Arnold P. Mordkin and Cindy Mordkin - Page 6

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          manager, promoting Crestwood as a desirable property available              
          for rental to those who desired lodging during vacation and                 
          recreational stays in the Snowmass Village area, entering into              
          rental agreements on behalf of petitioner, collecting rent from             
          tenants, inspecting petitioner's condominium units, maintaining             
          and purchasing necessary equipment and supplies, providing                  
          housekeeping and related services, and making necessary repairs             
          and alterations to those units.  In return, petitioner agreed to            
          pay the manager an operating charge to offset the cost of the               
          services provided by the manager and all actual costs and expens-           
          es incurred by the manager in providing such services.  The                 
          operating charge was to be determined as follows:                           
               The proportion which the OWNER shall pay for each                      
               billing period shall be a uniform percentage (identical                
               for all properties managed by the MANAGER) of gross                    
               rental receipts, which percentage shall be determined                  
               by the MANAGER each year by analyzing the percentage of                
               expenses for all properties managed by the MANAGER, as                 
               reflected in the annual audit.  At the end of each                     
               fiscal year the MANAGER will adjust the OWNER'S total                  
               operating charge for the year to the percentage re-                    
               flected in the annual audit as the actual percentage of                
               expenses.  If the actual expenses exceed the operating                 
               charge for the year, the OWNER agrees to pay the ex-                   
               cess; if the actual expenses are less than the operat-                 
               ing charge, the MANAGER agrees to refund the differ-                   
               During the years at issue, petitioner rented both of his               
          condominium units.  The average period of customer use for peti-            
          tioner's condominium units was less than seven days.                        
          Participation by Individuals Other Than Petitioner                          

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