-12-
depreciation of $2,388. The Form 8829 itemized the home
operating expenses as follows:
Direct expenses:
Repairs and maintenance $11
Utilities 989
Indirect expenses:
Insurance 683
Repairs and maintenance 1,999
Utilities 2,743
Total 5,425
Business-use percentage .252 1,367
Total 2,367
Petitioners did not deduct for 1997 any of either the reported
home operating expenses or the reported home depreciation but
deducted all of those amounts for 1998 as a carryover to that
year. Petitioners claimed on the 1997 Form 8829 that 25.2
percent of the residence was used exclusively for business
purposes; they stated on the form that they ascertained that
percentage by dividing the “Area used regularly and exclusively
for business * * * or for storage of inventory” (reported as 630
square feet) by the “Total area of home” (reported as 2,500
square feet).8 The 1997 Schedule C itemized the total expenses
of $239,745 as follows:
Advertising $2,339
Car and truck 4,161
Depreciation 1,675
Insurance (other than health) 5,843
Legal and professional services 475
Rent or lease:
Other business property 76,898
8 The record does not reveal how petitioners ascertained
either square footage.
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Last modified: November 10, 2007