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in several undertakings, each of which constitutes a separate
activity for purposes of section 183, or several undertakings may
constitute a single activity for this purpose. Id. The
regulations further state:
(d) Activity defined. (1) Ascertainment of
activity. * * * In ascertaining the activity or
activities of the taxpayer, all the facts and
circumstances of the case must be taken into account.
Generally, the most significant facts and circumstances
in making this determination are the degree of
organizational and economic interrelationship of
various undertakings, the business purpose which is (or
might be) served by carrying on the various
undertakings separately or together in a trade or
business or in an investment setting, and the
similarity of various undertakings. Generally, the
Commissioner will accept the characterization by the
taxpayer of several undertakings either as a single
activity or as separate activities. * * * Where land
is purchased or held primarily with the intent to
profit from increase in its value, and the taxpayer
also engages in farming on such land, the farming and
the holding of the land will ordinarily be considered a
single activity only if the farming activity reduces
the net cost of carrying the land for its appreciation
in value. * * * [Sec. 1.183-1(d)(1), Income Tax
Regs.; emphasis added.]
The regulations thus provide for delineating activities under
section 183 with a general rule drawing on all facts and
circumstances, and a special rule in the case of land acquired or
held primarily for its appreciation on which farming is also
conducted. In the latter circumstance, the regulations provide
that the holding of the land and the farming will be considered a
single activity only if the farming activity reduces the net cost
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