FORM 10-K/A

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 

For the fiscal year ended December 31, 1997

                               OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934 

For the transition period from                       to         

Commission File Number:  0-16862

                           CAPITAL SOURCE II L.P.-A                 
(Exact name of registrant as specified in its Agreement of Limited Partnership)

Delaware                                             38-2684691                
(State or other jurisdiction                         (IRS Employer 
 of incorporation or organization)                    Identification No.)

Suite 400, 1004 Farnam Street, Omaha, Nebraska       68102  
(Address of principal executive offices)             (Zip Code)

                                (402) 444-1630                      
             (Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

                                      None

Securities Registered Pursuant to Section 12(g) of the Act:

     Beneficial Assignment Certificates ("BACs") representing the beneficial 
assignment of limited partnership interests.

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by the Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports) and (2) has been subject to such 
filing requirements for the past 90 days.  Yes   X     No      

     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K (229.405 of the chapter) is not contained herein, 
and will not be contained, to the best of the registrant's knowledge, in 
definitive proxy or information statements incorporated by reference in Part 
III of this Form 10-K or any amendment to this Form 10-K.  [X]

     BACs are not currently traded in any market.  Therefore, there is no 
market price or average bid and asked price for BACs within the 60 days prior 
to the date of this filing.

                     DOCUMENTS INCORPORATED BY REFERENCE
                                     None















<PAGE>                               -i-
                              TABLE OF CONTENTS
                                                                               
                                                                           Page
                                                                               
                                                                               
                                    PART I                                     
Item  1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Item  2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
Item  3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .  2
Item  4. Submission of Matters to a Vote of Security Holders . . . . . . . .  3
                                                                               
                                   PART II                                     
                                                                               
Item  5. Market for Registrant's Common Equity and                             
         Related Stockholder Matters . . . . . . . . . . . . . . . . . . . .  3
Item  6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . .  3
Item  7. Management's Discussion and Analysis of Financial Condition and       
         Results of Operations . . . . . . . . . . . . . . . . . . . . . . .  5
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . . . .  8
Item  8. Financial Statements and Supplementary Data . . . . . . . . . . . .  9
Item  9. Changes in and Disagreements With Accountants on Accounting and       
         Financial Disclosure. . . . . . . . . . . . . . . . . . . . . .  . . 9
                                                                               
                                   PART III                                    
                                                                               
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . 	10
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .  12
Item 12. Security Ownership of Certain Beneficial Owners and Management . .  12
Item 13. Certain Relationships and Related Transactions . . . . . . . . . .  12
                                                                               
                                   PART IV                                     
                                                                               
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K. . 13
                                                                               
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25









































<PAGE>                               -ii-
                                    PART I

     Item 1.  Business. Capital Source II L.P. A (the "Registrant" or the 
"Partnership") hereby amends Items 1,2,5,6,7,8,10,13 and 14 of its Form 10-K 
filed for the fiscal year ended December 31, 1997 to restate its financial 
statements to reflect the Registrants investments in Operating Partnerships on 
the equity method of accounting.  Such investments had previously been 
consolidated by the Registrant as more fully described in Note 2.H. to the 
financial statements. Accordingly the financial statements, supplementary 
tables and related disclosures have all been restated to the new basis of 
accounting.  The financial statements appearing in the Partnership's 10K for 
the year ending December 31, 1997, should not be relied upon.

					Capital Source II L.P.-A was formed in August 1986 under the Delaware 
Revised Uniform Limited Partnership Act to invest principally in 
federally-insured mortgages on multifamily housing properties and to acquire, 
hold, sell, dispose of and otherwise deal with limited partnership interests 
(the "Partnership Equity Investments") in the limited partnerships (the 
"Operating Partnerships") which construct and operate these properties.  The 
Registrant's investment objectives generally are to (i) preserve and protect 
the Registrant's capital; (ii) provide quarterly cash distributions to 
investors; and (iii) achieve increasing current income and long-term capital 
appreciation through increases in income from the Partnership Equity 
Investments.  Originally, there was a fourth investment objective which was to 
make the BACs freely transferable 24 to 36 months after the Partnership 
commenced operations by qualifying the BACs for quotation on NASDAQ.  However, 
at a Special Meeting of BAC Holders on December 17, 1990, amendments to the 
Partnership Agreement were approved to only allow limited transferability of 
BACs to preserve the tax status of the Partnership and avoid being designated 
as a "publicly traded partnership".

     A total of 4,011,101 beneficial assignment certificates representing 
beneficial assignment of limited partnership interests in the Registrant 
("BACs") were sold at $20 per BAC for total capital contributions of 
$80,222,020 prior to the payment of certain organization and offering costs.

     The Registrant originally acquired (i) four mortgage-backed securities 
(the "GNMA Certificates") guaranteed as to principal and interest by the 
Government National Mortgage Association ("GNMA") collateralized by first 
mortgage loans on multifamily housing properties located in three states, (ii) 
a first mortgage loan insured by the Federal Housing Administration (the "FHA 
Loan") on a multifamily housing property located in Charlotte, North Carolina, 
and (iii) Partnership Equity Investments in five limited partnerships which 
own the multifamily housing properties financed by the GNMA Certificates and 
the FHA Loan.  The Partnership has been repaid by GNMA on one of the GNMA 
Certificates and the related property has been deeded to GNMA in lieu of 
foreclosure, thus eliminating the Partnership Equity Investment in this 
property.  Collectively, the remaining GNMA Certificates, the FHA Loan and the 
Partnership Equity Investments are referred to as the "Permanent 
Investments."  A description of the properties financed by the Registrant 
through December 31, 1997, appears in Item 7 hereof.  The Partnership has also 
invested amounts held in its reserve account in certain GNMA securities backed 
by pools of single-family mortgages ("Reserve Investments").

     While principal of and interest on the GNMA Certificates and the FHA Loan 
are ultimately guaranteed by the United States government, the amount of cash 
distributions received by the Registrant from the Partnership Equity 
Investments is a function of the net rental revenues generated by the 
properties owned by the Operating Partnerships.  Net rental revenues from a 
multifamily apartment complex depend on the rental and occupancy rates of the 
property and on the level of operating expenses.  Occupancy rates and rents 
are directly affected by the supply of, and demand for, apartments in the 
market area in which a property is located.  This, in turn, is affected by 
several factors such as local or national economic conditions, the amount of 
new apartment construction and interest rates on single-family mortgage 
loans.  In addition, factors such as government regulation (such as zoning 
laws), inflation, real estate and other taxes, labor problems and natural 
disasters can affect the economic operations of a property.

     In each city in which the Registrant's properties are located, such 
properties compete with a substantial number of other apartment complexes.  
Apartment complexes also compete with single-family housing that is either 
owned or leased by potential tenants.  The principal method of competition is 
to offer competitive rental rates.  The Registrant's properties also compete by 
emphasizing regular maintenance and property amenities.

<PAGE>                               - 1 -

     The Registrant believes that each of its properties is in compliance in 
all material respects with federal, state and local regulations regarding 
hazardous waste and other environmental matters and the Registrant is not 
aware of any environmental contamination at any of such properties that would 
require any material capital expenditure by the Registrant for the remediation 
thereof.  

     The Registrant is engaged solely in the business of owning mortgages and 
holding equity interests in real estate limited partnerships.  Accordingly, 
the presentation of information about industry segments is not applicable and 
would not be material to an understanding of the Registrant's business taken 
as a whole.

     The Registrant has one employee.  In addition to this employee, certain 
services are provided to the Registrant by employees of an affiliate of the 
general partners of the Registrant, and the Registrant reimburses such 
affiliate for such services at cost.  The Registrant is not charged and does 
not reimburse for the services performed by managers and officers of the 
general partners of the general partner of the Registrant.

     Item 2.  Properties.  The Registrant does not directly own or lease any 
physical properties.  However, by virtue of its interest in the  Partnership 
Equity Investments in the Operating Partnerships, the Registrant indirectly 
owns up to a 99% interest in three multifamily apartment projects.  In 
addition, the Registrant owns a 68.70% interest in another multifamily 
appartment project known as The Ponds at Georgetown.  The multifamily 
apartment projects are described in the following table:

<TABLE>
<CAPTION>
                                                                        Average                    
                                                         Number     Square Feet             Federal
Property Name                  Location                of Units        Per Unit           Tax Basis
--------------------------     -------------------     --------     -----------     ---------------
<S>                            <C>                     <C>          <C>             <C>
Crane's Landing                Winter Park, FL              252            751      $     8,684,275
Delta Crossing                 Charlotte, NC                178            880            4,975,895
Monticello Apartments          Southfield, MI               106          1,027            4,113,831
The Ponds at Georgetown        Ann Arbor, MI                134          1,002            5,565,607 
                                                       --------                     ---------------
                                                            670                     $    23,339,608
                                                       ========                     ===============
</TABLE>

     Depreciation is taken by the Operating Partnerships on each property on a 
straight-line basis over the estimated useful lives of the various components 
of the properties ranging from five to 40 years. 

     The average annual occupancy rate and average effective rental rate per 
unit for each of the properties for each of the last five years are listed in 
the following table:
<TABLE>
<CAPTION>
                                                1997         1996         1995         1994         1993
                                           ----------   ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>          <C>        
CRANE'S LANDING                                                                                           
Average Occupancy Rate                             96%          94%          89%          90%          96% 
Average Effective Annual Rental Per Unit       $7,366       $6,954       $6,327       $6,322       $6,718 
                                                                                                          
DELTA CROSSING                                                                                            
Average Occupancy Rate                             93%          92%          94%          95%          92%  
Average Effective Annual Rental Per Unit       $7,260       $7,097       $6,866       $6,380       $5,691  
                                                                                                          
MONTICELLO APARTMENTS                                                                                     
Average Occupancy Rate                             97%          96%          99%          97%          95%    
Average Effective Annual Rental Per Unit       $8,873       $8,804       $8,630       $8,287       $8,000    
                                                                                                          
THE PONDS AT GEORGETOWN                                                                                   
Average Occupancy Rate                             97%          95%          95%          95%          90%   
Average Effective Annual Rental Per Unit       $9,883       $9,515       $9,174       $8,955       $8,398      
</TABLE>



<PAGE>                              - 2 -

     In the opinion of the Partnership's management, each of the properties is 
adequately covered by insurance.  For additional information concerning the 
properties, see "Management's Discussion and Analysis of Financial Condition 
and Results of Operations".  A discussion of general competitive conditions to 
which these properties are subject is included in Item 1 hereof.

     Item 3.  Legal Proceedings.  There are no material pending legal 
proceedings to which the Registrant is a party or to which any of its property 
is subject.

