<TABLE>
<S>    <C>



                                                    UNITED STATES
                                         SECURITIES AND EXCHANGE COMMISSION
                                               Washington, D.C. 20549

                                                      FORM 10-Q



(Mark One)

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

For  the quarterly period ended September 30, 1995

                                                         OR

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

For                  the                  transition                   period                  from
to



For Quarter Ended September 30, 1995                                        Commission File No. 0-14415


                                                         American          Income         2          Limited
------------------------------------------------------------------------------------------------------------
Partnership
                                    (Exact name of registrant as specified in its charter)

Massachusetts
    04-2809330
(State                 or                 other                  jurisdiction                 of                 (IRS
Employer
  incorporation or organization)                                                            Identification No.)

98 North Washington Street, Boston, MA
02114
(Address of principal executive offices)                                                  (Zip Code)

Registrant's          telephone          number,          including          area         code         (617)
                                                                                                       -----
854-5800




 (Former  name,  former  address and former  fiscal year,  if changed since last
report.)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by 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

                                  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                                     PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark  whether  the  registrant  has filed all  documents  and reports  required to be filed by
Sections 12, 13, or 15(d) of the Securities  Exchange Act of 1934 subsequent to the  distribution of securities under
a plan  confirmed by a court  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
No

</TABLE>

<TABLE>


                                       AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                     FORM 10-Q

                                                       INDEX



<S>                                                                                                  <C>   
                                                                                                     Page

PART I.       FINANCIAL INFORMATION:


    Item 1.   Financial Statements

         Statement of Net Assets in Liquidation
              at September 30, 1995 and December 31, 1994              3

         Statement of Changes in Net Assets in Liquidation
              for the nine months ended September 30, 1995 and
              for the period July 1, 1994 to September 30, 1994                 4

         Statement of Operations
              for the period January 1, 1994 to June 30, 1994          5

         Statement of Cash Flows
              for the period January 1, 1994 to June 30, 1994          6

         Notes to the Financial Statements                                                              7-9

    Item 2.   Management's Discussion and Analysis of
              Financial Condition and Results of Operations                                           10-11


PART II.  OTHER INFORMATION:

    Items 1 - 6                                                                                          12


</TABLE>

<PAGE>





                                 The accompanying notes are an integral part
                                                           6
                                            of these financial statements.
<TABLE>
<CAPTION>
                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                        STATEMENT  OF NET ASSETS IN  LIQUIDATION
                                       September 30, 1995 and December 31, 1994

                                                      (Unaudited)



                                                                              September 30,December 31,
                                                                           1995                          1994
ASSETS

<S>                                                                          <C>                  <C>               
Cash and cash equivalents                                                    $          356,118   $          768,694

Accounts receivable - affiliate                                                              --                1,092
                                                                             ------------------   ------------------

       Total assets                                                          $           356,118  $           769,786
                                                                             ===================  ===================


LIABILITIES

Accrued liabilities                                                          $           20,873   $           61,090

Accrued liabilities - affiliate                                                           4,491               12,169

Cash distributions payable to partners                                                   62,799               62,799
                                                                             ------------------   ------------------

       Total liabilities                                                                 88,163              136,058
                                                                             ------------------   ------------------

       Net assets                                                            $           267,955  $           633,728
                                                                             ===================  ===================



</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                   STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

                                                      (Unaudited)




                                                                  For the Nine               For the Period
                                                                  Months Ended               July 1, 1994 to
                                                               September 30, 1995          September 30, 1994
                                                               ------------------          ------------------

<S>                                                                    <C>            <C>
Lease revenue                                                                --       $                  400

Interest income                                                        $ 21,822                        8,827
                                                             
Gain on sale of equipment                                                    --                      150,000

Cash distributions                                                     (188,397)                     (62,799)

Interest expense - affiliate                                                 --                       (5,575)

Equipment management fees - affiliate                                        --                          (20)

Operating expenses - affiliate                                         (199,198)                     (51,793)
                                                                        --------                     -------
    Net increase (decrease) in net assets
       in liquidation during the period                                (365,773)                      39,040

