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


                                    FORM 10-Q


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

                For the quarterly period ended September 30, 1996

                         Commission file number 0-17716

                        NATIONAL LEASE INCOME FUND 7 L.P.
             (Exact name of registrant as specified in its charter)


       DELAWARE                                                  13-3473036
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                   411 West Putnam Avenue, Greenwich, CT 06830
                    (Address of principal executive offices)

                                 (203) 862-7000
              (Registrant's telephone number, including area code)

                                      None
              (Former name, former address and former fiscal year,
                          if changed since last report)


Indicate by check 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 [   ]

<PAGE>
                        NATIONAL LEASE INCOME FUND 7 L.P.

                         FORM 10-Q - SEPTEMBER 30, 1996



                                      INDEX



PART I - FINANCIAL INFORMATION

     ITEM 1 - FINANCIAL STATEMENTS

        BALANCE SHEETS - September 30, 1996 and December 31, 1995


        STATEMENTS OF OPERATIONS - For the three months ended September 30, 1996
             and 1995 and the nine months ended September 30, 1996 and 1995


        STATEMENT OF PARTNERS' EQUITY - For nine months ended
             September 30, 1996


        STATEMENTS OF CASH FLOWS - For the nine months ended
             September 30, 1996 and 1995


        NOTES TO FINANCIAL STATEMENTS 

     ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS


PART II - OTHER INFORMATION

     ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                          NATIONAL LEASE INCOME FUND 7 L.P.

                                   BALANCE SHEETS


                                                         September 30,  December 31,
                                                             1996          1995
                                                         -----------    -----------
<S>                                                      <C>            <C>        
ASSETS

     Cash and cash equivalents .......................   $   482,789    $   875,344
     Leased equipment
        Accounted for under the financing method .....        29,023        251,308
        Accounted for under the operating method, net
            and accumulated depreciation of $1,450,353
            and $2,064,024 and allowance for equipment
            impairment of $502,998 and $562,764 ......        25,693        113,412
     Accounts receivable .............................        26,491         22,640
     Other receivables ...............................        15,866         24,424
                                                         -----------    -----------

                                                         $   579,862    $ 1,287,128
                                                         ===========    ===========
LIABILITIES AND PARTNERS' EQUITY

Liabilities
     Distributions payable ...........................   $   177,111    $   506,030
     Accounts payable and accrued expenses ...........        38,496         76,732
     Deferred income .................................         5,271          6,826
     Due to affiliates ...............................           691          5,488
                                                         -----------    -----------

        Total liabilities ............................       221,569        595,076
                                                         -----------    -----------

Commitments and contingencies

Partners' equity
     Limited partners' equity (50,097 units issued
        and outstanding) .............................       570,711        901,133
     General partners' deficit .......................      (212,418)      (209,081)
                                                         -----------    -----------

        Total partners' equity .......................       358,293        692,052
                                                         -----------    -----------

                                                         $   579,862    $ 1,287,128
                                                         ===========    ===========
</TABLE>

See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                  NATIONAL LEASE INCOME FUND 7 L.P.

                                                      STATEMENTS OF OPERATIONS


                                                                      For the three months ended          For the nine months ended
                                                                             September 30,                       September 30,
                                                                      --------------------------          --------------------------
                                                                        1996              1995              1996              1995
                                                                      --------          --------          --------          --------
<S>                                                                   <C>               <C>               <C>               <C>     
Revenues
     Rental ................................................          $155,716          $267,787          $518,204          $859,391
     Interest
        Other ..............................................             6,200            12,370            21,933            39,409
        Financing leases ...................................             2,878             9,507            10,590            36,503
     Other operating income ................................               677               128               783               187
                                                                      --------          --------          --------          --------

                                                                       165,471           289,792           551,510           935,490
                                                                      --------          --------          --------          --------
Costs and expenses
     Provision for equipment impairment ....................              --              60,000           130,000           225,000
     Depreciation ..........................................            25,319           122,245           117,655           419,194
     General and administrative ............................            16,051            26,816            51,367           106,618
     Fees to affiliates ....................................            11,586            22,200            36,804            72,251
     Operating .............................................             1,160            10,516            23,349            14,280
                                                                      --------          --------          --------          --------

                                                                        54,116           241,777           359,175           837,343
                                                                      --------          --------          --------          --------

                                                                       111,355            48,015           192,335            98,147

Gain on disposition of equipment, net ......................             2,410             2,559            43,189            90,767
                                                                      --------          --------          --------          --------

Net income .................................................          $113,765          $ 50,574          $235,524          $188,914
                                                                      ========          ========          ========          ========
Net income attributable to
     Limited partners ......................................          $112,627          $ 50,069          $233,169          $187,025
     General partners ......................................             1,138               505             2,355             1,889
                                                                      --------          --------          --------          --------

                                                                      $113,765          $ 50,574          $235,524          $188,914
                                                                      ========          ========          ========          ========
Net income per unit of limited partnership
     interest (50,097 units outstanding) ...................          $   2.25          $   1.00          $   4.65          $   3.73
                                                                      ========          ========          ========          ========
</TABLE>

See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                                  NATIONAL LEASE INCOME FUND 7 L.P.