     Item 4.  Submission of Matters to a Vote of Security Holders.  No matter 
was submitted during the fourth quarter of 1997 to a vote of the Registrant's 
security holders.

                                    PART II

     Item 5.  Market for Registrant's Common Equity and Related Stockholder 
Matters.

     (a)	Market Information.  The BACs are subject to various transfer 
restrictions imposed to prevent the Registrant from being treated as a 
publicly traded partnership for federal income tax purposes and, accordingly, 
there is no public trading market for the BACs.

     In the event the General Partners have reason to believe that a requested 
sale, transfer or assignment of BACs would cause the Partnership to be 
characterized as a publicly traded partnership for federal income tax 
purposes, the General Partners will, pursuant to their powers under Section 
5.09 of the Partnership Agreement, refuse to process such requested sale, 
transfer or assignment unless the General Partners receive an unqualified 
opinion of Counsel to the effect that such sale, transfer or assignment of 
BACs, would not cause the Partnership to be characterized as a publicly 
traded partnership for federal income tax purposes.  Neither the General 
Partners nor the Partnership may be held liable for any losses resulting to a 
holder of BACs or a purchaser of BACs as a result of a requested sale, 
transfer or assignment of BACs not being processed due to these limitations.

     The foregoing restrictions are intended to prevent the trading volume of 
BACs from reaching a level that would cause the Partnership to be 
characterized as a publicly traded partnership under Section 7704 of the Code.  
In the event the Partnership were characterized as a publicly traded 
partnership, the Partnership could be subject to entity level taxation.  In 
such event, amounts otherwise distributable to holders of BACs would be used 
to satisfy federal income tax liabilities of the Partnership and, thus, 
amounts received by holders of BACs would be less than anticipated.

     (b)	Investors.  The approximate number of BAC Holders on December 31, 
1997, was 5,499.

     (c)	Distributions.  Cash distributions are being distributed on a monthly 
basis to the record holders of BACs as of the last day of each month.  Total 
cash distributions paid or accrued to BAC Holders during the fiscal years 
ended December 31, 1997, and December 31, 1996, equaled $3,248,992 each year.  
The cash distributions paid per BAC during the fiscal years ended December 31, 
1997, and December 31, 1996, were as follows:

<TABLE>
<CAPTION>
                                    Per BAC                
                      Year Ended              Year Ended
                   December 31, 1997       December 31, 1996
                   -----------------       -----------------
<S>                <C>                     <C>              
Income             $     .4082             $     .5240                  
Return of Capital        .4018                   .2860                 
                   -----------------       -----------------
Total              $     .8100             $     .8100               
                   =================       =================
</TABLE>






PAGE>                               - 3 -

     See Item 7, Management's Discussion and Analysis of Financial Condition 
and Results of Operations, for information regarding the sources of funds 
used for cash distributions and for a discussion of factors, if any, which may 
adversely affect the Registrant's ability to make cash distributions at the 
same levels in 1998 and thereafter.

     Item 6.  Selected Financial Data.  Set forth below is selected financial 
data for the Registrant.  The information set forth below should be read in 
conjunction with the Financial Statements and Notes thereto filed in response 
to Item 8 hereof.

<TABLE>
<CAPTION>
                                       	            							For the        For the	       For the	       For the        For the
		                                      												  	 Year Ended     Year Ended     Year Ended     Year Ended     Year Ended
		                                    													  Dec. 31, 1997  Dec. 31, 1996  Dec. 31, 1995  Dec. 31, 1994  Dec. 31, 1993
                                                      -------------  -------------  -------------  -------------  -------------
<S>                                                   <C>            <C>            <C>            <C>            <C>
Mortgage-backed securities income	   						           $  2,499,844   $  2,520,727   $  2,561,901   $  2,526,266   $  2,715,851
Interest income on temporary cash investments
  and U.S. government securities                            91,327        147,530      	 200,678        181,315        345,962
Equity in losses of Operating Partnerships	      					    (121,450)          -          (109,900)      (209,805)      (343,842)   
Other income                                                 3,800          6,950          4,650          2,900          2,050    
Gain on sale of mortgage-backed securities                    -              -            15,670           -              -       
Operating and administrative expenses                     (819,516)      (552,170)      (499,903)      (479,388)      (464,457)
						                                                -------------  -------------  -------------  -------------  -------------
Net income	                                    					  $  1,654,005   $  2,123,037   $ 	2,173,096   $  2,021,288   $  2,255,564
                                                      =============  =============  =============  =============  =============
Net income, basic and diluted, per 
 Beneficial Assignment Certificate (BAC)              $        .41   $   		 .52   $        .54  $     	   .50    	$     4.0702
                                                      =============  =============  =============  =============  =============
Cash distributions paid or accrued per BAC            $      .8100   $      .8100   $      .8100   $      .8100   $      .8100
                                                      =============  =============  =============  =============  =============
Investment in FHA Loans                	              $  6,538,424   $  6,568,139   $  6,595,251   $  6,619,989   $  6,642,560
                                                      =============  =============  =============  =============  =============
Investment in GNMA Certificates     	   			           $ 21,674,940   $ 21,895,675   $ 22,142,421   $ 22,799,369   $ 20,976,662
                                                      =============  =============  =============  =============  =============
Total assets	                              			        $ 29,829,534   $ 31,340,155   $ 32,541,767   $ 33,589,321   $ 34,883,519 
                                                      =============  =============  =============  =============  =============
</TABLE>



































<PAGE>                               - 4 -

     Item 7.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Liquidity and Capital Resources

The Partnership originally acquired: (i) four GNMA Certificates which are 
guaranteed as to principal and interest by the Government National Mortgage 
Association (GNMA) collateralized by first mortgage loans on multifamily 
housing properties located in three states; (ii) an FHA Loan which is insured 
as to principal and interest by the Federal Housing Administration (FHA) on a 
multifamily housing property; and (iii) Partnership Equity Investments in five 
Operating Partnerships which own the multifamily properties financed by the 
GNMA Certificates and the FHA Loan.  The Partnership has been repaid by GNMA 
on one of the GNMA Certificates and the related property has been deeded to 
GNMA in lieu of foreclosure, thus eliminating the Partnership Equity 
Investment in this property.  Collectively, the remaining GNMA 
Certificates, the FHA Loan, and the Partnership Equity Investments are 
referred to as the "Permanent Investments".  The Partnership has also invested 
amounts held in its reserve account in certain GNMA securities backed by pools 
of single-family mortgages (Reserve Investments).  The obligations of GNMA 
and FHA are backed by the full faith and credit of the United States 
government.

Distributions

Cash distributions paid or accrued per BAC were as follows:
<TABLE>
<CAPTION>
                                                                               For the             For the             For the 
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                        --------------      --------------      --------------
<S>                                                                     <C>                 <C>                 <C>           
Regular monthly distributions                                                                                                  
  
Income                                                                  $        .4082      $        .5240      $        .5364 
  Return of capital                                                              .4018               .2860               .2736
                                                                        --------------      --------------      --------------
                                                                        $        .8100      $        .8100      $        .8100 
                                                                        ==============      ==============      ==============
Distributions                                                                                                                 
  Paid out of cash flow                                                          .5172      $        .6019      $        .6497 
  Paid out of reserves                                                           .2928               .2081               .1603   
                                                                        --------------      --------------      --------------
                                                                        $        .8100      $        .8100      $        .8100  
                                                                        ==============      ==============      ==============
</TABLE>
Regular monthly distributions to BAC Holders consist primarily of interest 
received on the FHA Loan, GNMA Certificates and the Reserve Investments.  
Additional cash for distributions is received from other temporary 
investments.  The Partnership may draw on reserves to pay operating expenses 
or to supplement cash distributions to BAC Holders.  The Partnership is 
permitted to replenish reserves with cash flows in excess of distributions 
paid.  During 1997, $1,186,163 was withdrawn from reserves to supplement 
regular monthly cash distributions.  The total amount held in reserves at 
December 31, 1997, was $1,550,084 of which $1,050,718 was invested in 
mortgaged-backed securities.

The Partnership has been supplementing cash flow from operations with 
withdrawals from reserves in order to maintain distributions at the current 
level.  Consequently, it is likely that the level of distributions will be 
reduced in the future.  The General Partners will continue to review the level 
of distributions each quarter in light of the Partnership's operating results 
and financial position.

The Partnership believes that cash provided by operating activities and, if 
necessary, withdrawals from the Partnership's reserves will be adequate to 
meet its short-term liquidity requirements, including the payments of 
distributions to BAC Holders.  The Partnership has no other internal or 
external sources of liquidity.  Under the terms of its Partnership Agreement, 
the Partnership has the authority to enter into short- and long-term debt 
financing arrangements; however, the Partnership currently does not anticipate 
entering into such arrangements.  The Partnership is not authorized to issue 
additional BACs to meet short-term and long-term liquidity requirements.

<PAGE>                               - 5 -

Year 2000

The Partnership does not own or operate its own computer system and owns no 
business or other equipment.  However, the operation of the Partnership's 
business relies on the computer system and other equipment maintained by 
America First Companies L.L.C., the parent company of its general partners 
("America First").  In addition, the Partnership has business relationships 
with a number of third parties whose ability to perform their obligations to 
the Partnership depend on such systems and equipment.  Some or all of these 
systems and equipment may be affected by the inability of certain computer 
programs and embedded circuitry to correctly recognize dates occurring after 
December 31, 1999.  America First has adopted a plan to deal with this 
so-called "Year 2000 problem" with respect to its information technology 
("IT") systems, non-IT systems and third party business relationships.

State of Readiness

The IT system maintained by America First consists primarily of personal 
computers, most of which are connected by a local area network.  All 
accounting and other record keeping functions relating to the Partnership that 
are conducted in house by America First are performed on this PC-LAN system.  
America First does not own or operate any "mainframe" computer systems.  The 
PC-LAN system runs software programs that America First believes are 
compatible with dates after December 31, 1999.  America First has engaged a 
third party computer consulting firm to review and test its PC-LAN system to 
ensure that it will function correctly after that date and expects that this 
process, along with any necessary remediation, will be completed by March 31, 
1999.  America First believes any Year 2000 problems relating to its IT 
systems will resolved without significant operational difficulties.  However, 
there can be no assurance that testing will discover all potential Year 2000 
problems or that it will not reveal unanticipated material problems with the 
America First IT systems that will need to be resolved.

Non-IT systems include embedded circuitry such as microcontrollers found in 
telephone equipment, security and alarm systems, copiers, fax machines, mail 
room equipment, heating and air conditioning systems and other infrastructure 
systems that are used by America First in connection with the operation of the 
Partnership's business.  America First is reviewing its non-IT systems along 
with the providers that service and maintain these systems, with initial 
emphasis being placed on those, such as telephone systems, which have been 
identified as necessary to America First's ability to conduct the operation of 
the Partnership's business activities.  America First expects that any 
necessary modification or replacement of such "mission critical" systems will 
be accomplished by mid-1999.