    Net assets in liquidation at
       the beginning of the period
                                                                        633,728                      661,202
                                                                        -------                      -------
    Net assets in liquidation at
       the end of the period                                 
                                                                  =============                      =======
                                                                        267,955                      700,242
                                                                  =============                      =======
    Cash distributions declared
       per limited partnership unit                                       $3.38                        $1.12

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                STATEMENT OF OPERATIONS
                                    for the period January 1, 1994 to June 30, 1994

                                                      (Unaudited)





Income:

<S>                                                                                     <C>              
   Lease revenue                                                                        $         109,424

   Interest income                                                                                  5,728

   Gain on sale of equipment                                                                       127,954

      Total income                                                                              243,106


Expenses:

   Depreciation                                                                                    87,173

   Equipment management fees - affiliate                                                            5,471

   Operating expenses - affiliate                                                                  83,209
                                                                                        -----------------

      Total expenses                                                                            175,853


Net income                                                                              $           67,253
                                                                                        ==================


Net income
  per limited partnership unit                                                          $               1.20
                                                                                        ====================

Cash distributions declared
  per limited partnership unit                                                          $               2.25
                                                                                        ====================

</TABLE>


<PAGE>
<TABLE>

<CAPTION>

                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                STATEMENT OF CASH FLOWS
                                    for the period January 1, 1994 to June 30, 1994

                                                      (Unaudited)





Cash flows from (used in) operating activities:
<S>                                                                                     <C>             
Net income                                                                              $         67,253

Adjustments to reconcile net income to net cash used in operating activities:
     Depreciation                                                                       87,173
     Gain on sale of equipment                                                          (127,954)

Changes in assets and liabilities Decrease in:
     accounts receivable - affiliate                                                    19,117
   Increase (decrease) in:
     accrued liabilities                                                                           3,250
     accrued liabilities - affiliate                                                             (87,867)
                                                                                        ----------------

         Net cash used in operating activities                                                   (39,028)
                                                                                        ----------------

Cash flows from investing activities:
   Proceeds from equipment sales                                                                 949,402

         Net cash from investing activities                                                      949,402

Cash flows used in financing activities:
   Distributions paid                                                                           (125,598)

         Net cash used in financing activities                                                  (125,598)
                                                                                        ----------------

Net increase in cash and cash equivalents                                                        784,776

Cash and cash equivalents at beginning of period                                                  27,816
                                                                                        ----------------

Cash and cash equivalents at end of period                                              $        812,592
                                                                                        ================



</TABLE>

<PAGE>



12


                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP
                                           Notes to the Financial Statements

                                                  September 30, 1995
                                                      (Unaudited)


NOTE 1 - BASIS OF PRESENTATION

        The  financial  statements  presented  herein are prepared in conformity
with generally accepted accounting principles and the instructions for preparing
Form 10-Q under Rule 10-01 of  Regulation  S-X of the  Securities  and  Exchange
Commission and are unaudited. As such, these financial statements do not include
all  information  and footnote  disclosures  required under  generally  accepted
accounting  principles for complete financial statements and,  accordingly,  the
accompanying  financial  statements  should  be read  in  conjunction  with  the
footnotes presented in the 1994 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1994 Annual Report.

        Beginning July 1, 1994, the General Partner initiated the liquidation of
the  Partnership  in  accordance  with the Amended and  Restated  Agreement  and
Certificate  of Limited  Partnership  (the  "Restated  Agreement,  as amended").
Accordingly, the financial statements herein for the nine months ended September
30,  1995 and for the  period  July 1,  1994 to  September  30,  1994  have been
prepared on a liquidation basis of accounting.

        In the opinion of management,  all adjustments (consisting of normal and
recurring adjustments)  considered necessary to present fairly the Partnership's
net assets in  liquidation  at September  30, 1995 and  December  31, 1994,  its
changes in net assets in  liquidation  for the nine months ended  September  30,
1995 and for the period July 1, 1994 to September  30, 1994,  and results of its
operations  and its cash flows for the period  January 1, 1994 to June 30,  1994
have been made and are reflected.


NOTE 2 - CASH

        At September 30, 1995, the Partnership had $355,000  invested in reverse
repurchase  agreements  secured  by U.S.  Treasury  Bills or  interests  in U.S.
Government securities.


NOTE 3 - REVENUE RECOGNITION

        All of the Partnership's  primary and renewal leases had expired and all
of the  associated  equipment  was sold as of December 31, 1994. No future rents
are due.

