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Sec. 1.469-4T(c)(2), Temporary Income Tax Regs., 54 Fed. Reg.
20544. Operations are separate undertakings if one of these two
prongs is not met. Sec. 1.469-4T(a)(3)(ii), (c)(2)(i), Temporary
Income Tax Regs., 54 Fed. Reg. 20542, 20543. Operations are
owned by the same person "if and only if one person (within the
meaning of section 7701(a)(1)) is the direct owner of such
operations." Sec. 1.469-4T(c)(2)(v), Temporary Income Tax Regs.,
54 Fed. Reg. 20544. The term "person" includes an individual,
partnership, association, company, or corporation. Sec.
7701(a)(1).
Even if two operations are considered the same undertaking
under the foregoing location/ownership test, rental operations
and nonrental operations are still considered to be separate
undertakings, unless "Less than 20 percent of the gross income of
the paragraph (c) undertaking is attributable" to either the
rental or nonrental operation (the de minimis exception). Sec.
1.469-4T(d)(1), (2)(ii) and (iii), Temporary Income Tax Regs., 54
Fed. Reg. 20547.
A combination undertaking is then subject to the
"predominant character rule". Under section 1.469-4T(d)(1)(iii),
Temporary Income Tax Regs., supra, with reference to section
1.469-1T(e)(3), Temporary Income Tax Regs., 53 Fed. Reg. 5702
(Feb. 25, 1988), a combined rental-nonrental undertaking has the
character of the rental operation only if the gross income from
the combined operation represents amounts paid "principally" for
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