The Partnership has no control over the remediation efforts of third parties 
with which it has material business relationships and the failure of certain 
of these third parties to successfully remediate their Year 2000 issues could 
have a material adverse effect on the Partnership.  Accordingly, America First 
has undertaken the process of contacting each such third party to determine 
the state of their readiness for Year 2000.  Such parties include, but are not 
limited to, the obligors on the Partnership's GNMA Certificates and FHA Loan, 
the Partnership's transfer and paying agent and the financial institutions 
with which the Partnership maintains accounts.  America First has received 
initial assurances from certain of these third parties that their ability to 
perform their obligations to the Partnership are not expected to be materially 
adversely affected by the Year 2000 problem.  America First will continue to 
request updated information from these material third parties in order to 
access their Year 2000 readiness.  If a material third party vendor is unable 
to provide assurance to America First that it is, or will be, ready for Year 
2000, America First intends to seek an alternative vendor to the extent 
practical.













<PAGE>                               - 6 -

Costs

All of the IT systems and non-IT systems used to conduct the Partnership's 
business operations are owned or leased by America First.  Under the terms of 
its partnership agreement, neither America First nor the Partnership's general 
partners may be reimbursed by the Partnership for expenses associated with 
their computer systems or other business equipment.  Therefore, the costs 
associated with the identification, remediation and testing of America First's 
IT and non-IT systems will be paid by America First rather than the 
Partnership.  The Partnership will bear its proportionate share of the costs 
associated with surveying the Year 2000 readiness of third parties.  However, 
the Partnership's share of the costs associated with these activities are 
expected to be insignificant.  Accordingly, the costs associated with 
addressing the Partnership's Year 2000 issues are not expected to have a 
material effect on the Partnership's results of operations, financial position 
or cash flow.

Year 2000 Risks

The Partnership's general partners believe that the most reasonably likely 
worst-case scenario will be that one or more of the third parties with which 
it has a material business relationship will not have successfully dealt with 
its Year 2000 issues and, as a result, is unable to provide services or 
otherwise perform its obligations to the Partnership.  For example, if an 
obligor on the Partnership's GNMA Certificates or FHA Loan encounters a 
serious and unexpected Year 2000 issue, it may be unable to make a timely 
payment of principal and interest to the Partnership.  This, in turn, could 
cause a delay or temporary reduction in cash distributions to BAC holders.  In 
addition, if the Partnership's transfer and paying agent experiences Year 
2000-related difficulties, it may cause delays in making distributions to BAC 
holders or in the processing of transfers of BACs.  It is also possible that 
one or more of the IT and non-IT systems of America First will not function 
correctly, and that such problems may make it difficult to conduct necessary 
accounting and other record keeping functions for the Partnership.  However, 
based on currently available information, the general partners do not believe 
that there will be any protracted systemic failures of the IT or non-IT 
systems utilized by America First in connection with the operation of the 
Partnership's business.

Contingency Plans

Because of the progress which America First has made toward achieving Year 
2000 readiness, the Partnership has not made any specific contingency plans 
with respect to the IT and non-IT systems of America First.  In the event of a 
Year 2000 problem with its IT system, America First may be required to 
manually perform certain accounting and other record-keeping functions.  
America First plans to terminate the Partnership's relationships with material 
third party service providers that are not able to represent to America First 
that they will be able to successfully resolve their material Year 2000 issues 
in a timely manner.  However, the Partnership will not be able to terminate 
its relationships with certain third parties, such as the obligors on its GNMA 
Certificates and FHA Loan, who may experience Year 2000 problems.  The 
Partnership has no specific contingency plans for dealing with Year 2000 
problems experienced with these third parties.

All forecasts, estimates or other statements in this report relating to the 
Year 2000 readiness of the Partnership and its affiliates are based on 
information and assumptions about future events.  Such "forward-looking 
statements" are subject to various known and unknown risks and uncertainties 
that may cause actual events to differ from such statements.  Important 
factors upon which the Partnership's Year 2000 forward-looking statements are 
based include, but are not limited to, (a) the belief of America First that 
the software used in IT systems is already able to correctly read and 
interpret dates after December 31, 1999 and will require little or any 
remediation; (b) the ability to identify, repair or replace mission critical 
non-IT equipment in a timely manner, (c) third parties' remediation of their 
internal systems to be Year 2000 ready and their willingness to test their 
systems interfaces with those of America First, (d) no third party system 
failures causing material disruption of telecommunications, data transmission, 
payment networks, government services, utilities or other infrastructure, (e) 
no unexpected failures by third parties with which the Partnership has a 
material business relationship and (f) no material undiscovered flaws in 
America First's Year 2000 testing process.


<PAGE>                               - 7 -

Asset Quality

The FHA Loan and GNMA Certificates owned by the Partnership are guaranteed as 
to principal and interest by FHA and GNMA, respectively.  The obligations of 
FHA and GNMA are backed by the full faith and credit of the United States 
government.  The Partnership Equity Investments, however, are not insured or 
guaranteed.  The value of these investments is a function of the value of 
the real estate underlying the Operating Partnerships.  

The fair value of the properties underlying the Operating Partnerships is 
based on management's best estimate of the fair value of such properties, 
however; the ultimate realized values may vary from these estimates.  The fair 
value of the properties is determined based on the discounted estimated future 
cash flows from the properties, including estimated sales proceeds.  The 
calculation of discounted estimated future cash flows includes certain 
variables such as the assumed inflation rates for rents and expenses, 
capitalization rates and discount rates.  These variables are supplied to 
management by an independent real estate firm and are based on local market 
conditions for each property.  In certain cases, additional factors such as 
the replacement value of the property or comparable sales of similar 
properties are also taken into consideration.  

The following table shows the occupancy levels of the properties financed by 
the Partnership as of December 31, 1997:

<TABLE>
<CAPTION>
                                                                                                    Number          Percentage
                                                                                Number            of Units            of Units
 Property Name                               Location                         of Units            Occupied            Occupied
 ------------------------------------        ------------------              ---------          ----------         -----------
 <S>                                         <C>                             <C>                <C>                <C>        
 Crane's Landing                             Winter Park, FL                       252                 237                  94%
 Delta Crossing                              Charlotte, NC                         178                 168                  94%
 Monticello Apartments                       Southfield, MI                        106                 104                  98%
 The Ponds at Georgetown                     Ann Arbor, MI                         134                 128                  96%
                                                                             ---------          ----------         -----------
                                                                                   670                 637                  95%
                                                                             =========          ==========         ===========
</TABLE>

Crane's Landing

Crane's Landing, located in Winter Park, Florida, is a 252-unit complex with 
one-, two- and three-bedroom apartments on fourteen acres of land.  Average 
occupancy was 96% during 1997, compared to 94% during 1996.  As a result of 
the increase in average occupancy and rental rate increases, rental income 
increased approximately 9% in 1997, compared to 1996.  The increase in rental 
income was partially offset by an increase in real estate operating expenses, 
primarily an increase of approximately 23% in repairs and maintenance expenses 
and 15% in labor expenses.  This resulted in an increase of approximately 4.4% 
in net cash flow generated by this property, before debt service, in 1997, 
compared to 1996.  The property generated cash flow in excess of debt service 
and was current on its mortgage obligations during 1997.

Delta Crossing

Delta Crossing is a 178-unit apartment complex located in Charlotte, North 
Carolina.  Average occupancy was 93% in 1997, compared to 92% in 1996.  As a 
result of the increase in occupancy and rental rate increases, rental income 
increased approximately 3% in 1997, compared to 1996.  The increase in rental 
income was offset by increases of approximately 11% in repairs and maintenance 
expenses and property improvements, 9% in labor expenses and slight increases 
in other expenses.  Thus, net cash flow generated by this property in 1997 was 
comparable to 1996.  The property generated cash flow in excess of debt 
service and was current on its mortgage obligations during 1997.









<PAGE>                               - 8 -

Monticello Apartments

Monticello Apartments, located in Southfield, Michigan, contains 106 rental 
units.  Average occupancy was 97% in 1997, compared to 96% in 1996.  As a 
result, rental income increased slightly in 1997, compared to 1996.  The 
increase in rental income, was more than offset by increases in real estate 
operating expenses, primarily an increase of approximately 42% in repairs and 
maintenance expenses and property improvements and 13% in labor expenses.  
Thus, net cash flow generated by this property, before debt service, decreased 
approximately 2.3% in 1997, compared to 1996.  Despite the decrease in net 
cash flow, the property generated cash flow in excess of debt service and was 
current on its mortgage obligations during 1997.

The Ponds at Georgetown

The Ponds at Georgetown consists of 134 apartments located in Ann Arbor, 
Michigan.  Average occupancy was 97% in 1997 compared to 95% in 1996.  
Operating revenue increased approximately 8% in 1997 compared to 1996, 
primarily due to the increase in average occupancy, rental rate increases and 
an increase in corporate unit rentals.  Despite the increase in operating 
revenue, the Operating Partnership remains in default on its mortgage loan and 
is delinquent in paying property taxes and insurance.  The Partnership 
continues to explore a number of alternatives with the mortgage holder to 
determine the best course of action to pursue, including a possible 
restructuring of the mortgage loan.

Results of Operations

The tables below compare the results of operations for each year shown.
<TABLE>
<CAPTION>
                                                                               For the	            For the		          For the
                                                                       	    Year Ended     		   Year Ended		       Year Ended
                                                                         Dec. 31, 1997 		    Dec. 31, 1996       Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $    2,499,844      $    2,520,727	     $    2,561,901	
Interest income on temporary cash investments	
  and U.S. government securities                                                91,327             147,530		           200,678
Equity in losses of Operating Partnerships 		                                 (121,450)               -               (109,900)
Other income                                                                     3,800               6,950               4,650
Gain on sale of mortgage-backed securities                                        -                   -   		            15,670
                                                                         --------------     ---------------     ---------------
				                                                                         2,473,521           2,675,207           2,672,999	
Operating and administrative expenses                                          819,516             552,170 		          499,903 
                                                                         --------------     ---------------     ---------------
Net income	                                                              $   1,654,005      $    2,123,037	     $    2,173,096	
                                                                         ==============     ===============     ===============
</TABLE>
<TABLE>
<CAPTION>
























<PAGE>                               - 9 -

                                                                         	    Increase	           Increase
                                                                       		    (Decrease)     		   (Decrease)
                                                                             From 1996 		        From 1995
                                                                        ---------------     ---------------
<S>                                                                     <C>                 <C>
Mortgage-backed securities income                                       $      (20,883)     $      (41,174)
Interest income on temporary cash investments 
  and U.S. government securities                                               (56,203)            (53,148)
Equity in losses of Operating Partnerships                                    (121,450)            109,900  
Other income                                                                    (3,150)              2,300 
Gain on sale of mortgage-backed securities   	                                    -                (15,670)	
                                                                         --------------     ---------------
				                                                                          (201,686)              2,208  
Operating and administrative expenses                                          267,346              52,267 	
                                                                         --------------     ---------------
Net income	                                                              $    (469,032)     $      (50,059)
                                                                         ==============     ===============
</TABLE>

Mortgage-backed securities income decreased $20,883 from 1996 to 1997 and 
$41,174 from 1995 to 1996.  The decreases were due to the continued 
amortization of the principal balances of the Partnership's mortgage-backed 
securities.

