- 13 - independent contractor business pertains only to the form of the activity and not its substance. Having been engaged in the paralegal business as an employee, see Primuth v. Commissioner, 54 T.C. 374, 377 (1970), petitioner did not change the general nature of his business activities by working out of his home office. Therefore, we conclude that petitioner, in 1992, was carrying on a trade or business as a paralegal and is entitled to deduct all of the other expenses at issue, with the exception of the two following items. The first item is the claimed expenses for $3,600 for a portion of the rent associated with petitioner’s residential premises. As applicable herein, section 280A provides that no deduction shall be allowed with regard to the use of residential property of the taxpayer. Some exceptions are provided in section 280A(c). However, section 280A(c)(5) clearly provides that no deduction shall be allowable in excess of the income derived from such use. In other words, no deduction for use of a residential unit can be taken if said deduction gives rise to a loss. Accordingly, even though petitioner’s use of his residence may have qualified as one of the exceptions under section 280A(c)(1) through (4), section 280A(c)(5) disallows the claimed rental expense deduction, as petitioner had no paralegal income for 1992.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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