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Bolton v. Commissioner, 77 T.C. 104, 108 (1981), affd. 694 F.2d
556 (9th Cir. 1982).
Respondent's position, insofar as it ignores the provisions
of section 280A, is without legal foundation. Regardless of
whether petitioners engaged in the activity of renting their home
with the intent to earn a profit, section 280A requires
petitioners to first offset rental income with expenses
attributable to the rental use of the house which are otherwise
allowable, such as mortgage interest paid. Petitioners do not
argue otherwise. Therefore, petitioners are entitled to offset
the rental income with mortgage interest paid in the amount of
$5,700.12
To reflect the foregoing,
Decision will be entered
under Rule 155.
12 Petitioners rented the house to the students for 210
days during the taxable year. Accordingly, petitioners' house
was rented for 58 percent of the taxable year 1991 (210 days/365
days). The mortgage interest attributable to the rental use of
their house, therefore, is $9,608 (58 percent of total mortgage
interest in the amount of $16,565). Bolton v. Commissioner, 77
T.C. 104, 111 (1981), affd. 694 F.2d 556 (9th Cir. 1982). Since
the mortgage interest attributable to the rental use of the
Connecticut house exceeds rental income, the net rental income is
zero.
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