Interest on temporary cash investments and U.S. government securities 
decreased $56,203 from 1996 to 1997 and $53,148 from 1995 to 1996.  The 
decreases were due to withdrawals made from the Partnership's reserves to 
supplement distributions to BAC Holders.

The recognition of equity in losses of Operating Partnerships have been 
suspended, limited to the extent distributions are received and capital 
investments are made. 

The Partnership made additional investments in certain Operating Partnerships 
during 1997 and 1995. As such, Equity in losses of Operating Partnerships was 
recorded in 1997 and 1995 to the extent of the additional investments.  No 
such investments were made and no equity in losses was recorded in 1996.

During 1995, the Partnership sold a portion of its mortgage-backed securities 
and realized a gain of $15,670 on the sale.  There were no such sales during 
either 1996 or 1997.

Operating and administrative expenses increased $267,346 from 1996 to 1997.  
Approximately $126,000 of such increase was due to costs incurred in 
connection with a review of various options available to the Partnership to 
improve total investment returns and provide liquidity to the Partnership's 
investors.  The remaining increase of $141,346 from 1996 to 1997 was due 
primarily to increases in salaries and related expenses. Operating and 
administrative expenses increased $52,267 from 1995 to 1996 primarily due to 
increases in salaries and related expenses.  

     This report contains forward looking statements that reflect management's 
current beliefs and estimates of future economic circumstances, industry 
conditions, the Partnership's performance and financial results.  All 
statements, trend analysis and other information concerning possible or 
assumed future results of operations of the Partnership and the real estate 
investments it has made (including, but not limited to, the information 
contained in "Management's Discussion and Analysis of Financial Condition and 
Results of Operations"), constitute forward-looking statements.  BAC holders 
and others should understand that these forward looking statements are subject 
to numerous risks and uncertainties and a number of factors could affect the 
future results of the Partnership and could cause those results to differ 
materially from those expressed in the forward looking statements contained 
herein.

     Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.  
The requirements of Item 7A of Form 10-K are not applicable to the Partnership 
prior to its Annual Report on Form 10-K for the year ended December 31, 1998.

	    Item 8.  Financial Statements and Supplementary Data.  The Financial 
Statements and supporting schedules of the Registrant are set forth in Item 14 
hereof and are incorporated herein by reference.



<PAGE>                              	- 10 - 

	    Item 9.  Changes in and Disagreements With Accountants on Accounting and 
Financial Disclosure.  There were no disagreements with the Registrant's 
independent accountants on accounting principles and practices or financial 
disclosure during the fiscal years ended December 31, 1997 and 1996.







































































<PAGE>                               - 11 -

                                   PART III

     Item 10.  Directors and Executive Officers of Registrant.  The Registrant 
has no directors or officers.  The general partners of the Registrant are 
America First Capital Source II, L.L.C., (the "America First General Partner") 
and Insured Mortgage Equities II L.P., (the "IME II General Partner"), each of 
which is controlled by America First Companies L.L.C. ("America First").  
Collectively, the America First General Partner and the IME II General Partner 
are referred to as the "General Partners".

	    The following individuals are the officers, directors and managers of the 
America First General Partner, the general partner of the IME II General 
Partner and America First, and each serves for a term of one year.

<TABLE>
<CAPTION>
Name                      Position Held                                    Position Held Since
-----------------------   ----------------------------------            -----------------------
<S>                       <C>                                           <C>
Michael B. Yanney	        Chairman of the Board, President,                       1984
                          Chief Executive Officer and 
                          Manager of America First

                          Chairman and Chief Executive                            1991
                          Officer of the America First
                          General Partner

                          Director of the general partner of the IME II 
                          General Partner                                         1997

Paul L. Abbott   	        President of the America First                          1997
                          General Partner

                          President of the general partner of the IME II 
                          General Partner                                         1997

Michael Thesing	          Vice President, Secretary, Treasurer and                1984
                          Manager of America First

                          Vice President, Secretary and                           1991
                          Treasurer of the America First
                          General Partner

                          Vice President, Secretary and                           1997
                          Treasurer of the IME II
                          General Partner

William S. Carter, M.D.   Manager of America First                                1994

George Kubat              Manager of America First                                1994

Martin A. Massengale      Manager of America First                                1994

Alan Baer                 Manager of America First                                1994

Gail Walling Yanney       Manager of America First                                1996

Mariann Byerwalter        Manager of America First                                1997
</TABLE>

	    Michael B. Yanney, 64, has served as the Chairman, President and Chief 
Executive Officer of America First Companies L.L.C. and its predecessors since 
1984.  From 1977 until the organization of the first such fund in 1984, Mr. 
Yanney was principally engaged in the ownership and management of commercial 
banks.  Mr. Yanney also has investments in private corporations engaged in a 
variety of businesses.  From 1961 to 1977, Mr. Yanney was employed by Omaha 
National Bank and Omaha National Corporation (now part of U.S. Bank), where he 
held various positions, including the position of Executive Vice President and 
Treasurer of the holding company.  Mr. Yanney also serves as a member of the 
boards of directors of Burlington Northern Santa Fe Corporation, Forest Oil 
Corporation, Lozier Corporation, Freedom Communications, Inc., Magnum 
Resources, RCN Corporation, Rio Grande Medical Technologies, Inc., and PKS 
Information Services, Inc.


<PAGE>                               - 12 -

	    Paul L. Abbott, 52, joined America First in 1997.  From 1988 until 1997, 
Mr. Abbott was a Managing Director of Lehman Brothers, Inc. ("Lehman 
Brothers").  At Lehman Brothers, Mr. Abbott served as chief executive of over 
50 investment funds controlled by Lehman Brothers.  The assets owned by those 
funds included 50,000 multifamily units; 5,100 manufactured housing sites; 5 
million square feet of retail; 950,000 feet of self-service storage; and a 
variety of other debt and equity real estate investments.  His 
responsibilities included acquisitions, financings, planning, investment 
management and workouts.  Mr. Abbott served on various committees responsible 
for approving acquisitions, financings, sales, workouts and similar 
decisions.  Prior to joining Lehman Brothers, from 1983 until 1988, Mr. Abbott 
was a Senior Vice President of Daseke & Co., Inc., a predecessor to Walden 
Residential, a NYSE-traded real estate investment trust.  At Daseke, Mr. 
Abbott was responsible for asset management of 20,000 multifamily units and 
arranging over $500 million of financings.

	    Michael Thesing, 43, has been Vice President and Chief Financial Officer 
of affiliates of America First Companies L.L.C. since July 1984.  From January 
1984 until July 1984 he was employed by various companies controlled by Mr. 
Yanney.  He was a certified public accountant with Coopers & Lybrand from 1977 
through 1983.

	    William S. Carter, M.D., 71, is a retired physician.  Dr. Carter 
practiced medicine for 30 years in Omaha, Nebraska, specializing in 
otolaryngology (disorders of the ears, nose and throat).

	    George Kubat, 52, is the President and Chief Executive Officer of 
Phillips Manufacturing Co., an Omaha, Nebraska, based manufacturer of drywall 
metals and construction materials.  Prior to assuming that position in 
November 1992, Mr. Kubat was a certified public accountant with Coopers & 
Lybrand in Omaha, Nebraska, from 1969.  He was the tax partner in charge of 
the Omaha office from 1981 to 1992.  Mr. Kubat currently serves on the board 
of directors of Sitel Corporation and InfoUSA.

	    Martin A. Massengale, 64, is President Emeritus of the University of 
Nebraska, Director of the Center for Grassland Studies and Foundation 
Distinguished Professor.  Prior to becoming President in 1991, he served as 
Interim President from 1989, as Chancellor of the University of Nebraska 
Lincoln from 1981 until 1990 and as Vice Chancellor for Agriculture and 
Natural Resources from 1976 to 1981.  Prior to that time, he was a professor 
and associate dean of the College of Agriculture at the University of 
Arizona.  Dr. Massengale currently serves on the board of directors of Woodmen 
Accident & Life Insurance Company and IBP, Inc. and is a member of the Board 
of Trustees of the Great Plains Funds, Inc.

	    Alan Baer, 75, is presently Chairman of Alan Baer & Associates, Inc., a 
management company located in Omaha, Nebraska.  He is also Chairman of Lancer 
Hockey, Inc., Baer Travel Services, Wessan Telemarketing, Total Security 
Systems, Inc. and several other businesses.  Mr. Baer is the former Chairman 
and Chief Executive Officer of the Brandeis Department Store chain which, 
before its acquisition, was one of the larger retailers in the Midwest.  Mr. 
Baer has also owned and served on the board of directors of several banks in 
Nebraska and Illinois.

	    Gail Walling Yanney, 61, is a retired physician.  Dr. Walling practiced 
anesthesia and was most recently the Executive Director of the Clarkson 
Foundation until October of 1995.  In addition, she was a director of FirsTier 
Bank, N.A., Omaha prior to its merger with First Bank, N.A..  Ms. Yanney is 
the wife of Michael B. Yanney.

	    Mariann Byerwalter, 37, is Vice President of Business Affairs and Chief 
Financial Officer of Stanford University.  Ms. Byerwalter was Executive Vice 
President of America First Eureka Holdings, Inc. ("AFEH") and EurekaBank from 
1988 to January 1996.  Ms. Byerwalter was Chief Financial Officer and Chief 
Operating Officer of AFEH, and Chief Financial Officer of EurekaBank from 1993 
to January 1996.  She was an officer of BankAmerica Corporation and its 
venture capital subsidiary from 1984 to 1987.  She served as Vice President 
and Executive Assistant to the President of Bank of America and was a Vice 
President in the bank's Corporate Planning and Development Department.

