Bob  - Thank you.  I appreciate the detail, questions, and examples.  Clients have already engaged Canadian CPA firm and attorney and I have access to their submittals.  I don't know as yet if they separated expenses between personal residential and business B&B.  That is pending. I understand 'intent' and am determining that now.  If the Canadian submittals show business expenses that would help with 'intent'.  

Prior discussion w/CPA says if there is a loss they don't have to file a personal tax return, however because there will be 'proceeds' the Canadian attorney withholds 25% - even if there is a loss!