Edward C. and Susan R. Hanna - Page 12

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          Mrs. Hanna 4 hours to construct and additional time each month              
          to maintain.  During their visits to Florida in 2000,                       
          petitioners contend Mrs. Hanna spent 60 percent of her waking               
          hours on rental activities.  Mrs. Hanna admitted this last                  
          figure was the result of “guesstimating”, but she maintained                
          that the 89-page narrative summary provided a more accurate                 
          estimate of the time she spent on the rental activities in 2000.            
               Applying the test of section 469(c)(7)(B) to the facts of              
          this case, petitioners first must prove that more than one-half             
          of Mrs. Hanna’s personal services performed in trades or                    
          businesses were performed in real property trades or businesses.            
          See sec. 469(c)(7)(B)(i).  Because Mrs. Hanna was paid for 2,119            
          hours of work as a computer consultant, she must have spent more            
          than that amount of time performing services for the rental                 
               Petitioners argue that Mrs. Hanna satisfied this                       
          requirement because she performed 2,610 hours of services in the            
          rental activities.  As described above, however, petitioners did            
          not calculate this figure by reference to appointment books or              
          calendars.  In fact, Mrs. Hanna admitted that she was not good              
          at recording the time she spent on the rental activities.                   
          Furthermore, although petitioners produced a narrative summary,             
          the accuracy of this document is suspect.  Petitioners prepared             
          the narrative summary shortly before trial, approximately 5                 
          years after the events in question occurred.  More importantly,             

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