  




<PAGE>                               - 13 -

   Item 11.  Executive Compensation.  The Registrant does not have any 
directors or officers.  None of the directors or officers of the General 
Partners or the managers or officers of America First receive compensation 
from the Registrant and neither General Partner receives reimbursement from 
the Registrant for any portion of their salaries.  Remuneration paid by the 
Registrant to the General Partners pursuant to the terms of its agreement of 
limited partnership during the period ending December 31, 1997, is described 
in Note 7 to the Notes to the Financial Statements filed in response to Item 8 
hereof.

     Item 12.  Security Ownership of Certain Beneficial Owners and Management. 

     (a) No person is known by Registrant to own beneficially more than 5% of 
the BACs.

     (b)	No director or officers of the General Partners or managers or 
officers of America First own any BACs.

     (c) There are no arrangements known to the Registrant the operation of 
which may at any subsequent date result in a change in control of the 
Registrant.

     Item 13.  Certain Relationships and Related Transactions.  The members of 
the America First General Partner are America First Companies L.L.C and Mr. 
Yanney.  The general partner of the IME II General Partner is CS Housing II, 
Inc. ("CSII"), which is owned by America First.  Except as described herein, 
the Registrant is not a party to any transaction or proposed transaction with 
either General Partner or with any person who is (i) a member, director or 
executive officer of the America First General Partner or manager or officer 
of America First or a director or officer of CSII, (ii) a nominee for election 
as a director or manager of the America First General Partner, or a manager of 
America First or CSII, (iii) an owner of more than 5% of the BACs or (iv) a 
member of the immediate family of any of the foregoing persons.
     
     The General Partners are entitled to receive an asset management and 
partnership administrative fee equal to 0.5% of invested assets per annum, the 
first $50,000 of which shall be paid each year with the balance payable only 
during such years that a 6.5% annual return has been paid to investors on a 
noncumulative basis.  An additional fee of 0.5% of invested assets will be 
paid in those years that an 11.5% annual return has been paid to investors on 
a cumulative basis.  Any unpaid amounts will accrue and be payable only after 
a 11.5% annual return to investors has been paid on a cumulative basis and the 
investors have received the return of their capital contributions.  During 
1997, the General Partners earned, and the Registrant incurred $166,000 in 
such asset management and partnership administration fees.  

     During 1997, the Registrant paid or reimbursed the General Partners 
$494,165 for certain costs and expenses incurred in connection with the 
operation of the Registrant, including legal and accounting fees and investor 
communication costs, such as printing and mailing charges.  See Note 7 to 
Notes to Financial Statements filed in response to Item 8 hereof for a 
description of these costs and expenses.

    America First Properties Management, L.L.C. (the "Manager") has been 
retained to provide property management services with respect to the 
day-to-day operation of The Ponds at Georgetown.  The property management 
agreement provides that the Manager is entitled to receive a management fee 
equal to a stated percentage of the gross revenues generated by the property 
under management.  Management fees payable to the Manager are 3% of gross 
revenues.  Because the Manager is an affiliate of the General Partner the 
management fees payable by the Registrant to the Manager may not exceed the 
lesser of (i) the rates that the Registrant would pay an unaffiliated manager 
for similar services in the same geographic location or (ii) the Manager's 
actual cost for providing such services.  During the year ended December 31, 
1997, the Registrant paid the Manager property management fees of $31,924.










<PAGE>                               - 14 -

	                                   PART IV

     Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8 K.
(a) The following documents are filed as part of this report:

     1.	Financial Statements.  The following financial statements are included 
in response to Item 8 of this report:

   		Independent Accountants' Report 

     Balance Sheets of the Registrant as of December 31, 1997, 
     and December 31, 1996.

     Statements of Income of the Registrant for the years ended 
     December 31, 1997, December 31, 1996, and December 31, 1995.

     Statements of Partners' Capital (Deficit) of the Registrant for the 
     years ended December 31, 1997, December 31, 1996, and December 31, 1995.

     Statements of Cash Flows of the Registrant for the years 
     ended December 31, 1997, December 31, 1996, and December 31, 1995.

     Notes to Financial Statements of the Registrant.

     2.	Financial Statement Schedules.  The information required to be set 
forth in the financial statement schedules is included in the Financial 
Statements filed in response to Item 8 hereof.

     3.	Exhibits.  The following exhibits were filed as required by Item 14(c) 
of this report.  Exhibit numbers refer to the paragraph numbers under Item 601 
of Regulation S-K:

          4(a).	Agreement of Limited Partnership of Capital Source II L.P.-A 
     (incorporated herein by reference from Exhibit A of the Prospectus 
     contained in the Registrant's Post Effective Amendment No. 4 dated 
     February 5, 1987, to the Registration Statement on Form S-11 (Commission 
     File No. 0-16862)).

          4(b).	Beneficial Assignment Certificate (incorporated by reference 
     from Exhibit 10(a) to the Registrant's Amendment No. 2 dated January 27, 
     1987, to the Registration Statement on Form S-11 (Commission File No. 0-
     16862)).

          24.	Power of Attorney (incorporated herein by reference to form 10-K 
					dated December 31, 1997, filed pursuant to section 13 or 15(d) of the 
					Securities Exchange Act of 1934 by Capital Source II L.P.-A (Commission 
					File No. 0-16862)).

     (b) The Registrant did not file any reports on Form 8-K during the last 
quarter of the period covered by this report.

Independent Accountants' Report























<PAGE>                               - 15 -

To the Partners
Capital Source II L.P.-A:

We have audited the accompanying balance sheets of Capital Source II L.P.-A as 
of December 31, 1997 and 1996, and the related statements of income, partners' 
capital (deficit) and cash flows for each of the three years in the period 
ended December 31, 1997.  These financial statements are the responsibility of 
the Partnership's management.  Our responsibility is to express an opinion on 
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement.  An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements.  An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation.  We believe that our audits provide a reasonable basis 
for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Capital Source II L.P.-A as 
of December 31, 1997 and 1996, and the results of its operations and its cash 
flows for each of the three years in the period ended December 31, 1997, in 
conformity with generally accepted accounting principles.

As discussed in Note 2.H., the accompanying financial statements have been 
restated to reflect the investments made by Capital Source II L.P. in 
Operating Partnerships on the equity method of accounting.  Such investments 
had previously been consolidated by Capital Source II L.P..

Omaha, Nebraska	       						
October 23, 1998				               					 KPMG Peat Marwick LLP










































<PAGE>                               - 16 -

CAPITAL SOURCE II L.P.-A
Balance Sheets
<TABLE>
<CAPTION>

                                                                                             Dec. 31, 1997       Dec. 31, 1996
                                                                                            ---------------     ---------------
<S>                                                                                         <C>                 <C>
Assets
 Cash and temporary cash investments, at cost which
  approximates market value                                                                 $    1,240,992      $    2,430,937
 Investment in FHA Loan (Note 5)                                                                 6,538,424           6,568,139
 Investment in GNMA Certificates (Note 5)                                                       21,674,940          21,895,675
 Investment in Operating Partnerships (Note 6)                                                        -                   -   
 Interest receivable                                                                               213,024             219,661
 Other assets                                                                                      162,154             225,743
                                                                                            ---------------     ---------------
                                                                                            $   29,829,534      $   31,340,155
                                                                                            ===============     ===============
Liabilities and Partners' Capital (Deficit)
	Liabilities
		Accounts payable (Note 7)	                                                                $      327,513      $      216,298
		Distribution payable (Note 4)		                                                                  546,968             546,968
                                                                                            ---------------     ---------------
                                                                                             		    874,481             763,266
                                                                                            ---------------     ---------------
 Partners' Capital (Deficit)
	 General Partner	                                                                                (276,907)           (260,689)
 	Beneficial Assignment Certificate Holders
			($7.29 per BAC in 1997 and $7.69 in 1996)	                                                   29,231,960          30,837,578
                                                                                            ---------------     ---------------
                                                                                          		    28,955,053          30,576,889
                                                                                            ---------------     ---------------
                                                                                      				  $   29,829,534      $   31,340,155
                                                                                            ===============     ===============
</TABLE>
CAPITAL SOURCE II L.P.-A
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                      			                      For the             For the             For the
                                               			                          Year Ended          Year Ended          Year Ended
                                               				                      Dec. 31, 1997       Dec. 31, 1996	      Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Income
	Mortgage-backed securities income (Note 5)                             $    2,499,844      $    2,520,727      $    2,561,901
	Interest income on temporary cash investments	
  and U.S. government securities                                                91,327             147,530             200,678
 Equity in losses of Operating Partnerships (Note 6)   		                     (121,450)               -               (109,900)
 Other income                                                                    3,800               6,950               4,650 
 Gain on sale of mortgage-backed securities                                       -                   -                 15,670
     	                                                                  ---------------     ---------------     ---------------
                                                                             2,473,521           2,675,207           2,672,999
Expenses
	Operating and administrative expenses (Note 7)		                              819,516             552,170             499,903
                                                                        ---------------     ---------------     ---------------
Net income	                                                             $    1,654,005      $    2,123,037      $    2,173,096
                                                                        ===============     ===============     ===============
Net income allocated to:
	General Partner	                                                       $       16,540      $       21,230      $       21,731
	BAC Holders		                                                               1,637,465           2,101,807           2,151,365	
                                                                        ---------------     ---------------     ---------------
			                                                                     $    1,654,005      $    2,123,037      $    2,173,096
                                                                        ===============     ===============     ===============
Net income, basic and diluted, per BAC	                                 $          .41      $          .52      $          .54
                                                                        ===============     ===============     ===============
Weighted average number of BACs outstanding	                                 4,011,101           4,011,101           4,011,101
                                                                        ===============     ===============     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>



<PAGE>                               - 17 -

CAPITAL SOURCE II L.P.-A
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FROM DECEMBER 31, 1994 TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                                                                

