Betsy and Larry Lorch own and reside in an apartment in midtown Manhattan. They left the city to avoid the uproar surrounding New Year’s Eve and spent a long holiday with Larry’s parents in upstate New York. They sublet their apartment to a German couple who wanted to join the throng in Times Square. They paid the Lorches $500 per night ($11,000 total) to stay in the apartment from December 21 through January 11. What are the tax consequences of this rental arrangement?