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the trade or business. Respondent contends that use of the verb
“was” in paragraph (2) of the relevant regulation means that for
the purposes of the incidental exception, the property cannot be
used in the trade or business activity and the rental activity
simultaneously.
We are not convinced by this argument. Section 1.469-1T(e)
(3)(vi)(C), Temporary Income Tax Regs., 53 Fed. Reg. 5703 (Feb.
25, 1988), provides that the rental of property during a taxable
year shall be treated as incidental to a trade or business
activity if, inter alia, “The property was predominantly used in
such trade or business activity during the taxable year or during
at least two of the five taxable years that immediately precede
the taxable year”. (Emphasis added.) The word “was” in the
regulation refers not only to past years, but also to the current
taxable year. The terms of the regulation are consistent with
the conclusion that the property can be used in the trade or
business activity at any time and still satisfy the requirements
for the incidental exception to the definition of a rental
activity. We conclude that the language of the regulation does
not require that the taxpayer must cease using the property in a
trade or business activity before it can be used in the rental
activity.
Second, respondent cites the preamble to T.D. 8175, the
Treasury Decision promulgating section 1.469-1T(e)(3)(vi)(C),
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