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petitioner did not prepare an economic projection or cash flow
analysis, but he considered the number of days of rental and
costs involved.
After 2 years, when it was clear that the rentals were not
generating a positive cash flow, petitioner spoke with B'Mae's
about why there were not more rentals. However, petitioner did
not put much effort into trying to rent the timeshares on his
own. For instance, he did not advertise. He made only one minor
suggestion about improving the rentals. Petitioner only
occasionally communicated with B'Mae's. For instance, B'Mae's
contacted petitioner about using one of the timeshares during a
telephone strike in New Hampshire. He did not maintain books and
records for the timeshares other than the records he got from
B'Mae's. He did not maintain a separate bank account for the
timeshares. However, petitioner was engaged in a consulting
activity separate from his job, and he maintained books and
records and a separate account for the consulting activity. The
primary source of petitioners' income during the years in issue
was their wages.
B'Mae's had given petitioner some information, in the form
of brochures, suggesting that petitioner did not need to be
actively involved in the renting of the property for it to
generate cash flow. Petitioner understood that B'Mae's would
take care of all day-to-day aspects of renting the timeshares.
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