- 6 - the carriage house. Respondent also allowed petitioners to capitalize for depreciation the $70,000 they spent for renovations to the carriage house. As an additional argument to support the adjustments, respondent argued at trial that the deductions attributable to petitioner’s rental of the third floor units are limited to their gross rental income from the units minus certain deductions. Discussion The first issue considered is whether section 280A(c)(5) limits petitioners’ deductions for the rental of the third floor units. Section 280A(a) provides the general rule that no deduction is allowable “with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.” The term “dwelling unit includes a house, apartment, condominium, mobile home, boat, or similar property, and all structures or other property appurtenant to such dwelling unit.” Sec. 280A(f)(1)(A). The term “dwelling unit” does not include that portion of a unit which is used exclusively as a hotel, motel, inn, or similar establishment. Sec. 280A(f)(1)(B). Section 280A(c) lists exceptions to the general rule of section 280A(a). The only exception relevant herein is that provided by section 280A(c)(3) which states that “Subsection (a) shall not apply to any item which is attributable to the rental of the dwelling unit or portion thereof (determined after thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011