LO$.2$ Sparrow Corporation would like you to review its employee fringe benefits

program with regard to the tax consequences of the plan for the company's president

$($Polly$),$ who is also the majority shareholder.

a$.$ The company has a qualified retirement plan. The company pays the cost of

employees attending a retirem$$t planning seminar. The employee must be

within $10$ years of retirement, and the cost of the seminar is $$1,500$ per

attendee.