Saffet and Ana Uslu - Page 5

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          security for the loan.  Due to extensive repairs needed on the              
          Alisal property, petitioners and their children were unable to              
          occupy the property until June 1991.                                        
               Nevertheless, petitioners made all the required mortgage               
          payments to Southern California Federal, with respect to the                
          Alisal property, from the commencement of the mortgage up until             
          trial of this case, including the entire year at issue.  During             
          1992, petitioners paid a total of $18,980 to Southern California            
          Federal as interest on the mortgage of the Alisal property.                 
          Petitioners also paid all repairs, improvements, and maintenance            
          on the Alisal property since the time of its purchase in 1990.              
          Up to the date of trial, Haluk and Aysun had never occupied the             
          Alisal property; they never made any payments on the Alisal                 
          property, either as to mortgage, repairs, maintenance,                      
          improvements, or otherwise, and they never agreed to or ever                
          intended to spend their money on the property.                              
               On their Federal income tax return for 1992, petitioners               
          claimed on Schedule A, Itemized Deductions, a deduction of                  
          $18,980 for home mortgage interest, representing the mortgage               
          interest paid on the Alisal property during 1992.  In the notice            
          of deficiency, respondent disallowed the home mortgage interest             
          deduction for the reason that "The interest expense you claimed             
          is not deductible since you are not legally liable for the debt."           
          Haluk and Aysun did not claim a Federal income tax deduction for            

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