Robert W. and Lila L. Blewett - Page 9




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          the outstanding stock of Highland; (2) the equipment in question            
          was used exclusively in Highland’s trade or business activity               
          throughout the year; and (3) petitioners did not receive any                
          gross rental income from Highland for the equipment.                        
               Respondent contends that section 1.469-1T(e)(3)(vi)(C),                
          Temporary Income Tax Regs., 53 Fed. Reg. 5703 (Feb. 25, 1988), is           
          inapplicable to the instant case because it requires that a                 
          taxpayer at least temporarily stop using property in his trade or           
          business and start using the property in a rental activity.                 
          Respondent argues that the exception is not available when the              
          property is used in the rental activity and the trade or business           
          activity simultaneously.  Respondent makes three arguments in               
          support of this construction of the regulation.  Respondent’s               
          arguments are set forth below, but we note that in our view here            
          “respondent advocates a strained interpretation of language                 
          prepared by respondent’s own employees.”  See Ferguson v.                   
          Commissioner, T.C. Memo. 1992-451.  In interpreting the language            
          in question, we bear in mind that respondent’s personnel drafted            
          that language, and the resolution of doubts against the draftsman           
          is appropriate in many circumstances.  See id. (and authorities             
          cited therein).                                                             
               First, respondent argues that section 1.469-1T(e)(3)(vi)(C),           
          Temporary Income Tax Regs., 53 Fed. Reg. 5703 (Feb. 25, 1988),              
          uses the past tense when referring to the use of the property in            






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