                                                    STATEMENT OF PARTNERS' EQUITY


                                                                               Limited              General                Total
                                                                              Partners'             Partners'             Partners'
                                                                               Equity                Deficit               Equity
                                                                              ---------             ---------             ---------
<S>                                                                           <C>                   <C>                   <C>      
Balance, January 1, 1996 .........................................            $ 901,133             $(209,081)            $ 692,052

Net income for the nine months
     ended September 30, 1996 ....................................              233,169                 2,355               235,524

Distributions to partners for the nine
     months ended September 30, 1996
     ($11.25 per limited partnership unit) .......................             (563,591)               (5,692)             (569,283)
                                                                              ---------             ---------             ---------

Balance, September 30, 1996 ......................................            $ 570,711             $(212,418)            $ 358,293
                                                                              =========             =========             =========
</TABLE>


See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
                           NATIONAL LEASE INCOME FUND 7 L.P.

                               STATEMENTS OF CASH FLOWS


                                                            For the nine months ended
                                                                   September 30,
                                                           --------------------------
                                                              1996            1995
                                                           -----------    -----------
<S>                                                        <C>            <C>        
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS

Cash flows from operating activities
     Net income ........................................   $   235,524    $   188,914
     Adjustments to reconcile net income to net
        cash provided by operating activities
            Provision for equipment impairment .........       130,000        225,000
            Depreciation ...............................       117,655        419,194
            Gain on disposition of equipment, net ......       (43,189)       (90,767)
     Changes in assets and liabilities
        Other receivables ..............................         8,558        (15,900)
        Accounts receivable ............................        (3,851)        15,883
        Accounts payable and accrued expenses ..........       (38,236)       (25,251)
        Deferred income ................................        (1,555)        14,381
        Due to affiliates ..............................        (4,797)        (3,604)
                                                           -----------    -----------

               Net cash provided by operating activities       400,109        727,850
                                                           -----------    -----------

Cash flows from investing activities
     Proceeds from the disposition of equipment,
        including installment sales ....................        44,200        259,488
     Minimum lease payments received on financing
        leases, net of interest earned .................        61,338        187,061
     Other non-operating receipts ......................          --          (14,288)
                                                           -----------    -----------

               Net cash provided by investing activities       105,538        432,261
                                                           -----------    -----------

Cash flows from financing activities
     Distributions to partners .........................      (898,202)    (1,442,186)
                                                           -----------    -----------

Net decrease in cash and cash equivalents ..............      (392,555)      (282,075)

Cash and cash equivalents, beginning of period .........       875,344      1,073,028
                                                           -----------    -----------

Cash and cash equivalents, end of period ...............   $   482,789    $   790,953
                                                           ===========    ===========
</TABLE>

See notes to financial statements.
<PAGE>
                        NATIONAL LEASE INCOME FUND 7 L.P.

                          NOTES TO FINANCIAL STATEMENTS


1        INTERIM FINANCIAL INFORMATION

         The summarized  financial  information  contained  herein is unaudited;
         however, in the opinion of management, all adjustments (consisting only
         of normal recurring accruals) necessary for a fair presentation of such
         financial  information have been included.  The accompanying  financial
         statements,   related  footnotes  and  discussion  should  be  read  in
         conjunction  with  the  financial  statements,  related  footnotes  and
         discussions  contained  in the National  Lease Income Fund 7 L.P.  (the
         "Partnership")  annual report on Form 10-K for the year ended  December
         31, 1995. The results of operations for the nine months ended September
         30, 1996 are not  necessarily  indicative of the results to be expected
         for the full year.

2        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Leases

         For operating  leases,  rental revenue is recognized on a straight-line
         basis and expenses  (including  depreciation) are charged to operations
         as incurred.  In addition,  rental  revenue  received on leases that go
         beyond the firm term (lessee does not supply notice of  termination  or
         renewal as required by the lease) is recognized as earned. For the nine
         months ended  September 30, 1996 and 1995,  rental  revenue earned on a
         month-to-month basis comprised approximately 78% and 24%, respectively,
         of the total rental revenue recognized.

