Pre-Tax) Income

Penod
Total
Wages/Salaries
SI 20,000
S20,000
SO
SO
so
Yearly
$140,000
Sales Commissions
SO

so
SO
SO
so
Yearly
$0
Investment Income
SO

SO
SO
SO
so
Yearly
SO
Net Business Income
S2.000

SO
SO
SO
so
Yearly
$2,000
Rental Income
SO

SO
SO
SO
so
Yearly
$0
Retirement Income
S800

SO
SO
SO
so
Yearly
$800
Child Support
SO

SO
SO
so
so
Yearly
$0
Alimony
SO

SO
SO
so
so
Yearly
$0
Name = Eldridge Cobb, Analyst = Matthew, Region 5;
Run = $50k; 7/3/2002
INDIPAY v. 3.2,
2002.b; Page 3 of 6
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Household Living Expenses

Expense
Amount
Period
Annualized
Rent
SO
Yearly
SO
Home maintenance
S100
Monthly
SI,200
Transportation (inc. auto maint.)
SO
Yearly
SO
Home heating oil, gas, etc
SO
Yearly
SO
Electricity
S100
Monthly
SI.200
Water & sewer
S20
Monthly
S240
Telephone
S80
Monthly
S960
Food
$600
Monthly
S7.200
Clothing, personal care
S100
Monthly
SI,200
Medical
SO
Yearly
SO
Mortgage payments (principal and i
S2,000
Monthly
S24,000
Car payments
SO
Yearly
so
Credit card interest
SO
Yearly
so
Educational loan payments
SO
Yearly
SO
Other debt payments
SO
Yearly
so
Home insurance
S900
Yearly
S900
Life insurance
$0
Yearly
SO
Auto insurance
SI.200
Yearly
SI.200
Medical insurance
SO
Yearly
SO
Property taxes
SI 2,815
Yearly
S12,815
Federal income taxes (net of any ref
S3,000
Yearly
S3,000
State & local income taxes (net of a
SO
Yearly
SO
FICA
SO
Yearly
SO
Other taxes
SO
Yearly
SO
Childcare
SO
Yearly
SO
Tuition
SO
Yearly
so
Legal or professional fees
SO
Yearly
so
Other
SO
Yearly
so
Subtotal: Debt Payments

$24,000
Total: All Expenses

$53,915
Name = Eldridge Cobb, Analyst = Matthew, Region 5; Run = $50k; 7/3/2002
INDIPAY v. 3.2, 2002.b; Page 4 of 6
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Net Worth
Bank Accounts - Name of Bank
Assets
Balance
Liabilities
Comlast Southenr Pines NC - checking S25,000
SO
SO
SO
$0
Investment Type (stocks, bonds, etc.) Market Value
SO
SO
SO
so
so
Retirement Funds and Accounts Market Value
SO
SO
SO
SO
SO
Life Insurance Policies Cash Value
SO
SO
SO
SO
Vehicles Used for Commuting Market Value Loan Balance
SO SO
SO SO
Other Vehicles Market Value Loan Balance
SO SO
SO SO
SO SO
SO SO
SO SO
Primary Residence Market Value Mortgage Balance
Home S300.000 5180,000
Other Real Estate Market Value Mortgage Balance
SO SO
SO SO
SO SO
SO SO
Personal Property Market Value Debt Balance
SO SO
SO SO
SO SO
$0 SO
SO SO
Credit Cards and Lines of Credit Balance Due
Visa Gold Card S15,000
SO
SO
SO
SO
Other Debts and/or Assets Market Value Debt Balance
Loan made to Newtown Inc S80,000 SO
Loan made to Robert Martin S1,500 $0
$0 $0
SO $0
SO SO
Total: Assets Liabilities
5406,500 $195,000
Name = Eldridge Cobb; Analyst = Matthew, Region 5; Run = $50k; 7/3/2002
INDIPAY v. 3.2, 2002.b; Page 5 of 6
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Additional Information
Reason to believe financial situation will change during the next year? No
Currently selling or purchasing any real estate? No
Property held by other person/entity on applicant's behalf No
Party in pending lawsuit (other than this enforcement action)? No
Any belongings repossessed in last three years'1 No
Is applicant a Trustee, Executor, or Administrator? No
Participant or beneficiary of estate or profit-sharing plan? No
Declared bankruptcy in last seven years? No
Receive any type of federal aid or public assistance'' No
Name = Eldridge Cobb; Analyst = Matthew, Region 5; Run = $50k; 7/3/2002
INDIPAY v. 3.2, 2002.b; Page 6 of 6
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