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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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