James W. Harris and Dorthy R. Harris - Page 4

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          11,984                                                                      
          Petitioners concede that their 1992 gross income includes $28 of            
          interest paid by the Alaskan Federal Credit Union and $76 of                
          interest paid by the Internal Revenue Service.  Petitioners                 
          dispute that their 1992 gross income includes the $11,880 of                
          interest reported on the Form 1099-INT issued to them by NBA.               
          NBA reported that petitioners were paid $11,880 in interest on an           
          account (the account) at its bank.  Petitioners had opened the              
          account in 1987 in connection with their sale of a home to Dale             
          and Kathy Turner on September 10, 1987.  Petitioners sold the               
          home to the Turners for $129,000, and the Turners agreed to pay             
          petitioners the selling price through monthly installments of at            
          least $960.  The Turners agreed that any outstanding balance owed           
          to petitioners would bear interest at 10.5 percent per annum.               
          When petitioners had owned the home, they borrowed money from               
          Seafirst Mortgage Corp. (Seafirst) using the home as collateral.            
          When petitioners sold the home to the Turners, petitioners did              
          not satisfy this debt, which then equaled $98,600, opting to                
          continue making monthly payments on it.  Petitioners' debt to               
          Seafirst bore interest at 10.5 percent per annum.                           
               The account was an escrow account, and NBA was the                     
          escrowee.2  The Turners agreed to make the monthly payments due             
          petitioners on the sale directly to NBA in its capacity as                  

          2 Petitioners paid NBA a fee for the services that it                       
          rendered in connection with the escrow account.                             




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