- 14 -
We accept Mr. Margolis' testimony in this regard. We are
satisfied that petitioners incurred $13,641 in general home
expenses during 1992.
Next, we decide the percentage of the total floor space in
petitioners' home that was used for Mrs. Margolis' business.
Petitioners' corrected 1992 return provides that petitioners
resided in a 1,380 square-foot apartment and that the room Mrs.
Margolis used as a home office was 450 square feet. However, at
trial, Mr. Margolis testified that in measuring his residence, he
did not include such areas as the kitchen, the hallways, and the
bathrooms. He testified that the square footage of his residence
including the excluded areas was more accurately about 2,000
square feet.
Based on the record, we find that Mrs. Margolis' home office
comprised 22.5 percent (450 out of 2,000 square feet) of
petitioners' residence. Cf. Cohan v. Commissioner, 39 F.2d 540
(2d Cir. 1930). Petitioners are therefore entitled to a home
office deduction in the amount of $3,069 (22.5 percent of
$13,641).
B. Interest Expense
Petitioners claim an $890 interest expense deduction for
each of their businesses. Respondent allowed the interest
expense deduction for Mr. Margolis' business. Respondent
contends that Mrs. Margolis is not entitled to an additional $890
deduction because petitioners have failed to substantiate such an
expense. We agree with respondent.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011