Michael London - Page 17

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             funds borrowed from the Broadway National Bank in Chelsea,               
             Massachusetts.  This property was petitioners' primary                   
             residence during the years at issue.                                     
                  On October 7, 1982, Mr. London purchased a                          
             condominium unit, No. 304, located at 1265 Beacon Street,                
             Brookline, Massachusetts, for $174,336.  Petitioner                      
             borrowed the funds used to purchase the property from                    
             the Broadway National Bank.  As collateral for the loan,                 
             petitioner gave the bank two certificates of deposit which               
             were worth $100,882.29 and $100,909, respectively, as of                 
             October 12, 1982, the maturity date of both certificates.                
             Petitioner sold the condominium unit on May 24, 1985, for                
             $187,000.                                                                
                  On June 18, 1984, petitioners purchased property as                 
             tenants by the entirety at 140 Greeley Avenue, West Hyannis              
             Port, Massachusetts, for $467,500 (Hyannis Port property).               
             They borrowed $270,000 from the Broadway National Bank to                
             purchase the property and agreed to repay the loan in 3                  
             years with interest at the rate of 11.5 percent per year.                
             The loan required petitioners to make monthly payments of                
             $3,148.20 for 36 months and to pay the balance on June 18,               
             1987.  Petitioners gave $198,737.35 of the loan proceeds to              
             Alger & Schilling, the escrow attorneys, to pay part of the              
             purchase price.  They used $69,882.65 of the loan proceeds               






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