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combination of this rental operation with this nonrental
operation upon which the parties do not agree.
The combination of operations into undertakings occurs using
the two-pronged test found in section 1.469-4T(c)(2), Temporary
Income Tax Regs., supra. Applying the first prong, it is clear
that petitioner's Rental Operation and Associates' Project are
conducted at the same location. Sec. 1.469-4T(c)(2)(i)(A),
Temporary Income Tax Regs., 54 Fed. Reg. 20544.
But, the combination fails the second prong of the test
because the two operations are not owned by the same person. Id.
Section 1.469-4T(c)(2)(v), Temporary Income Tax Regs., supra, is
clear that 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." (Emphasis added.) Units 206
and 405 are owned by petitioner, a natural person, whereas the
Project is owned by the Associates partnership, a separate legal
person. See Wiseman v. Commissioner, T.C. Memo. 1995-203.
Petitioner points to section 1.469-4T(j), Temporary Income
Tax Regs., 54 Fed. Reg. 20559, and argues that effective control
is the measure of ownership under section 1.469-4T(c)(2),
Temporary Income Tax Regs., supra. Section 1.469-4T(f)(2),
Temporary Income Tax Regs., 54 Fed. Reg. 20552, makes common
control, as defined in section 1.469-4T(j), Temporary Income Tax
Regs., supra, a precondition to the aggregation of trade or
business undertakings into a single activity, not the combination
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