         For financing leases, unearned income is recognized as revenue over the
         respective lease term so as to produce a constant rate of return on the
         net investment.

         Leased equipment

         The  cost  of  leased  equipment  represents  the  initial  cost of the
         equipment to the Partnership plus miscellaneous acquisition and closing
         costs,  and  is  carried  at  the  lower  of  depreciated  cost  or net
         realizable value.

         Depreciation  is  computed  using the  straight-line  method,  over the
         estimated  useful  lives of such assets (five years for  equipment  for
         management  information and electronic laser printing systems and eight
         years for  telephone  equipment,  retail  sales  equipment,  voice mail
         systems, transportation and related equipment).

         When  equipment  is  sold  or  otherwise  disposed  of,  the  cost  and
         accumulated  depreciation  (and any  related  allowance  for  equipment
         impairment)  are removed from the accounts and any gain or loss on such
         sale or disposal is reflected in  operations.  Normal  maintenance  and
         repairs are charged to operations as incurred. The Partnership provides
         allowances for equipment  impairment  based upon a quarterly  review of
         all equipment in its portfolio,  when management  believes that,  based
         upon market analysis,  appraisal  reports and leases currently in place
         with respect to specific  equipment,  the  investment in such equipment
         may not be recoverable.
<PAGE>
3        CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

         The corporate  general  partner of the  Partnership,  ALI Capital Corp.
         (the "Corporate General Partner"),  the managing general partner of the
         Partnership,  ALI Equipment Management Corp.,  ("Equipment Management")
         and Integrated  Resources  Equipment  Group,  Inc.  ("IREG") are wholly
         owned subsidiaries of Presidio Capital Corp. ("Presidio"). Fourth Group
         Partners was the associate  general partner of the Partnership  through
         February  27,  1995.  On February 28,  1995,  Presidio  Boram Corp.,  a
         subsidiary of Presidio,  became the associate  general  partner.  Other
         limited  partnerships and similar investment  programs have been formed
         by Equipment  Management or its  affiliates to acquire  equipment  and,
         accordingly,  conflicts of interest may arise  between the  Partnership
         and such other limited partnerships. Affiliates of Equipment Management
         have also engaged in businesses  related to the management of equipment
         and the sale of various  types of equipment  and may transact  business
         with the Partnership.

         Subject  to the  rights  of the  Limited  Partners  under  the  Limited
         Partnership  Agreement,  Presidio will control the Partnership  through
         its direct or  indirect  ownership  of all of the  shares of  Equipment
         Management, the Corporate General Partner and, as of February 28, 1995,
         the  associate  general  partner.   Presidio  is  managed  by  Presidio
         Management Company, LLC ("Presidio  Management"),  a company controlled
         by a director of Presidio.  Presidio is also party to an administrative
         services agreement with Wexford Management LLC ("Wexford")  pursuant to
         which Wexford is responsible for the day-to-day  management of Presidio
         and,  among other  things,  has  authority  to  designate  directors of
         Equipment  Management,  the Corporate General Partner and the associate
         general  partner.  During the nine months  ended  September  30,  1996,
         reimbursable  expenses  to  Wexford  by  the  Partnership  amounted  to
         $20,940.

         Presidio is a liquidating  company.  Although Presidio has no immediate
         plans to do so, it will  ultimately seek to dispose of the interests it
         acquired from  Integrated  Resources,  Inc.  including its interests in
         Equipment  Management,  the Corporate General Partner and IREG, through
         liquidation;  however,  there can be no assurance of the timing of such
         transaction or the effect it may have on the Partnership.

         The  Partnership  has entered  into a management  agreement  with IREG,
         pursuant to which IREG  receives 5% of annual gross rental  revenues on
         operating  leases;  2% of annual gross  rental  revenues on full payout
         leases  which  contain  net lease  provisions;  and 1% of annual  gross
         rental  revenues if services are  performed by third  parties under the
         active supervision of Equipment  Management,  as defined in the Limited
         Partnership  Agreement.  The Partnership  incurred equipment management
         fees of $14,852 and $30,551 for the nine  months  ended  September  30,
         1996 and 1995, respectively.
<PAGE>
3        CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)

         During  the  operating  and  sale  stage  of the  Partnership,  IREG is
         entitled to a partnership  management fee equal to 4% of  distributable
         cash from operations as defined in the Limited  Partnership  Agreement,
         subject to increase  after the limited  partners have received  certain
         specified  minimum  returns on their  investment.  For the nine  months
         ended September 30, 1996 and 1995, IREG earned  partnership  management
         fees of $21,952 and $41,700, respectively.

