Net Investment Income Tax (REG-130507-11)

Under the Explanation of provisions, Item E "Properly Allocable Deductions", the proposed regulation indicates that, for rental income, Section 62(a)(4) deductions (deductions allowable in computing adjusted gross income) allocable against the rental income are allowed in computing net investment income. However, the proposed regulation itself, at Example 1 under 1.1411-5(b)(2) gives the example of individual A renting a building to B for $50,000. Presumably, A would have SOME 62(a)(4) deductions (depreciation, property taxes, interest, insurance, etc.) allocable against that $50,000. However, the example indicates the ENTIRE $50,000 would be "gross income from rents". It would be a very unusual event that a rental property that was a building would not have (at the very least) depreciation. The apparent direct conflict between these two provisions in the same regulation should be clarified.