Bruce A. and Kathy J. Krist - Page 10




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          two conditions:  (1) the relative importance of the activities              
          performed at each business location, and (2) the time spent at              
          each place.  Here we find that most of petitioner’s locksmith               
          work was done on the premises of customers or third parties.  The           
          alleged home office in his garage was not petitioner’s principal            
          place of business.  Although petitioner stored certain equipment,           
          machines, and some inventory of the locksmith business in his               
          garage, he failed to show that the office was used exclusively              
          for business purposes.  We are aware of the exception provided in           
          section 280A(c)(1)(C) that if an office is a “separate structure”           
          not attached to the dwelling unit and is used in connection with            
          the taxpayer’s trade or business, a home office deduction may be            
          justified.  However, the statute requires that the separate                 
          structure be used exclusively for business purposes in order to             
          qualify for the deduction.  The Senate committee report that                
          accompanied the legislation enacting section 280A(c)(1)(C) states           
          “with respect to a separate structure not attached to the                   
          dwelling unit, if the taxpayer uses such structure (e.g., a                 
          detached garage) for both trade or business and personal                    
          purposes, the exclusive use test is not met”.  S. Rept. 94-938,             
          at 148 (1976), 1976-3 C.B. (Vol. 3) 57, 186.                                
               Here petitioner provided limited testimony regarding his use           
          of the garage office.  While he introduced into evidence a hand             
          drawn sketch of the alleged office, it is not possible to                   
          determine from the drawing whether the garage unit is a detached            






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