- 23 - the home office did not meet the requirements of section 280A, and that petitioners failed to establish the percentage of business use for the assets. Section 280A(a) provides, as a general rule, that an individual taxpayer is precluded from deducting expenses incurred in connection with the business use of a dwelling unit that is used by the taxpayer during the year as a residence. The general disallowance rule does not prevent a taxpayer from taking any deduction that would otherwise be allowable without regard to the use of the home for business.9 Sec. 280A(b). Subject to the income limitation on deductions under section 280A(c)(5), a business-use exception from the general disallowance rule is carved out where a taxpayer can meet certain statutory tests prescribed by section 280A(c)(1). Section 280A(c)(1) permits a taxpayer to deduct expenses allocable to a home office which is exclusively used on a regular basis for one or more of the following three purposes: (1) As the taxpayer's principal place of business, (2) as the place where the taxpayer meets with customers, clients, or patients in the normal course of business, and (3) in the case of an unattached separate structure, in connection with the taxpayer's business. Sec. 280A(c)(1); Commissioner v. Soliman, 506 U.S. 168 (1993); Cao v. 9 Under sec. 280A(b), deductions which are otherwise allowable without regard to any connection with a trade or business include the deduction for: (1) Interest under sec. 163, subject to the sec. 163(h)(1) personal interest restriction, (2) real estate taxes under sec. 164, and (3) casualty losses under sec. 165.Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
Last modified: May 25, 2011