William C. and Cheryl M. Fowler - Page 14




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          in the individual’s capacity as an investor in an activity is not           
          generally treated as participation in the activity.  Sec. 1.469-            
          5T(f)(2)(ii)(A), Temporary Income Tax Regs., 53 Fed. Reg. 5727              
          (Feb. 25, 1988).                                                            
               With respect to the evidence that may be used to establish             
          hours of participation, section 1.469-5T(f)(4), Temporary Income            
          Tax Regs., supra, provides:                                                 
               The extent of an individual’s participation in an                      
               activity may be established by any reasonable means.                   
               Contemporaneous daily time reports, logs, or similar                   
               documents are not required if the extent of such                       
               participation may be established by other reasonable                   
               means.  Reasonable means for purposes of this paragraph                
               may include but are not limited to the identification                  
               of services performed over a period of time and the                    
               approximate number of hours spent performing such                      
               services during such period, based on appointment                      
               books, calendars, or narrative summaries.                              
               We believe that the methods that petitioner used to                    
          approximate the time that he spent performing services in real              
          property trades or businesses are not reasonable within the                 
          meaning of section 1.469-5T(f)(4), Temporary Income Tax Regs.,              
          supra.  Petitioners’ estimates are based on petitioner’s calendar           
          entries and do not reliably or reasonably reflect the hours that            
          petitioner actually devoted to United Air Temp or to his rental             
          real estate activities.  Petitioner assigned hours to the                   
          activities in his calendar before the activities occurred, and              
          his estimates were not later adjusted to reflect the actual                 
          duration of the activities.  In preparation for trial in 2001,              






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