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which would be allowed as deductions regardless of the business
use of the home, such as interest and taxes on the residence,
before allocating other items, such as insurance, utilities,
repairs, etc. Petitioners reported real estate taxes of $5,311
and mortgage interest of $12,540, 9 percent of which exceeds the
net profit reported on Mrs. Coffman’s Schedule C. Accordingly,
we allow Mrs. Coffman a Schedule C deduction for interest and
taxes for the home office expenses of $406, which amount will
reduce the itemized deductions on Schedule A.
Similarly, with respect to Mr. Coffman’s home office, we
allow him 9 percent of the itemized deductions for real estate
tax and interest paid, as well as 9 percent of his Southern
California Edison expense of $2,246.09 (electricity) and CLPOA
expense of $3,709 (property association dues). We further allow
a deduction for telephone expense for Mr. Coffman’s business line
of $81.88. Except for the interest and taxes, the allowable
deductions are miscellaneous itemized deductions subject to the
limitations set forth in section 67(a). None of the other
documentation submitted substantiates deductible items without
further testimony and explanation. Petitioners did not make a
habit of identifying the purpose of their checks on the memo
line.
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