Roy J. and Helen Cole - Page 3

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               Petitioners' home is approximately 1,300 square feet, and              
          petitioner's home office is approximately 110 square feet.  When            
          petitioners' children grew up and moved out, petitioner converted           
          one of the bedrooms in the house for use as a home office.                  
               Petitioner does not have an office located anywhere else and           
          does not use this room in the house for any purpose other than a            
          home office.  No person other than petitioner uses the room.                
          There is no bed or dresser located in the room, and petitioner              
          does not use the room for any type of storage.                              
               Petitioner has one phone line for the household that doubles           
          as a business line.  Petitioner keeps business-related materials            
          in the room, such as a computer, books pertaining to his trade,             
          and business records.                                                       
               Respondent did not raise an issue regarding substantiation.            
               Section 162(a) allows a deduction for the ordinary and                 
          necessary expenses paid or incurred during the taxable year in              
          carrying on a trade or business.                                            
               Section 280A, in general, disallows deductions with respect            
          to the use of a dwelling unit that is used by the taxpayer during           
          the taxable year as a residence.  However, section 280A(c)(1)(A)            
          permits the deduction of expenses allocable to a portion of the             
          dwelling unit which is exclusively used on a regular basis as               
          "the principal place of business for any trade or business of the           

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