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We agree with respondent that all floors of the building
constitute petitioner's "dwelling unit". Clearly, the upper
level of the building, which petitioner utilized as his
residence, is a dwelling unit. The building contains no
permanent partitions or walls that physically or functionally
separate the area used by the art gallery from the areas used as
petitioner's residence. Various photographs introduced into
evidence depicting different interior areas of the building
reveal nothing that suggests that the three levels of the
building were anything other than one integrated unit. Customers
who entered the art gallery had free access to the foyer where
the stairway to the basement was located. Allowing customers to
have access to the foyer area also gave them access to the
building's upper level, or petitioner's residence. Petitioner
had to pass through the foyer in order to gain access to his
residence. He had to use the same stairway that customers used
when he descended to the laundry room in the basement.
We see no meaningful distinction between the facts of this
case and those involved in Burkhart v. Commissioner, T.C. Memo.
1989-417. In that case the taxpayer used the basement portion of
his residence exclusively for business purposes. In deciding
that the entire structure constituted the dwelling unit the Court
stated:
The basement became both a physical and functional part
of the building. * * * The costs of maintaining the
basement in terms of taxes, interest, utilities and
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