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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.
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