<TABLE>
<CAPTION>

NOTE 4 - RELATED PARTY TRANSACTIONS

        All operating  expenses incurred by the Partnership are paid by American
Finance Group ("AFG") on behalf of the  Partnership and AFG is reimbursed at its
actual cost for such expenditures. Fees and other costs incurred during the nine
month periods ended  September 30, 1995 and 1994,  which were paid or accrued by
the Partnership to AFG or its Affiliates, are as follows:


                                                                      1995                       1994
                                                                 --------------             ---------

<S>                                                                                  <C>          
        Interest expense - affiliate                                       --        $       5,575
        Equipment management fees                                          --               5,491
        Administrative charges                                   $     13,476               9,000
        Reimbursable operating expenses
          due to third parties                                        185,722              126,002
                                                                 ------------         ------------

                                 Total                            $   199,198         $   146,068
                                                                  ===========         ===========

</TABLE>
                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP
                                           Notes to the Financial Statements

                                                      (Continued)



NOTE 5 - LEGAL PROCEEDINGS


        On February 24, 1992  Investors  Asset  Holding Corp.  ("I.A.H.C."),  as
trustee of a trust of which the Partnership is the sole  beneficiary,  commenced
an action in the United  States  District  Court for the District of Puerto Rico
(the  "District  Court")  against  L.A.P.S.A.,  Inc. to recover  possession of a
Shorts SD-330 aircraft  pursuant to a defaulted  conditional sales agreement and
for related  monetary  damages.  I.A.H.C.,  on behalf of the  Partnership,  also
commenced action to recover the aircraft in the Dominican Republic, which action
resulted  in the  recovery  of the  aircraft  and its  removal  to the  U.S.  in
February, 1993. L.A.P.S.A. filed counterclaims and one of its principals,  Louis
Perez  Gonzales  ("Perez"),  filed a second action in the District Court against
I.A.H.C.  and AFG seeking monetary damages in excess of $1,000,000.  On July 18,
1994,  the  Partnership  sold the aircraft to a third party for $150,000,  which
event resulted in a net gain of equal amount, for financial  statement purposes.
On December 23, 1994, the District Court dismissed all of L.A.P.S.A.'s claims as
a result of L.A.P.S.A.'s failure to comply with several discovery requests and a
discovery  order. On January 31, 1995, the District Court confirmed its position
by denying L.A.P.S.A.'s motion for reconsideration.
<TABLE>
<S> <C>

        In a jury trial  held in  District  Court in San Juan,  Puerto  Rico  between  April 24,  1995 and May 1, 1995,
I.A.H.C.,  obtained a favorable verdict in its case against L.A.P.S.A.  and was awarded approximately $569,000 for lost
profits,  costs to repossess  the aircraft and legal fees.  In the  separate  case of Perez vs.  I.A.H.C.  and AFG, the
jury entered a verdict for Perez and against I.A.H.C.  in the amount of $125,000.  Immediately  following the verdicts,
L.A.P.S.A.  filed for  protection  under Chapter 7 of the Bankruptcy  Code in the District of Puerto Rico and,  through
post-verdict  discovery  I.A.H.C.  made the  determination  that L.A.P.S.A.  is  judgment-proof.  The parties agreed to
settle the matter for a mutual cancellation of the claims and a settlement agreement was executed on July 20, 1995.
</TABLE>

        Additionally,  Victoria Air, an unauthorized user of the aircraft at the
time when  I.A.H.C.  repossessed  the  aircraft,  commenced  an  action  against
I.A.H.C.  in the Dominican  Republic demanding monetary damages in the amount of
approximately  $1,000,000  for loss of  revenues  from use of the  aircraft  and
related  damages.  Currently,  Victoria  Air is not  pursuing its claims and any
further  prosecution  of this  matter  is  considered  unlikely.  The  term  for
prescription of this case for inactivity runs through July 1996.

        On August 8, 1995 AFG, on behalf of the Partnership, commenced an action
in the United  States  District  Court for the  Eastern  District  of  Wisconsin
against Air Cargo Carriers, Inc. and its President, James M. Germek, for damages
in connection with an alleged breach in the parties' agreement pursuant to which
Air Cargo  Carriers,  Inc.  assumed custody and control of the aircraft while it
was stored at Miami International Airport and promised to maintain, preserve and
protect the plane.  Currently,  it is not  possible to  determine  the  ultimate
outcome of this matter.


