Rick and Ruth Baime Richards - Page 21

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          maintaining a household.  See sec. 1.262-1(b)(3), Income Tax                
          Regs.  Section 262(b) provides that any charge (including taxes             
          thereon) for basic local telephone service with respect to the              
          first telephone line provided to any residence of the taxpayer              
          shall be treated as a personal expense.                                     
               Under section 280A(a) and (c)(1)(A), ordinary business                 
          expenses relating to use of any portion of a taxpayer’s home are            
          not allowable unless the taxpayer establishes that the portion of           
          the taxpayer’s home to which the expenses relate was used                   
          exclusively and on a regular basis as the principal place of the            
          taxpayer’s trade or business.  See Hamacher v. Commissioner, 94             
          T.C. 348, 353 (1990).                                                       
               Petitioners have not shown how these expenses, which are               
          clearly personal, are related to a trade or business.  Mr.                  
          Richards stated at trial that he had an office in the corner of a           
          partially converted garage, but none of these expenses appear to            
          relate to the garage.  Petitioners offered no further evidence or           
          testimony on whether any portion of their house was used                    
          exclusively for business.  Accordingly, respondent is sustained             
          on this issue.5                                                             

               5  We note that petitioners are entitled to deduct their               
          mortgage interest paid during 1994 on Schedule A.  However, it              
          does not appear that this amount would exceed petitioners’                  
          standard deduction.                                                         

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