-18-
business activities, or (b) as a place of business to meet or deal
with clients. Moreover, petitioners have not satisfied the
limitation of section 280A(c)(5), which provides that the amount of
the home office deduction is limited to the excess of the gross
income generated from the business activity conducted in the home
office, less all other deductible expenses attributable to such
activity which are not allocable to the use of the home office
itself. In other words, the deduction may not create or increase
a net loss from the business activity to which it relates.
Grinalds v. Commissioner, T.C. Memo. 1993-66 (citing H. Rept. 99-
426, at 134-135 (1985), 1986-3 C.B. (Vol. 2) 135). In the instant
case, Mr. Martin derived no income from his consulting business in
1989 or 19905 and Mrs. Martin only derived $1,778 in 1989 from her
Schedule C activity and no income for 1990.
Petitioners also claim entitlement to a business deduction for
the use of their 1988 Honda Accord for business activities.
Petitioners both testified that their 1988 Honda was used almost
exclusively for business. However, on the application for the
insurance policy on the automobile, petitioners stated the car was
used for pleasure and not for business. In this regard, we do not
find petitioners' testimony credible. In sum, petitioners are not
5 Mr. Martin contends his income from Woodhead from the
time he was relieved as president of Aero-Motive in September
1989 until September 1990, should be characterized as Schedule C
income. We disagree. Mr. Martin received a W-2 with respect to
his income, which petitioners reported as wages on their original
1989 and 1990 tax returns.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011