NOTE 6 - LIQUIDATION PROCEEDINGS

        On October 31,  1995,  the General  Partner as trustee  (the  "Trustee")
executed a Declaration of Trust  establishing a Liquidating  Trust (the "Trust")
to satisfy any unforeseen  expenses of the Partnership  that may arise after the
dissolution date as a result of the Partnership's  equipment leasing activities.
Organization  of the Trust will have the additional  benefit of terminating  the
Partnership's  income tax reporting  obligations  after 1995. To the extent that
the  pending  matter  of  litigation  described  in  Note 5 to the  accompanying
financial  statements is settled as expected before the end of 1995, the General
Partner will  transfer all  undistributed  cash held by the  Partnership  at its
dissolution  date,  expected to be  approximately  $268,000 or $4.80 per limited
partnership  unit at September 30, 1995, into a non-interest  bearing  custodian
account  (the  "Account")  of the Trust.  Amounts  held in the  Account  will be
reserved for a period not to exceed seven years (or such shorter time as counsel
for the Partnership advises will be sufficient to assure that all claims against
the

                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP
                                           Notes to the Financial Statements

                                                      (Continued)



Partnership  have been  presented).  To the extent  that such  funds  exceed the
ultimate  liabilities  of the  Partnership,  the Trustee  will  distribute  such
remaining balance to the beneficiaries of the Trust,  which  beneficiaries  will
consist of the General Partner and the Limited Partners in accordance with their
respective   percentage  ownership  interests  in  the  Partnership  as  of  the
dissolution date.



<PAGE>


                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                       FORM 10-Q

                                             PART I. FINANCIAL INFORMATION



Item 2. Management's Discussion and Analysis of Financial Condition and Results 
     of Operations.

Overview

        On July 1, 1994, the General  Partner  initiated the  liquidation of the
Partnership.  The  Partnership  was  organized  in 1985 to  acquire  and lease a
diversified  portfolio  of  capital  equipment  to  third-party  lessees  and to
distribute the net proceeds from  operating and  remarketing  activities,  after
satisfaction of all expenses and debt service obligations,  to the Partners. The
Partnership was capitalized with $13,815,750 of equity from the Limited Partners
and $50,000 of equity  from the General  Partner  and  acquired  $24,676,869  of
equipment,  subject to related indebtedness.  All of the Partnership's equipment
was sold by the end of 1994. Dissolution of the Partnership is anticipated on or
before  December 31, 1995,  provided the  litigation  described in Note 5 to the
accompanying financial statements is resolved.


Results of Operations

        The Statement of Changes in Net Assets in  Liquidation  is presented for
the nine months ended  September 30, 1995 and reflects the liquidation of assets
during the period.  As a result,  a  comparison  between  current and prior year
reporting periods is not meaningful and is not presented.

        For the nine month period ended  September  30,  1995,  the  Partnership
recognized $21,822 of interest income generated from the temporary investment of
cash. Operating expenses paid or accrued consisted principally of administrative
charges,  professional  service costs,  such as audit and legal fees, as well as
printing and distribution expenses. These charges amounted to $59,749 during the
period ended September 30, 1995. In addition,  the Partnership incurred $139,449
of legal costs  related to the  aircraft  litigation  described in Note 5 to the
financial  statements herein. The Partnership has accrued for operating expenses
anticipated through its dissolution date.


Liquidity and Capital Resources

        Aggregate  cash  distributions  were  adversely  affected by the loss of
stipulated rent payments associated with the aircraft described in Note 5 to the
financial  statements  included herein and the cost of associated legal actions.
Future  operating  and  dissolution  expenses  as  well  as  the  third  quarter
distribution to Partners will reduce the Partnership's  cash balance of $356,118
held at  September  30, 1995.  Substantially  all of this amount was invested in
interest-bearing  investments at September 30, 1995. See Note 2 to the financial
statements herein.

