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On September 8, 1987, petitioners entered into a contract to
purchase a condominium unit (unit No. 390) in the Wisp resort
located in Garrett County, McHenry, Maryland. The purchase price
was $88,900. The purchase and sale of the condominium unit took
place in February 1988.
The Wisp condominium hotel consisted of two buildings with a
total of 168 units.3 The larger building contained 100 units,
and the smaller building contained 68 units. Each owner of a
condominium unit at Wisp is a member of the council of unit
owners. The council of unit owners elects a board of directors.
Each unit owner could elect to dedicate his or her unit to a
hotel rental program. Under the hotel rental program, rental
receipts for all units in the program, less management expenses,
are divided proportionally on a monthly basis among the
participating units. Thus, a unit owner participating in the
program would not necessarily be concerned about rental of a
particular unit since the income and expenses were pooled. The
units were rented on a rotational basis to equalize wear and
tear. A unit owner could use his or her own unit when it was not
rented.
By agreement dated February 5, 1988, petitioners elected to
participate in the hotel rental program. During the years in
issue, all unit owners participated in the hotel rental program.
3 One of the units was used as a beauty parlor.
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