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Income Tax Regs. The evidence in the record establishes that
Aeternum, a general partnership engaged in the manufacturing of
semi-conductor devices, was a trade or business.
The first issue is whether the trade or business activities
of Aeternum, a general partnership, can be classified as the
trade or business activities of petitioner for purposes of the
“incidental” exception. The regulations require that the
taxpayer own “an interest in such trade or business activity”,
not that the taxpayer be the sole owner of the trade or business.
Sec. 1.469-1T(e)(3)(vi)(C)(1), Temporary Income Tax Regs., 53
Fed. Reg. 5703 (Feb. 25, 1988). Section 1.469-4(a), Income Tax
Regs., provides that a taxpayer’s activities include those
conducted through a partnership for purposes of grouping a
taxpayer’s trade or business activities with rental activities.
Additionally, petitioner was actively involved in affairs of the
general partnership and substantially contributed both time and
effort to the success of Aeternum. Based on the regulations and
the facts before us, we hold that the trade or business
activities of petitioner for 1993 include the trade or business
activities of Aeternum for purposes of the “incidental”
exception. Cf. Podell v. Commissioner, 55 T.C. 429, 433 (1970)
(interpreting “his trade or business” under section 1221(1) to
9(...continued)
references sec. 1.469-4(b)(1), Income Tax Regs.
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