        On October 31,  1995,  the General  Partner as trustee  (the  "Trustee")
executed a Declaration of Trust  establishing a Liquidating  Trust (the "Trust")
to satisfy any unforeseen  expenses of the Partnership  that may arise after the
dissolution date as a result of the Partnership's  equipment leasing activities.
Organization  of the Trust will have the additional  benefit of terminating  the
Partnership's  income tax reporting  obligations  after 1995. To the extent that
the  pending  matter  of  litigation  described  in  Note 5 to the  accompanying
financial  statements is settled as expected before the end of 1995, the General
Partner will  transfer all  undistributed  cash held by the  Partnership  at its
dissolution  date,  expected to be  approximately  $268,000 or $4.80 per limited
partnership  unit at September 30, 1995, into a non-interest  bearing  custodian
account  (the  "Account")  of the Trust.  Amounts  held in the  Account  will be
reserved for a period not to exceed seven years (or such shorter time as counsel
for the Partnership advises will be sufficient to assure that all claims against
the Partnership have been  presented).  To the extent that such funds exceed the
ultimate  liabilities  of the  Partnership,  the Trustee  will  distribute  such
remaining balance to the beneficiaries of the Trust,  which  beneficiaries  will
consist of the General Partner and the Limited Partners in accordance with their
respective   percentage  ownership  interests  in  the  Partnership  as  of  the
dissolution date.
                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                       FORM 10-Q

                                             PART I. FINANCIAL INFORMATION

                                                      (Continued)



        For the nine months ended September 30, 1995, the  Partnership  declared
total distributions of $188,397.  In accordance with the Restated Agreement,  as
amended,  the Limited  Partners were  allocated 99% of these  distributions,  or
$186,513 and the General Partner was allocated 1%, or $1,884.  The third quarter
1995 cash  distribution  was paid on October  13,  1995.  Since  inception,  the
Partnership has distributed  $14,956,922 to the Limited Partners and $151,080 to
the  General  Partner.  The  Partnership  expects to make no  further  quarterly
distributions  of cash to its Partners,  except as may be available in the Trust
(described above) at the date of its liquidation. Cash distributions paid to the
Limited  Partners  consist  of both a return of and a return on  capital.  Final
yield on investment will be determined at the Partnership's dissolution date.





<PAGE>


                                         AMERICAN INCOME 2 LIMITED PARTNERSHIP

                                                       FORM 10-Q

                                              PART II. OTHER INFORMATION


Item 1.                                  Legal Proceedings
                                         Response:

                                         Refer  to Note 5  herein  and Note 6 in
                                         the 1994 Annual Report.

Item 2.                                  Changes in Securities
                                         Response:  None

Item 3.                                  Defaults upon Senior Securities
                                         Response:  None

Item 4.                                  Submission of Matters to a Vote of 
                                         Security Holders
                                         Response:  None

Item 5.                                  Other Information
                                         Response:  None

Item 6(a).                               Exhibits

                                99(d)       Declaration of Trust to establish a
                                            liquidating trust

Item 6(b).                               Reports on Form 8-K
                                         Response:  None






























<PAGE>





13




                                                    SIGNATURE PAGE




        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report  has been  signed  below on  behalf  of the  registrant  and in the
capacity and on the date indicated.



                                        AMERICAN INCOME 2 LIMITED PARTNERSHIP


                                By:     AFG Leasing Associates, a Massachusetts
                                 general partnership and the General Partner of
                                         the Registrant.

                              By:     AFG Leasing Incorporated, a Massachusetts
                                corporation and general partner in such general
                                         partnership.


                                 By:
                                         Gary M. Romano
                                         Vice President and Controller
                                         (Duly Authorized Officer and
                                         Principal Accounting Officer)


                                 Date:




<PAGE>



                                                    SIGNATURE PAGE





        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report  has been  signed  below on  behalf  of the  registrant  and in the
capacity and on the date indicated.



                                        AMERICAN INCOME 2 LIMITED PARTNERSHIP

                       By:      AFG Leasing Associates, a Massachusetts
                                general partnership and the General Partner of
                                the Registrant.

                       By:      AFG Leasing Incorporated, a Massachusetts
                                corporation and general partner in such general
                                partnership.


                       By:      /s/ Gary M. Romano
                                Gary M. Romano
                                Vice President and Controller
                                (Duly Authorized Officer and
                                Principal Accounting Officer)


                       Date:    November 13, 1995