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Property used by a hotel, motel, inn, or other
similar establishment, in connection with the
trade or business of furnishing lodging shall not
be considered as property which is used
predominantly to furnish lodging or predominantly
in connection with the furnishing of lodging,
provided that the predominant portion of the
lodging accommodations in the hotel, motel, etc.,
is used by transients during the taxable year.
For purposes of the preceding sentence, the term
“predominant portion” means “more than one-half”.
Thus, if more than one-half of the living quarters
of a hotel, motel, inn, or other similar
establishment is used during the taxable year to
accommodate tenants on a transient basis, none of
the property used by such hotel, motel, etc., in
the trade or business of furnishing lodging shall
be considered as property which is used
predominantly to furnish lodging or predominantly
in connection with the furnishing of lodging.
Accommodations shall be considered used on a
transient basis if the rental period is normally
less than 30 days.
We adopt, as the parties suggest, this regulation’s
definition of a transient as one who rents for less than 30 days.
We also note that in Moore v. Commissioner, 58 T.C. 1045, 1054 n.
8, affd. 489 F.2d 285 (5th Cir. 1973), we held that “predominant
portion” means the proportion of accommodations used by
transients, not the proportion of all renters who are transients.
Finally, the parties also agree that section 1.48-
1(h)(1)(i), Income Tax Regs., prescribes an all-or-nothing
approach. Under this approach, we characterize mixed-used assets
according to their predominant use. The regulation thus seems to
require us to decide whether an asset was used predominantly for
lodging or transportation.
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Last modified: May 25, 2011