Kenneth Lee and Margaret Ihlenfeldt - Page 10




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          petitioner (at least through Delta) used the Oceanside Blvd.                
          property during the subject years in the course of his self-                
          employment.  Whereas respondent invites the Court to find that              
          the Oceanside Blvd. property was used entirely by petitioner as             
          his residence, the record at hand supports a contrary finding.              
          We conclude that the deductions which respondent has allowed as             
          itemized deductions are properly characterized as business                  
          expenses to the extent that they are attributable to petitioner’s           
          business use of the Oceanside Blvd. property.  We find in this              
          regard that 542 square feet of the 6.7 acres is attributable to             
          petitioner’s personal use and that the remainder constitutes                
          Delta’s business use.5  We allow petitioner to deduct as business           
          expenses 99.8 percent ((291,852 - 542)/291,852 = 99.8%)6 of the             
          Oceanside Blvd. property expenses that respondent concedes are              
          itemized deductions.  We allow petitioner to deduct the remainder           
          of those expenses as itemized deductions.                                   
               As to the other expenses in dispute, i.e., depreciation,               
          insurance, interest (exclusive of the amounts discussed in the              
          immediately preceding paragraph), legal and professional                    
          (exclusive of the $297 for 1989), repairs and maintenance, taxes            

               5 Although the building itself did not cover 6.7 acres,                
          petitioner’s personal use of the Oceanside Blvd. property was               
          limited solely to the apartment.  We conclude, therefore, that              
          petitioner used the remainder of the building and the grounds               
          surrounding it in the course of his self-employment.                        
               6 An acre equals 43,560 square feet.  Webster’s New World              
          Dictionary 12 (3d coll. ed. 1988).  Thus, the total square                  
          footage of the Oceanside Blvd. property is 291,852 (6.7 x                   
          43,560).                                                                    



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