                                                           General             BAC
                                                          Partners            Holders               Total
                                                    ---------------     ---------------     ---------------
<S>                                                 <C>                 <C>                 <C>          
Partners' Capital (Deficit) (excluding net 
 unrealized holding gains)
  Balance at December 31, 1994,																					$					(280,672)					$			28,859,231						$			28,578,559	
   as previously reported 
  Effect of restatement (Note 2.I.)																									42,296											4,187,279											4,229,575
																																																					---------------     ---------------     ---------------
  Balance at December 31, 1994, as restated               (238,376)         33,046,510      	   32,808,134
  Net income                                                21,731           2,151,365           2,173,096
  Cash distributions paid or accrued (Note 4)              (32,818)         (3,248,992)         (3,281,810) 
                                                     ---------------     ---------------     ---------------
  Balance at December 31, 1995                            (249,463)         31,948,883   	      31,699,420
  Net income				                                            21,230		         2,101,807  	        2,123,037
  Cash distributions paid or accrued (Note 4)		            (32,818)		       (3,248,992)         (3,281,810)
                                                      ---------------     ---------------     ---------------
  Balance at December 31, 1996                            (261,051)         30,801,698          30,540,647
  Net income                                                16,540           1,637,465           1,654,005
  Cash distributions paid or accrued (Note 4)              (32,818)         (3,248,992)         (3,281,810)
                                                    ---------------     ---------------     ---------------
                                                   	      (277,329)         29,190,171          28,912,842
                                                    ---------------     ---------------     ---------------
Net unrealized holding gains
 Balance at December 31, 1994                                 -                   -                   -
  Net change                                                   787              77,955              78,742
                                                    ---------------     ---------------     ---------------
 Balance at December 31, 1995                                  787              77,955              78,742
  Net change                                                  (425)            (42,075)            (42,500)
                                                    ---------------     ---------------     ---------------
 Balance at December 31, 1996                                  362              35,880              36,242
  Net change                                                    60               5,909               5,969
                                                    ---------------     ---------------     ---------------
                                                               422              41,789              42,211
                                                    ---------------     ---------------     ---------------
Balance at December 31, 1997                        $     (276,907)     $   29,231,960      $   28,955,053
                                                    ===============     ===============     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>



























<PAGE>                               - 18 -

CAPITAL SOURCE II L.P.-A
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended	         Year Ended
                                                                         Dec. 31, 1997       Dec. 31, 1996	      Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Cash flows from operating activities			
 Net income			                                                          $    1,654,005      $    2,123,037      $   2,173,096
  Adjustments to reconcile net income to
    net cash provided by operating activities
   Equity in losses of Operating Partnerships	 			                             121,450                -               109,900
   Amortization of discount on mortgage-backed securties																								(1,397)													(9,400)											(25,076)
   Gain on sale of mortgage-backed securities				                                 -                   -               (15,670)
   Decrease (increase) interest receivable 																																						6,637              26,654        	   (15,159)
   Decrease in other assets																																																					63,589             	62,156           		62,871 
   Increase (decrease) in accounts payable																																					111,215             		 (339)           (17,582)
																																																																								---------------     ---------------     ---------------
   Net cash provided by operating activities                                 1,955,499           2,202,108           2,272,380
                                                                        ---------------     ---------------     ---------------
Cash flows from investing activities
 FHA Loan and GNMA principal payments received                                 257,816             253,258             286,952
 Maturity of U.S. government securities                                           -              2,500,000                -
 Disposition of mortgage-backed securities                                        -                   -                470,667
 Investment in Operating Partnerships                                         (121,450)               -               (109,900)
 Acquisition of U.S. government securities                                        -                   -             (2,468,945)
                                                                        ---------------     ---------------     ---------------
  Net cash provided by (used in) investing activities                          136,366           2,753,258          (1,821,226)
                                                                        ---------------     ---------------     ---------------
Cash flows from financing activities
 Distributions paid				                                                     (3,281,810)         (3,281,810)         (3,281,810)
                                                                        ---------------     ---------------     ---------------
Net increase (decrease) in cash and temporary cash investments	             (1,189,945)          1,673,556          (2,830,656)
Cash and temporary cash investments at beginning of year  				               2,430,937             757,381           3,588,037
                                                                        ---------------     ---------------     ---------------
Cash and temporary cash investments at end of year  			                 $    1,240,992      $    2,430,937      $      757,381
                                                                        ===============     ===============     ===============
</TABLE>

The accompanying notes are an integral part of the financial statements.

































<PAGE>                               - 19 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. Organization

Capital Source II L.P.-A (the Partnership) was formed on August 22, 1986, 
under the Delaware Revised Uniform Limited Partnership Act.  The General 
Partners of the Partnership are Insured Mortgage Equities II L.P. and America 
First Capital Source II, L.L.C. (the General Partners).  

The Partnership was formed to invest principally in federally-insured 
mortgages on multifamily housing properties and limited partnership interests 
in the Operating Partnerships which construct and operate these properties.  
Each federally insured loan is guaranteed in amounts equal to the face amount 
of the mortgage, by the Federal Housing Administration (FHA) or the Government 
National Mortgage Association (GNMA).  Hereinafter, the Partnership's 
investments in such mortgages are referred to as investments in 
mortgage-backed securities.  The Operating Partnerships are 
geographically located as follows: (i) two in Michigan; and, (ii) one each in 
Florida and North Carolina.

CS Properties II, Inc. which is owned by the General Partners, serves as the 
Special Limited Partner for the Operating Partnerships.  The Special Limited 
Partner has the power, among other things, to remove the general partners of 
the Operating Partnerships under certain circumstances and to consent to the 
sale of the operating partnerships' assets.  

The Partnership will terminate subsequent to the sale of all properties but in 
no event will the Partnership continue beyond December 31, 2035.

2. Summary of Significant Accounting Policies

 A)Method of Accounting
   The financial statements of the Partnership are prepared on the accrual 
   basis of accounting in accordance with generally accepted accounting 
   principles.

   The preparation of financial statements in conformity with generally 
   accepted accounting principles requires management to make estimates and 
   assumptions that affect the reported amounts of assets and liabilities and 
   disclosure of contingent assets and liabilities at the date of the 
   financial statements and the reported amounts of revenues and expenses 
   during the reporting period.  Actual results could differ from those 
   estimates.
 
 	B)	Investment in Mortgage-Backed Securities
    Investment securities are classified as held-to-maturity, 
				available-for-sale, or trading.  Investments classified as 
    held-to-maturity are carried at amortized cost.  Investments classified as 
    available-for-sale are reported at fair value, as determined by references 
				to published sources.  Any unrealized gains or losses are excluded from 
				earnings and reflected as a separate component of partners' capital.  
				Subsequent increases and decreases in the net unrealized gain/loss on the
			 available-for-sale securities are reflected as adjustments to the carrying
			 value of the portfolio and adjustments to the component of partners' 
				capital.  The Partnership does not have investment securities classified
			 as trading.

















<PAGE>                               - 20 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

	C)	Investment in Operating Partnerships    
    The investment in Operating Partnerships consists of interests in limited
    partnerships which own properties underlying the mortgage-backed securities
    and are accounted for using the equity method. The investments 
				by the Partnership in the Operating Partnership were recorded at the cost 
				to acquire such interests.  Subsequently losses were recorded by the 
				Partnership as they were realized by the Operating Partnerships.  The 
				Partnerships suspended recognizing losses in the Operating Partnerships 
				when its entire initial investment had been consumed by such losses.  
				Subsequently, losses have been recognized only to the extent of additional 
				contributions net of distribution received, to the Operating Partnerships
			 by the Partnership.  The Operating Partnerships are not insured or 
				guaranteed.  The	value of these investments is a function of the value of
			 the real estate owned by the Operating Partnerships.  With regard to the
			 Operating	Partnerships, the Partnership has no legal obligation to provide
			 additional cash support as they are not the general partner, nor have they
			 indicated any commitment to provide this support; accordingly they have 
				not reduced their investment in these operating partnerships below zero.

  D)Income Taxes
   No provision has been made for income taxes since BAC Holders are required 
   to report their share of the Partnership's income for federal and state 
   income tax purposes.  The tax basis of the Partnership's assets and 
   liabilities exceeded the reported amounts by $1,817,163 and $2,147,478 at 
   December 31, 1997, and December 31, 1996, respectively.

 E)Temporary Cash Investments
   Temporary cash investments are invested in short-term debt securities 
   purchased with original maturities of three months or less.

 F)Net Income per Beneficial Assignment Certificate (BAC)
   Net income per BAC was calculated based on the number of BACs outstanding 	
   (4,011,101) during each year presented.

 G)New Accounting Pronouncement
   The Financial Accounting Standards Board has issued Financial Accounting 
   Standards No. 128 "Earnings Per Share" (FAS 128).  FAS 128, which is 
   effective for periods ending after December 15, 1997, did not  
   have an impact on the Partnership's computation, presentation or 
   disclosure of earnings per BAC as no dilutive common share equivalents 
   existed at December 31, 1997.

 H)Restatement
			The Partnership holds a majority ownership interest and through 
			Capital Source Properties II, Inc. can influence the decisions of the 
			general	partners of the Operating Partnerships in certain 
			circumstances.		Accordingly, the Partnership had consolidated the 
			Operating Partnerships since inception.  In 1998 it was determined that 
			this influence did not	constitute	control of the Operating Partnerships.  
			Therefore, the accompanying financial statements have been restated to 
			deconsolidate the Operating Partnerships and to account for the 
			investments in Operating Partnerships under the equity method of accounting 
			rather than consolidation.

			Under the equity method of accounting, the Partnership's investments are 			
			adjusted to reflect its share of Operating Partnership profits or losses 
			and distributions.  As required by consolidation accounting, the Partnership 
			had recorded losses from the Operating Partnerships substantially in excess 
			of its investments.  As previously disclosed, the Partnership is not 
			the general	partner, nor is it obliged to fund the negative balances.  Under 
			equity accounting, the Partnership does not reduce the carrying value of 
			its investments below zero.  As restated, investments in the Operating 			
			Partnerships are reflected at zero and profits and losses are recorded 
			based on capital	contributions made and distributions received from the
		 Operating Partnerships.






<PAGE>                               - 21 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

			The restatement increased partners' capital at December 31, 1994 by 
			$4,229,575	which was the negative balance of the investment in Operating 
			Partnerships at that date.  The restatement further increased net income for 
			1997, 1996 and 1995 by $256,455, $523,809 and $444,782, respectively.  Net
		 income per BAC (basic and diluted) increased by $.07, $.13 and $.11, 
			respectively.

3.	Partnership Reserve Account

The Partnership maintains a reserve account which consisted of the following 
at December 31, 1997:

<TABLE>
<S>                                                                   <C>
Cash and temporary cash investments				                               $      499,366
GNMA Certificates                                                          1,050,718
                                                                      ---------------
                              					                                   $    1,550,084
                                                                      ===============
</TABLE>

The reserve account was established to maintain working capital for the 
Partnership and is available for distribution to BAC Holders and for any 
contingencies related to mortgage backed securities and the operation of the 
Partnership.  See Note 5 regarding the investment in mortgage backed 
securities.

4. Partnership Income, Expenses and Cash Distributions

Profits and losses from continuing operations and cash available for 
distribution will be allocated 99% to the investors and 1% to the General 
Partners.  Certain fees payable to the General Partners will not become due 
until investors have received certain priority returns.  Cash distributions 
included in the financial statements represent the actual cash distributions 
made during each year and the change in cash distributions accrued at the end 
of each year.