         The general  partners  are  entitled to 1% of  distributable  cash from
         operations,  cash from sales or financings  and cash from the equipment
         reserve  account and, in general,  an  allocation  of 1% of taxable net
         income or loss of the Partnership.

         During the operating and liquidating stage of the Partnership, IREG may
         be entitled to receive certain other fees which are subordinated to the
         receipt by the limited partners of their original  invested capital and
         certain specified minimum returns on their investment.

         Upon the ultimate liquidation of the Partnership,  the general partners
         may  be  required  to  remit  to  the  Partnership   certain   payments
         representing  capital account deficit  restoration based upon a formula
         provided within the Limited  Partnership  Agreement.  Such  restoration
         amount may be less than the recorded general partners'  deficit,  which
         could result in  distributions to the limited partners of less than the
         recorded equity.

         In April 1995, Equipment Management and certain affiliates entered into
         an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone")
         pursuant  to  which   Fieldstone   performs   certain   management  and
         administrative  services relating to the Partnership as well as certain
         other  partnerships  in which  Equipment  Management  serves as general
         partner.  Substantially  all costs  associated  with the  retention  of
         Fieldstone will be paid by Equipment Management.

4        DISTRIBUTIONS TO PARTNERS

         Distributions  payable to the Limited  Partners and General Partners of
         $175,340  ($3.50 per unit) and $1,771  respectively,  at September  30,
         1996, were paid in November 1996.

5        EQUIPMENT SALES - 1996

         During the nine months ended September 30, 1996, the  Partnership  sold
         certain  equipment for  management  information  systems,  which it had
         originally purchased for purchase prices aggregating $867,103 inclusive
         of associated  acquisition fees, to various  unaffiliated third parties
         for an  aggregate  sales  price  of  $44,200.  Such  equipment  had net
         carrying  values  aggregating  $1,011 (net of allowances  for equipment
         impairment  aggregating  $134,766  provided  for in prior  periods with
         respect to such equipment) when sold.
<PAGE>
6        DUE TO AFFILIATES

         The amount due to  affiliates as of September 30, 1996 and December 31,
         1995 represents the following:

<TABLE>
<CAPTION>
                                                       September 30,    December 31,
                                                           1996            1995
                                                       -------------    ------------
<S>                                                       <C>             <C>   
Equipment management fees ......................          $  615          $2,516
Partnership management fees ....................              76           2,972
                                                          ------          ------

                                                          $  691          $5,488
                                                          ======          ======
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         Liquidity and Capital Resources

         The  Partnership  declared  a cash  distribution  of $3.50  per unit of
         limited  partnership  interest  totaling $177,111 for the quarter ended
         September 30, 1996, which  represented cash from operations of $157,095
         generated  during the current  quarter  and sales of $2,410  during the
         current quarter as well as from reserves generated in prior periods. As
         of September  30,  1996,  the  Partnership  had  operating  reserves of
         approximately  $265,500 which was comprised of undistributed  cash from
         operations, as well as general working capital reserves of $250,460.

         Although expense levels have been reduced, the Partnership  anticipates
         that most of its administrative  expenses (i.e. accounting and investor
         services  including  printing)  are fixed  and thus  will not  decrease
         significantly  during the Partnership's  future operating period. Other
         expenses such as insurance and fees to affiliates  will decline  during
         such period.

         As of  September  30,  1996,  the  Partnership  remained  the  owner of
         equipment  originally  purchased  for  an  aggregate  of  approximately
         $3,171,000   (inclusive  of   approximately   $1,404,000  of  equipment
         originally  accounted for as financing  leases) of which  approximately
         $1,436,000  is leased on a  month-to-month  basis (on an original  cost
         basis).  Excluding rents on a  month-to-month  basis and renewals,  the
         leases of equipment  (subject to operating leases) with purchase prices
         aggregating  approximately $214,000 and representing  approximately 16%
         of the Partnership's monthly rentals generated during the quarter ended
         September  30, 1996,  are  scheduled to expire  during the remainder of
         1996, unless renewed or remarketed.  The Partnership's anticipated cash
         from operations for the remainder of 1996, based on firm term leases in
         place,  is not  sufficient to maintain  previous  distribution  levels.
         Distribution  levels will fluctuate based upon the remarketing  success
         of the Partnership's  equipment including any proceeds generated by the
         sale of the assets and requirements for operating reserves, if any.

