Chad A. and Katherine J. Lincoln - Page 3

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          construct a house on the Big Sur property.  The house was                   
          completed in August 1994, and petitioners commenced using it as a           
          rental property.                                                            
               In the meantime, on March 16, 1993, petitioners sold the               
          Pacific Grove property to Allen and Marla Elvin (the Elvins) for            
          $228,668.  The Elvins entered into an agreement with petitioners            
          whereby, upon the closing of a Chicago Title Company escrow                 
          account, the money consideration for the Pacific Grove property             
          would be deposited into an account that petitioners opened at               
          Provident Central Credit Union for this purpose.  After the sales           
          proceeds were deposited, petitioners directed Provident Central             
          Credit Union to make payments by cashier’s check to contractors             
          hired to make improvements on the Big Sur property.  In addition,           
          petitioners directed Provident Central Credit Union to reimburse            
          petitioner husband for the downpayment on the Big Sur property              
          and for expenses incurred to improve it.  Statements from the               
          Provident Central Credit Union account were sent directly to                
          petitioners’ home address.  Petitioners had sole authority to               
          withdraw funds and make payments from the account.                          
               Petitioners did not report any gain on the sale of the                 
          Pacific Grove property on their joint 1993 Federal income tax               
          return, nor did their return include a Form 8824, Like-Kind                 

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