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comparison of the functions performed at the other locations
yields no definitive answer, and because petitioner spends a
small amount of time in the office in the home relative to the
remainder of his working hours, the office in the home is not the
principal place of business. Therefore, petitioners fail to meet
the requirements of section 280A(c)(1)(A). Furthermore, because
NIRC does not require petitioner to maintain an office in the
home and because the NIRC office building is available for
petitioner to use 24 hours a day, petitioner does not maintain
the office in the home for the convenience of his employer.
Thus, petitioners are not entitled to deductions for the alleged
expenses of maintaining the office in the home.
Penalties
Section 6662(a) and (b)(1) imposes a penalty equal to
20 percent of the portion of the underpayment that is
attributable to negligence or disregard of rules or regulations.
Negligence is defined as a lack of due care or failure to do what
a reasonable or ordinarily prudent person would do under similar
circumstances. See Neely v. Commissioner, 85 T.C. 934, 947
(1985). Negligence also includes any failure by the taxpayer to
keep adequate books and records or to substantiate items
properly. See sec. 1.6662-3(b)(1), Income Tax Regs.
The deductions for unsubstantiated estimated expenses,
duplicate deductions of amounts paid to their son, and deductions
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Last modified: May 25, 2011