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things, that “[t]he property was predominantly used in such trade
or business activity during the taxable year.” Id. (emphasis
added). The equipment therefore may be used in petitioner’s law
firm at any time in the taxable year under the incidental
activity exception.
Second, respondent argues that the preamble to the Treasury
Decision in which the incidental activity exception was
promulgated also supports his argument that the property must be
used in the taxpayer’s trade or business before its use in the
taxpayer’s rental activity. See T.D. 8175, 1988-1 C.B. 191. The
preamble states specifically 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., 1988-1 C.B. at 193.
While the preamble does refer to the use of the property in
the trade or business activity in the past tense and the use of
the property in the rental activity in the present tense, we
believe the preamble merely exemplifies a situation that would
satisfy the incidental activity exception. The preamble does not
bar situations where the property is being used in both
activities at once. Consequently, petitioner may use the
equipment in the law firm concurrently with using it in the
rental activity. See Tarakci v. Commissioner, supra.
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