Aziz A. Tokh and Susan K. Tokh - Page 13




                                       - 13 -                                         

               Section 212 provides a deduction for all ordinary and                  
          necessary expenses paid or incurred with respect to management,             
          conservation, and maintenance of property held for the production           
          of income, including real property rental.  See also sec. 1.212-            
          1(h), Income Tax Regs.  However, because the record is void of              
          adequate receipts or records that would substantiate petitioners’           
          claimed expenses, petitioners are not entitled to deductions in             
          excess of the amount already conceded by respondent.                        
          Office in the Home Expenses                                                 
               Petitioners claim that they are entitled to a deduction for            
          maintaining an office in their home.  Section 280A(a) prohibits             
          deductions “with respect to the use of a dwelling unit which is             
          used by the taxpayer during the taxable year as a residence.”               
          Nonetheless, taxpayers may deduct expenses attributable to the              
          business use of their home if they qualify under one of the                 
          exceptions to this prohibition.  Section 280A(c)(1) provides:               
               SEC. 280A.  DISALLOWANCE OF CERTAIN EXPENSES IN                        
                    CONNECTION WITH BUSINESS USE OF HOME, RENTAL OF                   
                    VACATION HOMES, ETC.                                              
                         (1) Certain Business Use.--Subsection (a)                    
                    shall not apply to any item to the extent such                    
                    item is allocable to a portion of the dwelling                    
                    unit which is exclusively used on a regular                       
                    basis--                                                           
                              (A) [as] the principal place of business                
                         for any trade or business of the taxpayer,                   
                    *       *       *       *       *       *       *                 






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