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petitioners' personal residence. On their 1992 Federal income
tax return, petitioners filed a Schedule C in which the income
and expenses of this activity were reported as a trade or
business. Among the expenses claimed were expenses related to an
office in the home in which petitioners claimed one-eighth of the
expenses of their home as being attributable to this business
activity. The one eighth portion of the home office expenses
claimed were the following:
$218.89 Utilities
222.54 Property taxes
360.00 House depreciation
$801.43 Total
Petitioners claimed only $435.53 of this amount as a deduction,
pursuant to section 280A(c), which limits the home office
deduction to the amount of income from the activity that, in
petitioners' case, was $435.53 for 1992. However, petitioners
additionally claimed a deduction of $801.43 that is described on
the Schedule C as "Storage of Inventory Cost, one-eighth of the
total space, calculated as above." In the notice of deficiency,
respondent did not question petitioners' entitlement to a
deduction of expenses for an office in the home but disallowed
the $801.43 claimed for "Storage of Inventory Cost" because the
claimed storage expenses related to the same business activity,
the writing and publishing of books, and was also subject to
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