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A taxpayer's "principal place of business" is not simply an
important or necessary place of business, but rather the "most
important, consequential, or influential" one. Commissioner v.
Soliman, 506 U.S. 168, 174 (1993).
Petitioners are entitled to a deduction for a home office
because Mrs. Margolis' principal place of business for her
activities was her home office. Mrs. Margolis spent the majority
of her working time preparing designs at her home office.
Preparing textile designs, the activity that Mrs. Margolis
performed while at her home office, was of central importance to
her trade or business as a textile designer. Mrs. Margolis'
principal place of business was her home office. Further, Mrs.
Margolis exclusively used the bedroom she used as a home office
for her business activity.
Therefore, petitioners are entitled to a deduction for a
home office expense.
Petitioners claim a deduction for 33 percent of the general
expenses of their home based on a square footage ratio.
Respondent contends that at a maximum petitioners are entitled to
a deduction for 22.5 percent of the general expenses of their
home.
As an initial matter, we must decide the general expenses
allocable to petitioners' home. On their corrected 1992 return,
petitioners claimed that they incurred $13,641 in general home
expenses during 1992. At trial, Mr. Margolis testified that the
$13,641 amount represented monthly rent of approximately $1,200.
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