H Enterprises International, Inc., and Subsidiaries - Page 3

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          of the borrowed funds in the present case are attributable to the           
          purchase of portfolio stock by HEI [the parent] or were used to             
          purchase or carry tax-exempt securities by HEI is a fact question           
          and not one to be decided on a summary judgment motion."  Id. at            
          85.  In this report, we address the factual questions identified            
          in H Enterprises I.                                                         
                                  FINDINGS OF FACT                                    
               Certain facts have been stipulated and are so found.  The              
          stipulations of facts filed by the parties, with attached                   
          exhibits, are incorporated herein by this reference.  Also, the             
          Court directed the parties to review those facts set forth in               
          H Enterprises I and provide the Court with statements of                    
          differences or objections, if any, with respect to those facts.             
          The parties have identified as the facts set forth in                       
          H Enterprises I the facts set forth in the five consecutive                 
          paragraphs commencing with the last paragraph beginning on                  
          page 73 of volume 105, U.S. Tax Court Reports (105 T.C. at 73;              
          the H Enterprises I facts).  The parties agree with the                     
          H Enterprises I facts subject to certain common, minor, or                  
          inconsequential differences.  In light of those agreements, we              
          shall adopt the H Enterprises I facts for purposes of this                  
          report, subject to (and incorporating) the differences agreed to            
          by the parties, and we find accordingly.  In the following                  
          paragraphs of this portion of our report, we shall summarize                





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