HAR § 18-237-16.5-05 — Allocation — Various real property or space with different rental values; sublease of one hundred per cent of the real property or space

If the Lessee leases from the Lessor various real property or space which has different rental values and the Lessee subleases the real property or space, the Lessee shall allocate the total amount of gross proceeds or gross income paid by the Lessee for all real property or space based upon the percentage of real property or space leased, or if not reasonable, the fair rental value as determined by factors in section 237-16.5-06 for each real property or space before the Lessee may compute the deduction under section 237-16.5(g), HRS. Example 9: Lessor L leases real property XYZ, which is divided into spaces X, Y , and Z, to lessee A for $10,000. Space X is fifty per cent of the entire real property and spaces Y and Z account for twenty-five per cent each of the real property. Lessee A allocates the gross proceeds paid to L based upon the percentage of space leased as follows: Space X ($5,000), Space Y ($2,500), and Space Z ($2,500).