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a deduction for interest expense in the amount of $1,361 (82
percent x $1,660), rather than the amount petitioners claimed.
c. Depreciation
Petitioners claimed a $2,850 depreciation deduction for the
Cadillac. In the notice of deficiency, respondent allowed an
amount in excess of this figure.
3. Home Office Expenses
Petitioners claimed numerous household expenses as part of
their claimed home office deduction. Included within this claimed
deduction are the following:
Depreciation
Direct capital improvements $9,135.03
Indirect capital improvements 1,164.56
Office expenses
Telephone (Mission Viejo) 467.45
Telephone (Poway) 503.21
Cellular telephone
(account 0438631) 1,138.88
(account 1019538) 471.12
Home insurance
(9.53 percent of $525.33)
(Mission Viejo) 25.59
(Poway) 24.47
Home operating costs
(9.53 percent of $14,854.86) 1,415.67
Section 280A denies deductions with respect to the use of a
dwelling unit used by the taxpayer as a residence during the
taxable year. Section 280A(c), however, permits the deduction of
expenses allocable to a portion of the dwelling unit that is used
exclusively and on a regular basis as “the principal place of
business” for any trade or business of the taxpayer. Sec.
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