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representing about 8 percent of gross rentals.
In Example (4) of section 1.469-1T(e)(3)(viii), Temporary
Income Tax Regs., 53 Fed. Reg. 5703 (Feb. 25, 1988), the taxpayer
is engaged in the activity of owning and operating a residential
apartment hotel where rentals are for more than 7 but less than
30 days. The taxpayer provides daily maid and linen service at
no additional charge. Because the value of the maid and linen
service is less than 10 percent of the amount charged to tenants,
they are not significant personal services. The Court concludes
that petitioners' cleaning and repair services, including maid
and linen services, are not significant personal services.
Petitioner testified that they attended owners association
meetings to protect their investment. They also received and
deposited funds from customers, paid bills, and prepared income
and expense summaries "for tax return preparation". Petitioners
argue that these activities should be considered as personal
services under the B exception.
The B exception addresses cases where significant personal
services are provided by or on behalf of the owner of the
property in connection with making it available for customer use.
Petitioners press their argument by broadly interpreting the "in
connection with" language of the exception. They fail, however,
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