George and Bozenna Pohoski - Page 6

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               Under the addendum agreement, Rainbow Reservations collected           
          the rent from petitioners' tenants and placed the funds into a              
          trust account.  Rainbow Reservations then deducted from the rental          
          proceeds its commission and the costs of maid or other services it          
          provided.  At the end of each month, a check representing the net           
          proceeds from the rental of the Maui condo was forwarded to                 
          petitioners.  As part of this process, Rainbow Reservations                 
          maintained records of the rental proceeds for petitioners, and              
          issued a Form 1099 to petitioners at the end of the year.                   
               Although the addendum agreement provided that Rainbow                  
          Reservations would receive a 20-percent commission, Rainbow                 
          Reservations actually received a 25-percent commission during 1993          
          as a result of its performing special services for petitioners.             
          Additionally, Rainbow Reservations was permitted to rent                    
          petitioners' Maui condo directly during times when the condo was            
          vacant, subject to petitioners' approval.  For those bookings,              
          which only occurred once or twice during 1993, Rainbow Reservations         
          earned a 40-percent commission.                                             
               As part of its front desk services, Rainbow Reservations               
          issued keys and parking permits to petitioners' tenants (unless             
          petitioners made other arrangements).  The front desk was also              
          available for petitioners' tenants to answer questions, obtain              
          additional linens, or receive complaints.                                   
               The Maui condo was rented for 22 weeks during 1993, with an            
          average stay for a tenant of 6.5 days.  Petitioners' base charge            



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