Walter A. Barniskis and Mary Sue Barniskis - Page 4




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          BBCA and TMC decided to simplify the relationships between the              
          unit owners and TMC by negotiating for individual written                   
          management contracts between each unit owner and TMC.  The                  
          contracts were modeled after the policies that BBCA's committees            
          had developed in preceding years.  With the exception of a few              
          unit owners who lived at Bluefin Bay all year, most of the unit             
          owners entered into management contracts with TMC.                          
               Petitioners' management contract with TMC was effective                
          January 1, 1991, through the taxable years in issue.  Under the             
          management contract, TMC was appointed as the exclusive rental              
          agent for petitioners' unit.  Petitioners were required to                  
          specifically reserve their unit in writing for the days which               
          they intended to personally use it.  In the event petitioners               
          failed to properly notify TMC of their intended use, rental                 
          arrangements previously made by TMC with other guests would hold            
          priority over petitioners' personal use, unless the guests could            
          be assigned to another, comparable unit.                                    
               The management contract provided for TMC to receive 45                 
          percent of the gross rental proceeds from petitioners' unit in              
          exchange for its services.  Under the management contract, TMC's            
          duties included, but were not limited to, managing reservations,            
          checking in and out guests, providing housekeeping services,                
          collecting rents, generating financial reports, conducting damage           








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