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2 Petitioners deducted 50 percent of their total home-
security expenses.
3 Petitioners deducted 25 percent of their total homeowner’s
insurance, 50 percent of their total telephone expenses, 50
percent of their total home-security expenses, and 50
percent of their total utilities.
Petitioners contend that petitioner maintained office space in
three separate areas of their personal residence for the purpose
of conducting a tax return preparation business. A room directly
adjacent to the front entry hall of petitioners’ home was a
waiting room, and a smaller room directly adjacent thereto,
adjacent to the kitchen and eating area, was an office.
Additionally, a room adjacent to the guest bedroom and bathroom
was a computer and files room. Other than the described rooms,
petitioners’ home consisted of a garage, utility room,
kitchen/eating area, family room, master bedroom, master
bathroom, guest bedroom, and guest bathroom.
Under section 162(a), a taxpayer is permitted to deduct all
ordinary and necessary expenses paid or incurred in carrying on a
trade or business. Under section 280A(c)(1)(A), however,
deductions associated with a home office are generally disallowed
unless the home office is used exclusively and regularly as the
principal place of business of the taxpayer. Respondent contends
that the residence areas claimed by petitioners as a home office
for petitioner’s tax return preparation business were not used
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