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Respondent disallowed the $18,748 per diem lodging expense
deduction claimed by petitioner but allowed a deduction of $5,595
for the lodging expenses actually incurred while operating the
business in Washington. The actual expenses were computed as
follows:
Rent $3,521
Electricity 257
Cable 178
Utilities 544
Entertainment 1,095
Total $5,595
Petitioner concedes that the maximum lodging deduction that
he could claim in 1995 using a per diem rate would be $12,948,
computed as the maximum Federal per diem rate multiplied by the
156 days that petitioner lived in Woodinville for business
purposes. The maximum Federal per diem rate for lodging in King
County, Washington, where Woodinville is located, was $83 per day
during 1995.
Discussion
Petitioner contends that a self-employed individual is
entitled to use the Federal per diem rate to substantiate
expenditures for lodging away from home. Respondent claims that
petitioner, as a sole proprietor, is precluded from using the
Federal per diem rate and is entitled only to a deduction equal
to his actual lodging expenses substantiated under section
274(d).
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Last modified: May 25, 2011