Edward C. and Susan R. Hanna - Page 10

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          she spent on the rental activities.  Petitioners did produce a              
          number of documents, however, including more than 400 pages of              
          e-mail messages sent to and from an e-mail account they                     
          maintained for the rental activities, sales and marketing                   
          materials they developed, a “cost analysis” and “cash flow                  
          analysis” they prepared, and various other documents relating to            
          the rental activities such as photographs, worksheets,                      
          handwritten notes, receipts, and correspondence.                            
               Petitioners also produced two summaries of the time spent on           
          the rental activities.  The first summary is titled “Susan                  
          Hanna’s Activity for Year 2000” and indicates that Mrs. Hanna               
          spent 3,247 hours on rental activities.  This document does not             
          indicate when it was prepared.  The second document is an 89-page           
          “narrative summary” of each petitioner’s rental activities that             
          they created shortly before trial.  This document indicates that            
          Mrs. Hanna spent 2,610 hours on rental activities in 2000.                  
               Petitioners did not explain the discrepancy between the two            
          summaries.  Petitioners’ pretrial memorandum lists the 2,610-hour           
          figure, however, and petitioners consistently used that figure at           
          trial.  Furthermore, petitioners made frequent reference to the             
          89-page narrative summary during their testimony.  Accordingly,             
          we assume that petitioners’ position is that Mrs. Hanna worked              
          2,610 hours on rental activities in 2000.  The narrative summary            
          provides the following breakdown of those hours:                            
                    Category                       Hours                              

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