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Temporary Income Tax Regs., 53 Fed. Reg. 5703 (Feb. 25, 1988).
The preamble states that the exception applies if “an
insubstantial amount of rental income is derived from property
that was recently used in a trade or business activity of the
taxpayer and is temporarily rented”. Id.
We apply a regulation according to its plain or ordinary
meaning unless such interpretation would lead to absurd results
or another construction is supported by unequivocal evidence of
administrative intent. Phillips Petroleum Co. v. Commissioner,
101 T.C. 78, 107 (1993), affd. without published opinion 70 F.3d
1282 (10th Cir. 1995). Respondent does not suggest that the
application of the plain meaning of section 1.469-1T(e)(3)
(vi)(C), Temporary Income Tax Regs., 53 Fed. Reg. 5703 (Feb. 25,
1988), leads to absurd results. Thus, we must determine whether
the language from the preamble amounts to unequivocal evidence of
administrative intent to limit the exception to only those
situations where the property being rented is no longer being
used in the trade or business activity.
The preamble does refer to the use of the property in the
trade or business activity in the past tense, and it does refer
to the use of the property in the rental activity in the present
tense. However, in our view, rather than creating a separate
requirement in addition to the requirements set forth in the text
of the regulations, the preamble merely recites one example of a
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