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Thus, according to section 543(a)(2), adjusted income from
rents is taken into account in computing personal holding
company income if it amounts to less than 50 percent of the
corporation's adjusted ordinary gross income. See sec.
543(a)(2). If adjusted income from rents amounts to 50
percent or more of the corporation's adjusted ordinary
gross income, and a condition involving the corporation's
dividends for the year is met, then adjusted income from
rents is not taken into account in computing personal
holding company income. See sec. 543(a)(2).
The phrase "adjusted income from rents" is defined by
section 543(b)(3) as follows:
(3) Adjusted income from rents.--The term
"adjusted income from rents" means the gross income
from rents, reduced by the amount subtracted under
paragraph (2)(A) of this subsection [i.e., deprecia-
tion, property taxes, interest expense, and rent].
For purposes of the preceding sentence, the term
"rents" means compensation, however designated, for
the use of, or right to use, property, and the
interest on debts owed to the corporation, to the
extent such debts represent the price for which real
property held primarily for sale to customers in the
ordinary course of its trade or business was sold or
exchanged by the corporation; but such term does not
include--
(A) amounts constituting personal holding
company income under subsection (a)(6),
(B) copyright royalties (as defined in
subsection (a)(4)),
(C) produced film rents (as defined in
subsection (a)(5)(B)),
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