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monthly basis. This decision making process occurs
each month in which a rental income or expense
statement is received from the rental agreement. At
that time a management decision is made whether to
continue or terminate the participation in the rental
agreement * * * in that the rental agreement is
terminable at will * * *.
* * * [Petitioners] may at any time elect to
provide the rental services themselves or to procure
another agent for these services. Under these
conditions the Petitioners are making significant and
[bonafide] management decisions on a month-to-month
basis whether to continue, cancel, or make another
agency relationship.
Petitioners have offered no evidence to indicate that they
personally approved of tenants, decided rental terms, approved of
expenditures for repairs and capital improvements, or in any way
participated in the management of the unit in a significant and
bona fide sense. It appears that VDS, rather than petitioners,
performed all significant management activities. Moreover, we do
not consider petitioner's ability to terminate the contract with
VDS as active participation per se; the legislative history of
section 469 explains that taxpayers must themselves genuinely
exercise independent discretion and judgment. On the basis of
the record before us, we conclude that petitioners have failed to
establish that they actively participated in the activity of
renting the condominium unit during each of the years in issue.
Therefore, assuming that the average period of customer use of
petitioner's condominium unit was greater than 7 days,
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Last modified: May 25, 2011