- 11 - employed by the taxpayer. The average period of customer use for the tractor-trailers exceeds 30 days. Under these facts, the use of the tractor-trailers by the taxpayer’s customers is incidental to their receipt of personal services provided by the taxpayer. Accordingly, the services performed in the activity are extraordinary personal services * * * and, * * * [thus], the activity is not a rental activity. In this case, petitioners are not engaged in an activity which provides personal services to Pauline’s Concrete. Petitioners simply own and lease cement pumping equipment to Pauline’s Concrete. The lease is “net of all costs” to petitioners.15 While petitioners clearly provide personal services in their capacity as employees of Pauline’s Concrete and, in their individual capacity, to construction contractors, nonetheless, with respect to leasing equipment to Pauline’s Concrete, the record reflects no provision for services incident to such leasing activities. We hold that petitioners did not provide extraordinary personal services within the meaning of section 1.469-1T(e)(3)(v), Temporary Income Tax Regs., 53 Fed. Reg. 5702 (Feb. 25, 1988). Accordingly, the activity is not excepted from the definition of a rental activity. Our opinion in Hairston v. Commissioner, T.C. Memo. 2000- 386, is instructive. In Hairston, the taxpayers owned heavy construction equipment in their own names which they leased to 15Under the lease, Pauline’s Concrete “shall pay all of the costs associated with the acquisition and maintenance of the leased property including the cost(s) of adequate insurance sufficient to exculpate * * * [petitioners] from any and all liability.”Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011