Paul L. Blanton and Cynthia D. Blue-Blanton - Page 5

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          Esposito (Esposito), filed with the Bankruptcy Court for the                
          Eastern District of Washington a motion to authorize the trustee            
          to sell the W. 22d property (motion to sell).  On December 15,              
          1989, Deglow objected to the motion to sell.                                
               On December 22, 1989, the bankruptcy court decided that the            
          W. 22d property was the property of Deglow's bankruptcy estate              
          and ordered that the trustee and Hagan sell the residence to                
          petitioners for $180,000.  Petitioners spent $10,000 in legal               
          fees to resolve the title dispute over the W. 22d property.                 
               4.   Passage of Title to the W. 22d property                           
               On January 25 and 26, 1990, Hagan, and Esposito as trustee             
          for Deglow's bankruptcy estate, conveyed title to the W. 22d                
          property to petitioners by quitclaim deed.  Petitioners financed            
          $144,000 of the purchase price through Mountain West Savings Bank           
          (Mountain West).  Mountain West disbursed the $144,000 loan on              
          January 30, 1990.                                                           
               On January 31, 1990, escrow closed on the W. 22d property.             
          Petitioners obtained legal title to the W. 22d property on                  
          January 31, 1990.  At settlement, Hagan applied petitioners'                
          $10,000 deposit to the purchase price.                                      
               Petitioners made the first mortgage payment on the W. 22d              
          property on March 1, 1990.  Petitioners did not pay rent or other           
          compensation to Hagan to live in the W. 22d property from when              
          the purchase agreement was executed on March 20, 1989, until                
          escrow closed on January 31, 1990.                                          




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