The General Partners will receive 1% of the net proceeds from any sale of 
Partnership assets.  The General Partners will receive a termination fee equal 
to 3% of all sales proceeds less actual costs incurred in connection with all 
sales transactions, payable only after the investors have received a return of 
their capital contributions and an 11.5% annual return on a cumulative basis.  
The General Partners will also receive a fee equal to 9.1% of all cash 
available for distribution and sales proceeds (after deducting from cash 
available or sales proceeds any termination fee paid therefrom) after 
investors have received a return of their capital contributions and an 11.5% 
annual return on a cumulative basis.

5.	Investment in Mortgage-Backed Securities

The mortgage-backed securities held by the Partnership represent Government 
National Mortgage Association (GNMA) Certificates and Federal Housing 
Administration (FHA) loans.  The GNMA Certificates are backed by 
first mortgage loans on multifamily housing properties and pools of 
single-family properties.  The GNMA Certificates are debt securities issued by 
a private mortgage lender and are guaranteed by GNMA as to the full and timely 
payment of principal and interest on the underlying loans.  The FHA loan is 
guaranteed as to the full and timely payment of principal and interest on the 
underlying loans.

At December 31, 1997, the total amortized cost, gross unrealized holding gains 
and aggregate fair value of available-for-sale securities were $1,008,507, 
$42,211, and $1,050,718, respectively.  At December 31, 1997, the total 
amortized cost, gross unrealized holding gains and aggregate fair value of 
held-to-maturity securities were $27,162,646, $331,442, and $27,494,088, 
respectively.





<PAGE>                               - 22 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

At December 31, 1996, the total amortized costs, gross unrealized holding 
gains and aggregate fair value of available-for-sale securities were 
$1,134,837, $36,242 and $1,171,079, respectively.  At December 31, 1996, the 
total amortized cost, gross unrealized holding gains and aggregate fair value 
of held-to-maturity securities were $27,292,735, $211,781, and $27,504,516, 
respectively.

During 1995, the Partnership sold a portion of the securities in the available 
-for-sale portfolio.  The total amortized cost and realized gain for sales of 
securities classified as available-for-sale were $454,997 and $15,670, 
respectively.

Prior to June 30, 1995, the Partnership classified all investment securities 
as held-to-maturity.  However, during the quarter ending June 30, 1995, the 
Partnership reassessed the appropriateness of the classification of securities 
held in the reserve account.  The Partnership concluded, given the nature of 
the reserve account, it would be more appropriate to classify securities held 
in the reserve account as available-for-sale rather than as held-to-maturity.  
Accordingly, on June 30, 1995, the Partnership transferred all securities held 
in the reserve account from the held-to-maturity classification to the 
available-for-sale classification.  The total amortized cost, gross unrealized 
holding gains and aggregate fair value of the securities transferred were 
$4,283,759, $67,199, $4,350,958, respectively.

Descriptions of the Partnership's mortgage-backed securities held during the 
year ended December 31, 1997, are as follows:
<TABLE>
<CAPTION>                                                                                                                      
																																																																																																																									Income
                                                           	  Number    Interest       Maturity    	 	  Carrying         Earned
Type of Security and Name	          	Location               of Units    	   Rate      	    Date		         Amount        in 1997
-------------------------------     	-------------------   ----------  ----------   ------------   --------------   ------------
<S>                                 	<C>                   <C>         <C>          <C>            <C>              <C>
Held-to-Maturity
	FHA Loan:
 	Delta Crossing                      Charlotte, NC              178      9.10%          10/01/30  $   6,538,424     $   596,257
	GNMA Certificates:
	 Crane's Landing                     Winter Park, FL            252      8.75%          12/15/30     10,229,304         897,020
 	Monticello Apartments               Southfield, MI             106      8.75%          11/15/29      5,328,430         467,367
 	The Ponds at Georgetown             Ann Arbor, MI              134      9.00%          12/15/29      5,066,488         457,018
																																																																																																			--------------    ------------
																																																																																																						20,624,222							1,821,405	
																																																																																																			--------------    ------------
																																																																																																						27,162,646							2,417,662
Availible-for-sale:
	GNMA Certificates:
	 Pools of single-family properties                                       7.58% (1)   2008 to 2009 	  	1,050,718 (2)      82,182
                                                                                                 	 --------------    ------------
Balance at December 31, 1997                                                                   				$ 	28,213,364     $ 2,499,844
                                                                                                  	==============    ============
(1) Represents yield to the Partnership
(2) Reserve account asset See Note 3.



















<PAGE>                               - 23 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

Reconciliation of the carrying amount of the mortgage-backed securities is as 
follows:

</TABLE>
<TABLE>
<CAPTION>
                                                                               For the             For the             For the
                                                                            Year Ended          Year Ended          Year Ended
                                                                         Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Balance at beginning of year                                            $  	28,463,814      $   28,737,672      $   29,419,358
	Additions
			Amortization of discount on mortgage-backed securities																								1,397        			    1,470       				    1,951
		Change in net unrealized holding gains on
   available-for-sale mortgage-backed securities                                 5,969  											(22,070)             58,312
	Deductions
		Mortgage principal payments received                                        (257,816)           (253,258)           (286,952)
		Disposition of mortgage-backed securities                                       - 														    -            	 	(454,997)
                                                                        ---------------     ---------------     ---------------
Balance at end of year                      					                       $ 		28,213,364      $   28,463,814      $   28,737,672
                                                                        ===============     ===============     ===============
</TABLE>
                                          		
6.	Investment in Operating Partnerships

The Partnership's Operating Partnerships consist of interests in limited 
partnerships which own multifamily properties financed by the GNMA 
Certificates and FHA Loan held by the Partnership.  The limited partnership 
agreements originally provided for the payment of a base return on the equity 
provided to the limited partnerships and for the payment of additional amounts 
out of a portion of the net cash flow or net sale or refinancing proceeds of 
the properties subject to various priority payments.  

Descriptions of the Operating Partnerships held at December 31, 1997, are as
follows:

<TABLE>
<CAPTION>
                                                                                                                  			Equity in
                                                                                                                     Losses of
                                                                                                       Carrying      Operating
Name                         	Location                 Partnership Name			                               Amount   Partnerships
------------------------      ---------------------    -----------------------------------------    ------------  -------------
<S>                           <C>                      <C>                                          <C>           <C>
Delta Crossing                Charlotte, NC            Delta Crossing Limited Partnership            $     -      $       -
Crane's Landing               Winter Park, FL          Crane's Landing Partner, Ltd.               				    -              -
Monticello Apartments         Southfield, MI           Centrum Monticello Limited Partnership              -              -
The Ponds at Georgetown       Ann Arbor, MI            Ponds at Georgetown Limited Partnership             -          (121,450)
                                                                                                    ------------   ------------
Balance at December 31, 1997                                                            					       $      -       $  (121,450)
                                                                                                    ============   ============
</TABLE>

Reconciliation of the carrying amount of the Operating Partnerships is as 
follows:

<TABLE>
<CAPTION>
                                                                              For the             For the             For the
                                                                           Year Ended          Year Ended          Year Ended
                                                                        Dec. 31, 1997       Dec. 31, 1996       Dec. 31, 1995
                                                                       ---------------     ---------------     ---------------
<S>                                                                    <C>                 <C>                 <C>
Balance at beginning of year                  								                 $         -         $          -        $          -    
	Addition
  Investment in Operating Partnerships                                        121,450                 -                109,900
 Deduction
		Equity in losses of Operating Partnerships                          							(121,450)                -               (109,900)
	                                                                       ---------------      ---------------     ---------------
Balance at end of year                   					                         $         -          $ 	       -         $         -  
                                                                       ===============      ===============     ===============
</TABLE>
<PAGE>                               - 24 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

Combined Financial Statements of the Operating Partnerships are as follows:

CAPITAL SOURCE II L.P.
OPERATING PARTNERSHIPS BALANCE SHEET

<TABLE>
<CAPTION>

                                                                                             Dec. 31, 1997       Dec. 31, 1996
                                                                                            ---------------     ---------------
<S>                                                                                         <C>                 <C>
Assets
 Investment in real estate:
		Land																						                                                              	$  		2,800,750      $    2,800,750
		Buildings																				                                                               	24,396,923          24,396,923
 	Personal Property																																																																													1,666,485											1,597,666		
																					                                                   																				  --------------     ---------------
																																																																																															28,864,158										28,795,339			
Less accumulated depreciation															                                                 		(6,598,576)									(5,899,183)
																																																																																														--------------     ---------------	

 	Net investment in real estate                                                             	  22,265,582          22,896,156

		Cash and temporary cash investments, at cost
			which approximates market value	                                                             	 491,562           	 283,185
		Escrow deposits and property reserves                                                      				 613,261			 									487,876	
		Interest and other receivables																																																																				7,442															5,450	
		Deferred mortgage issuance cost, net of
			accumulated amortization																																																																					1,428,684											1,477,452
  Other assets																																																																																				234,560													211,891
																																																																																														--------------     ---------------
																																																																																											$			25,041,091						$			25,362,010
																																																																																														==============					===============

Liabilities and Partners' Capital (Deficit)
	Liabilities
		Accounts payable and accrued expenses                                                    $      850,743      $      740,469
		Mortgage loan payable										                                                           		 27,164,788          27,294,690
		Intercompany interest payable																																																																			247,487         			 248,281
		Due to general partners and their affiliates                                                	   961,563     							 971,209
	                                                                                            	---------------     ---------------
																																																																																															29,224,581          29,254,649
																																																																																														---------------     ---------------
																																			
 Partners' Capital (Deficit)
	 General Partners                                                                             (4,183,490)         (3,892,639)
 	Limited Partners																																																																																					-              				 -		
                                                                                           	 ---------------     ---------------
																																																																																															(4,183,490)         (3,892,639)
																																																																																																																															
                                                                                          	$  	25,041,091     $ 	 	25,362,010
                                                                                           	 ===============   	 ===============
</TABLE>


















