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employed. On or about April 30, 1981, petitioner purchased a
condominium unit (hereinafter referred to as the condominium
unit) in Corpus Christi, Texas. Petitioner entered into a rental
agency agreement, effective January 1, 1988, with Villa Del Sol
Condominiums (VDS). Under the terms of the agreement, petitioner
retained VDS as the exclusive agent to rent the condominium unit,
and VDS was obligated to use its best efforts to do so.
During the taxable years in issue, between 275 and 293 units
were subject to rental agency agreements with VDS. Pursuant to
these agreements, including the agreement with petitioner, VDS
pooled items of income and expense from all participating units
and allocated to each unit owner a ratable share of income and
expenses. Thus, VDS did not determine each owner's share of
income and expenses based upon whether the unit was actually
rented; rather, VDS determined each owner's share based upon the
number of days in which the unit was available for rental. The
agreement, however, required petitioner to provide the initial
furnishings of the condominium unit, subject to the approval of
VDS. Petitioner was also obligated to provide the unit with a
19-inch television, a cassette stereo, a telephone, and a
prescribed deadbolt lock.
The agreement required VDS to employ and manage all
necessary personnel, including professional management, for
implementation of the condominium unit's rental operation and
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