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(1980); sec. 1.162-7(a), Income Tax Regs. Petitioner testified
that the payments to his children were based on their needs,
rather than the services they provided. Petitioner wrote a check
to his wife for $3,300, dated February 6, 1994, and he testified
that it was payment to Nicole for running the one-room
schoolhouse and tutoring students there. He later testified that
the $3,300 payment was for Nicole’s braces. Petitioner did not
describe what services Brooke and Tye performed for the tax
preparation activity. Petitioner has not shown that the
purported wages he paid his children were for services actually
rendered or were reasonable in amount.
4. Home Office Deduction
Section 280A(c)(1)(A)5 allows a deduction for home office
5 Sec. 280A provides, in pertinent part:
SEC. 280A. DISALLOWANCE OF CERTAIN EXPENSES IN
CONNECTION WITH BUSINESS USE OF HOME, RENTAL OF
VACATION HOMES, ETC.
(a) General Rule.--Except as otherwise provided
in this section, in the case of a taxpayer who is an
individual or an S corporation, no deduction otherwise
allowable under this chapter shall be allowed with
respect to the use of a dwelling unit which is used by
the taxpayer during the taxable year as a residence.
* * * * * * *
(c) Exceptions for Certain Business or Rental Use;
Limitation on Deductions for Such Use.--
(1) Certain business use.--Subsection (a)
shall not apply to any item to the extent such
(continued...)
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