Units of real property. (1) In gen- eral. A unit of real property includes any components of real property owned by the taxpayer or a related person that are functionally interdependent and an allocable share of any common feature owned by the taxpayer or a re- lated person that is real property even though the common feature does not meet the functional interdependence test. When the production period be- gins with respect to any functionally interdependent component or any com- mon feature of the unit of real prop- erty, the production period has begun for the entire unit of real property. See, however, paragraph (b)(5) of this section for rules under which the costs of a common feature or benefitted property are excluded from accumu- lated production expenditures for one or more measurement dates. The por- tion of land included in a unit of real property includes land on which real property (including a common feature) included in the unit is situated, land subject to setback restrictions with re- spect to such property, and any other contiguous portion of the tract of land other than land that the taxpayer holds for a purpose unrelated to the unit being produced (e.g., investment purposes, personal use purposes, or specified future development as a sepa- rate unit of real property).
Units of real property. (1) In gen-
