Steven D. Rapp and Judith A. Rapp - Page 4




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          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           
          inspections, and making any necessary maintenance calls and                 
          repairs.                                                                    
               TMC owns and operates a restaurant located adjacent to the             
          condominium complex.  During the taxable years in issue, TMC's              
          employees staffed a reception desk near the restaurant entrance             
          for guests staying at Bluefin Bay.  TMC also employed managers,             
          activity directors, bookkeepers, a housekeeping staff, and a                
          maintenance staff, all of whom participated in the activity of              
          renting petitioners' unit.                                                  
               TMC's employees developed, drafted, and printed marketing              
          and promotional materials for Bluefin Bay.  TMC maintained a                
          toll-free telephone number for promotional and reservation                  
          purposes.  TMC's employees answered this telephone line, booked             
          reservations for owners and guests, and mailed promotional and              
          marketing materials to interested parties.                                  








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