Walter A. Barniskis and Mary Sue Barniskis - Page 12

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          all constitute investor activities.3   Petitioners have failed to           
          establish that they materially participated in the rental                   
          activity.  Even if we were to assume that petitioners expended              
          100 hours in their rental activity during the years in issue,               
          they have not proved that their participation was greater than              
          the management company's participation.                                     
          Other Individuals' Participation                                            
               The second requirement of the section 1.469-5T(a)(3),                  
          Temporary Income Tax Regs., supra, material participation test is           
          that petitioners' participation in the activity of renting their            
          unit must not have been less than the participation in such                 
          activity of any other individuals.  Petitioners must establish              
          that no other individuals participated in the activity of renting           
          their unit for more time than they did during the years in issue.           
               Dennis Rysdahl, the founder, president, secretary, and                 
          general manager of TMC, was involved in the construction of                 
          Bluefin Bay in 1984 and, more recently, an adjacent development             
          called Tofte Cove.  Mr. Rysdahl currently oversees the management           
          and operation of Bluefin Bay and did so during the taxable years            
          in issue.                                                                   
               In a letter dated June 30, 1997, to the Bluefin Bay and                
          Tofte Cove owners, Mr. Rysdahl solicited contributions to a fund            

          3         We find that the listed hours of participation include            
          38.5 hours, 25.25 hours, and 27.25 hours of investor activities             
          for 1991, 1992, and 1993, respectively.                                     

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