Andrew E. Blanche, Jr., and Cynthia D. Blanche - Page 12

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          were liable to Lomas Mortgage for payment of the mortgage on the            
          Foxbriar property.  Moreover, at least through May 1992,                    
          petitioners paid no amounts to Lomas Mortgage; rather, from July            
          1990 through April 1992, petitioners were making lease payments             
          of $1,000 per month directly to the Hewitts.  Thus, it cannot be            
          said that petitioners paid any interest on the Foxbriar property            
          at least through May 1992.                                                  
               Petitioners contend that the $5,372 deducted on their 1991             
          return for mortgage interest represents one-half of the total               
          interest paid on the Foxbriar property for 1991.  The record in             
          this case is unclear as to how petitioners determined the amount            
          of interest paid on the Foxbriar property for that year, and the            
          manner in which petitioners calculated that they were entitled to           
          a deduction for one-half of that amount.  The record is explicit,           
          however, that petitioners paid no interest on the Foxbriar                  
          property during 1991.  The record shows that, during 1991,                  
          petitioners paid nothing more than lease payments (and earnest              
          money payments) directly to the Hewitts in connection with the              
          Foxbriar property.10  Whether or not the Hewitts used the monthly           
          lease payments from petitioners to make mortgage payments on the            
          Foxbriar property is of no consequence in this case.  The Federal           

               10   It is notable that, on Schedule A of their 1991 return,           
          petitioners reported that the $5,372 in mortgage interest for               
          which they claimed a deduction was paid to Peggy L. Hewitt of               
          Tacoma, Washington.                                                         

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