         Upon  the sale of the  remaining  assets,  the  Partnership  will  have
         liquidated all of its equipment portfolio. The Managing General Partner
         will then prepare a final  accounting of the assets and liabilities and
         commence the  dissolution and termination of the Partnership and make a
         final distribution to partners.

         At the present  time,  the level of fees  payable to IREG for  services
         rendered to the  Partnership  and other  affiliated  equipment  leasing
         partnerships  is  declining.  The  effect of this  situation  cannot be
         determined  at  this  point.  The  management  agreements  between  the
         Partnership  and  IREG  may be  terminated  by  either  party  to  such
         agreements.

         In April 1995,  the  Managing  General  Partner and certain  affiliates
         entered into an agreement with Fieldstone  pursuant to which Fieldstone
         performs certain management and administrative services relating to the
         Partnership as well as certain other partnerships in which the Managing
         General  Partner  serves as general  partner.  Substantially  all costs
         associated  with  the  retention  of  Fieldstone  will  be  paid by the
         Managing General Partner.
<PAGE>
         Liquidity and Capital Resources (continued)

         On February 28, 1995  Presidio  Boram Corp.,  a subsidiary of Presidio,
         became the  Associate  General  Partner upon the  withdrawal  of Fourth
         Group Partners, the former Associate General Partner.

         Inflation and changing  prices have not had any material  effect on the
         Partnership's  revenues  since its inception  nor does the  Partnership
         anticipate any material effect on its business from these factors.

         The Partnership had no outstanding  material  commitments for equipment
         acquisitions as of September 30, 1996.

         Results of Operations

         Net income  increased  for the quarter and nine months ended  September
         30, 1996 as compared  with the prior year's  periods,  primarily due to
         the reduction of rental revenues and the reduction of gains  recognized
         on  dispositions  of equipment in the current year  periods,  more than
         offset by the decrease in expenses.

         Rental  revenues  decreased  for the  quarter  and  nine  months  ended
         September  30,  1996,  due to  the  expiration  of  certain  leases  in
         accordance with the terms of such leases subsequent to the prior year's
         periods, as well as the sale or disposition of certain equipment during
         and  subsequent  to the  prior  year's  period.  Equipment  subject  to
         operating leases decreased from  approximately  $4,016,000 at September
         30,  1995 to  approximately  $1,979,000  at  September  30,  1996 (both
         amounts at original acquisition cost) due to the sale or disposition of
         equipment,  which is consistent  with the  Partnership's  decision,  in
         1992, to cease  reinvestment  in additional  equipment and commence the
         liquidation of the Partnership.

         Costs and  expenses  decreased  in the quarter  and nine  months  ended
         September 30, 1996 in comparison to the prior year as follows: (i) fees
         to affiliates  decreased  due to the reduction in equipment  management
         fees as a result of a decrease in rentals (as  defined,  which  include
         operating and financing  leases) on which such fees are based,  as well
         as to the decrease in  partnership  management  fees  resulting  from a
         reduction in the distribution of cash from operations  generated during
         the current year's period; and (ii) depreciation  expense decreased due
         to the elimination of depreciation  expense  resulting from the sale or
         disposition  of certain  equipment  during or  subsequent  to the prior
         year's period,  as well as to the fact that certain equipment was fully
         depreciated during or prior to the current year's period. Additionally,
         the Partnership did not record a provision for equipment  impairment to
         recognize the loss in value of certain  equipment for the quarter ended
         September 30, 1996 compared to $60,000 for the comparable  prior year's
         period. During the nine months ended September 30, 1996 the Partnership
         recorded provisions for equipment impairment of $130,000 as compared to
         provisions of $225,000 recorded during the prior year's period.

         Net gains  recognized in connection  with the  disposition of equipment
         were  $2,410 and  $43,189  during the  current  quarter  and nine month
         period ended September 30, 1996 as compared to the net gains recognized
         of $2,559 and $90,767 during the prior year periods.
<PAGE>
PART II - OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K


(a)               Exhibits:  None
(b)               Reports on Form 8-K:  None
<PAGE>
                                   SIGNATURES


Pursuant  to the  requirements  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.


                                   National Lease Income Fund 7 L.P.
                          By:      ALI Equipment Management Corp.
                                   Managing General Partner



                          /S/      Douglas J. Lambert
                                   -----------------------------------
                                   Douglas J. Lambert
                                   President (Principal Executive and
                                     Financial Officer)





Date: November 12, 1996