<PAGE>                               - 25 -

CAPITAL SOURCE II L.P.-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

<TABLE>
CAPITAL SOURCE II L.P.
OPERATING PARTNERSHIPS INCOME STATEMENT
                                                                         Dec. 31, 1997        Dec. 31, 1996      	Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Income
 Rental income																																																										$				5,105,108      $  	 4,854,898      $		  4,656,371
	Interest on temporary cash investments                                  
		and U.S. government securities																																																13,084         				 20,781   				       17,399
 Other income		                                                              		198,870      			    154,855    			      140,317
                                                                        ---------------     ---------------     ---------------
			                                                                     	   	5,317,062      	    5,030,534         	 4,814,087
                                                                        ---------------     ---------------     ---------------
Expenses
	Real estate operating expenses																																													2,504,026	          2,325,848     	     2,075,218
 Depreciation expense			                                              							 700,297													725,922          		 737,694			
 Property development and management fees                                     			 -   				            314       				   28,769
	Interest expense											                                              	 2,476,272       		  2,487,587      		   2,497,927
 Amortization																																																																		48,768        				  48,819   					      64,920	
                                                                        ---------------     ---------------    	---------------
			                                                                     	   5,729,363      	  	 5,588,490      	 	  5,404,528
                                                                        ---------------     ---------------    	---------------
Net Loss					                                                          	$    (412,301)      $	   (557,956)      $   	(590,411)
    		                                                                  ===============     ===============     ===============
Net Loss allocated to:
 General Partners																																																												(290,851)     		    (557,956)     	 	   (480,541)
	Limited Partners																																																												(121,450)																-														(109,900)
																																																																								---------------     ---------------    	---------------
																														                                        	 $	   (412,301)    		$     557,956)     	$ 	  (590,441)	
	                                                                       ===============     ===============     ===============
</TABLE>







































<PAGE>                               - 26 -

<TABLE>
Financial Statements
CAPITAL SOURCE II L.P.
OPERATING PARTNERSHIPS CASH FLOW
																																																																															For the														For the													For the	
																																																																												Year Ended											Year Ended										Year Ended
                                                                         Dec. 31, 1997        Dec. 31, 1996      	Dec. 31, 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Cash flows from operating activities
Net loss																																																																$					(412,301)     $  		 (557,956)     $		  	(590,441)
		Adjustments to reconcile net loss to net cash
		provided by operating activities
			Depreciation and amortization																																															749,065      				 	 774,741      					  802,614
			Property development and management fees																																								-         				 					314   				       28,769
			Decrease (increase) in interest and other receivables                     		(1,992)      				    10,467													(11,443)
			Decrease (increase) in escrow deposits and property reserves        	   		(125,385)      	 			   63,524       				 	 56,250
			Decrease in other assets																																																			(22,669)													(21,816)												(64,138)
			Increase in accounts payable and accrued expenses																										110,274															22,040													137,065
			Decrease in intercompany interest payable																																					(794)																(728)															(665)
			Increase (decrease) in due to general partners and their affiliates									(9,646)														15,090												(110,296)
                                                                        ---------------     ---------------     ---------------
  Net cash provided by operating activities																																			286,552														305,676													247,715
																																																																								---------------     ---------------     ---------------
Cash flows from investing activities
			Acquisition of real estate																																																					-															(60,663)												(34,527)
			Acquisition of personal property																																											(68,819)	          (102,292)     	 	   (100,757)
                                                                        ---------------     ---------------    	---------------
			Net cash used in investing activities 	 				                       							 (68,819)											(162,955)        		 (135,284)	
                                                                        ---------------     ---------------    	---------------
Cash flows from financing activities
 		Principal payments on mortgage loan payable  		                           (129,902)  				     (118,650)    					  (108,374)
			Capital contributions																																																						121,450        							  -   					    	  109,900
			Other net																                                              							(904)       				 (17,956)      		 		  27,391
                                                                        ---------------     ---------------    	---------------
  	Net cash provided by (used in) financing activities	                  	   		(9,356)      	  	 (136,606)     	 				  28,917
                                                                        ---------------     ---------------    	---------------
Net increase in cash and temporary cash investments                     	    	208,377      	  				  6,115      			   	141,348
Cash and temporary cash investments at beginning of year																						283,185													277,070													135,722
                                                                        ---------------     ---------------    	---------------
Cash and temporary cash investments at end of year																						$					491,562							$					283,185							$					277,070
																																																																								===============     ===============     ===============
</TABLE>
































<PAGE>                               - 27 -	

7. Transactions with Related Parties

The General Partners, certain of their affiliates and the Operating 
Partnerships' general partners have received or may receive fees, 
compensation, income, distributions and payments from the Partnership in 
connection with the offering and the investment, management and sale of the 
Partnership's assets (other than disclosed elsewhere) as follows.

The General Partners are entitled to receive an asset management and 
partnership administrative fee equal to 0.5% of invested assets per annum, the 
first $50,000 of which will be paid each year with the balance payable only 
during such years that a 6.5% annual return has been paid to investors on a 
noncumulative basis.  An additional fee equal to 0.5% of invested assets per 
annum will be payable only during those years that an 11.5% annual return has 
been paid to investors on a noncumulative basis.  Any unpaid amounts will 
accrue and be payable only after an 11.5% annual return to investors has been 
paid on a cumulative basis and the investors have received the return of their 
capital contributions.  Asset management and partnership administration fees 
for the years ended December 31, 1997, 1996 and 1995 amounted to $166,000 
for each year.

Substantially all of the Partnership's general and administrative expenses are 
paid by a General Partner or an affiliate and reimbursed by the Partnership.  
The amount of such expenses reimbursed to the General Partner for the years 
ended December 31, 1997, 1996 and 1995 amounted to $494,165, $313,049 and 
$281,606, respectively.  These reimbursed amounts are presented on a cash 
basis and do not reflect accruals made at each year end.

An affiliate of the General Partners has been retained to provide property 
management services for The Ponds at Georgetown beginning in November 1996.  
The fees for services provided were $31,924 for 1997 and $4,933 for 1996, 
respectively, and represented the lower of costs incurred in providing 
management of the property or customary fees for such services determined on a 
competitive basis.

8. Fair Value of Financial Instruments

The following methods and assumptions were used by the Partnership in 
estimating the fair value of its financial instruments:

		Cash and temporary cash investments, interest receivable, other assets, 
		accounts payable, distribution payable:  Fair value approximates the carrying 
		value of such assets.

  Investment in FHA Loan and GNMA Certificates:  Fair values are based on
	 prices obtained from an independent pricing source, adjusted for estimated 
		prepayments.

<TABLE>
<CAPTION>
                                                        At December 31, 1997                    At December 31, 1996
                                                -----------------------------------     -----------------------------------
                                                      Carrying           Estimated            Carrying           Estimated
                                                        Amount          Fair Value              Amount          Fair Value
                                                ---------------     ---------------     ---------------     ---------------
<S>                                             <C>                 <C>                 <C>                 <C>
Cash and temporary cash investments             $    1,240,992      $    1,240,992      $    2,430,937      $    2,430,937     
Investment in FHA Loan                          $    6,538,424      $  		6,645,393      $    6,568,139      $    6,644,328
Investment in GNMA Certificates                 $   21,674,940 					$			21,899,413      $	  21,895,675   		 $   22,031,267
                                               
</TABLE>














<PAGE>                               - 28 -

10.	Summary of Unaudited Quarterly Results of Operations (Restated)
<TABLE>
<CAPTION>                                               First		            Second	               Third		            Fourth
From January 1, 1997, to December 31, 1997	           Quarter		           Quarter	             Quarter		           Quarter
                                          						---------------     ---------------     ---------------     ---------------
<S>						                                       <C>                 <C>                 <C>                 <C>
Total income					                               $      655,945 	    $      529,318      $      646,693      $      641,565
Total expenses					                                   (151,630)		         (148,583)           (164,872)           (354,431)
														                                  ---------------     ---------------     ---------------     ---------------
Net income				                                  $      504,315 	    $      380,735 	    $      481,821      $      287,134 
														                                  ===============     ===============     ===============     ===============
Net income, basic and diluted, per BAC		        $          .12 	    $          .10 	    $          .12      $          .07 
														                                  ===============     ===============     ===============     ===============
</TABLE>

<TABLE>
<CAPTION>
								                                                 First		            Second		             Third		            Fourth
From January 1, 1996, to December 31, 1996		           Quarter		           Quarter		           Quarter		           Quarter
														                                  ---------------     ---------------     ---------------     ---------------
<S>														                               <C>                 <C>                 <C>                 <C>
Total income						                              $      679,515 	    $      674,522 	    $     	659,196 	    $      661,974
Total expenses							                                 (140,501)		         (141,908)		         (140,608)		         (129,153)
														                                  ---------------     ---------------     ---------------     ---------------
Net income						                                $      539,014 	    $      532,614 	    $     	518,588 	    $      532,821
														                                  ===============     ===============     ===============     ===============
Net income per BAC						                        $          .13 	    $          .13 	    $          .13    	 $          .13
														                                  ===============     ===============     ===============     ===============
</TABLE>














































<PAGE>                               - 29 -

	                                 SIGNATURES

	    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.


		                                 CAPITAL SOURCE II L.P.-A

		                                 By	America First Capital
			                                   Source II, L.L.C., General
			                                   Partner of the Registrant


	                                 	By	/s/ Michael Thesing
			                                   Michael Thesing,
			                                   Vice President and 
                                      Principal Financial Officer

Date:  October 26, 1998























































<PAGE>                              - 30 -

 	   Pursuant to the requirements of the Securities and Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.


Date:  October 26, 1998       		   By	/s/ Michael B. Yanney*
			                                Michael B. Yanney,
			                                Chairman and Chief Executive Officer of 
                                   the America First General Partner
                                   (Principal Executive Officer)

                                   Chairman of the Board, President,
                                   Chief Executive Officer and Manager of
                                   America First Companies L.L.C.


Date:  October 26, 1998	      		   By	/s/ Michael Thesing
			                                Michael Thesing, Vice
			                                President, Secretary and
			                                Treasurer (Principal Financial Officer) 
                                   of the America First General Partner

                                   Vice President, Secretary, Treasurer
                                   and Manager of America First Companies L.L.C.


Date:  October 26, 1998	    		     By	/s/ William S. Carter, M.D.*
                   			             William S. Carter, M.D.
                                   Manager of America First Companies L.L.C.


Date:  October 26, 1998	      		   By	/s/ George Kubat*
			                                George Kubat
                                   Manager of America First Companies L.L.C.


Date:  October 26, 1998	 		        By	/s/ Martin A. Massengale*
                   			             Martin A. Massengale
                                   Manager of America First Companies L.L.C.


Date:  October 26, 1998	      		   By	/s/ Alan Baer*
                   			             Alan Baer
                                   Manager of America First Companies L.L.C.


Date:  October 26, 1998	  		       By	/s/ Gail Walling Yanney*
                   			             Gail Walling Yanney
                                   Manager of America First Companies L.L.C.

Date:  October 26, 1998	    		     By	/s/ Mariann Byerwalter*
                   			             Mariann Byerwalter
                                   Manager of America First Companies L.L.C.



*By Michael Thesing,
    Attorney in Fact


/s/ Michael Thesing                           
Michael Thesing













<PAGE>                              - 31 -