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relating to the rental properties. Such calls were placed both
from petitioners’ home and from her place of employment. Mrs.
Jahina also maintained a variety of other records in conducting
the rental property activities.
When petitioners were audited by respondent, Mrs. Jahina
prepared summaries of her activities for the revenue agent. She
prepared the summaries based on her calendars, phone records,
correspondence, bills, and other records. The summaries suggest
that Mrs. Jahina spent 2,591 hours in 1996 and 2,639 hours in
1997 on the rental properties. However, the hours indicated on
the summaries exceeded the hours shown on Mrs. Jahina’s
contemporaneous calendars. Mrs. Jahina admitted at trial that
she prepared the summaries hurriedly for purposes of the audit,
using a computer program that would not charge less than 1 hour
for any entry. She admitted that the summaries overstated the
hours devoted to the real estate properties. However,
petitioners maintain that she devoted well in excess of 1,800
hours annually to the rental activities; i.e., more time than she
spent working for her employers.2
2 When Mrs. Jahina prepared the summaries, she felt
frustrated that the revenue agent had not fully credited her time
spent working on the rental properties, despite her attempts to
cooperate by presenting phone and other business records. Mrs.
Jahina objected that the revenue agent only counted the actual
minutes of phone time listed on the records. Mrs. Jahina
maintained that the agent should have credited her with a span of
(continued...)
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