William Lenehan III and Barbara Lenehan - Page 4





                                        - 3 -                                         
               Part I.  Total Investment Interest Expense                             
               Line 1.  Investment interest expense                                   
               paid or accrued in 1997                         $2,505                 
               Line 2.  Disallowed investment interest                                
               expense from 1996 Form 4952, line 7             24,216                 
               Line 3.  Total investment interest expense      26,721                 
               Part II.  Net Investment Income                                        
               Line 4a.  Gross income from property held for                          
               investment (excluding any net gain from the                            
               disposition of property held for investment)            [1]5,044       
               Line 4b.  Net gain from the disposition                                
               of property held for investment        $114,738                        
               Line 4c.  Net capital gain from the                                    
               disposition of property held for                                       
               investment                             65,721                          
               Line 4d.  Subtract line 4c from line 4b         49,017                 
               Line 4e.  Enter all or part of the amount                              
               on line 4c that you elect to include                                   
               in investment income                            0                      
               Line 4f.  Investment Income.                                           
               Add lines 4a, 4d, and 4e.                       54,061                 
               Line 5.  Investment expenses                    0                      
               Line 6.  Net investment income.                                        
               Subtract line 5 from line 4f.                   54,061                 
               Part III.  Investment Interest Expense Deduction                       
               Line 7.  Disallowed investment interest                                
               expense to be carried forward to 1998.                                 
               Subtract line 6 from line 3.                    0                      
               Line 8.  Investment interest expense deduction.                        
               Enter the smaller of line 3 or 6.               26,721                 
               1 This is the total amount of petitioners’ interest ($1,075) and       
          dividend ($3,969) income reported on Schedule B.                            
               Petitioners calculated most of the lines on Form 4952 from             

          Schedule D, column f, where they reported the following amounts:            

               Line 1.  Short-term capital gains and losses$4,002                         
               Line 2.  Enter your short-term totals,                                 
               if any, from Schedule D-1, line 2       45,015                         
               Line 7.  Net short-term capital gain or (loss)  $49,017                
               Line 8.  Long-term capital gains and losses(3,601)                        
               Line 9.  Enter your long-term totals,                                  
               if any, from Schedule D-1, line 9       69,322                         
               Line 11.  Gain from Form 4797, Part I * * *       [1]12,751            
               Line 14.  Long-term capital loss carryover(141,621)                      
               Line 16.  Net long-term capital gain or (loss)  (63,149)               
               1 This gain resulted from petitioners’ sale of a condominium that was  
          sec. 1250 property and, therefore, was not included as an item of investment
          income.  See sec. 163(d)(4)(D).                                             







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