- 16 - (A) the gross income derived from such use for the taxable year, over (B) the sum of-– (i) the deductions allocable to such use which are allowable under this chapter for the taxable year whether or not such unit (or portion thereof) was so used, and (ii) the deductions allocable to the trade or business (or rental activity) in which such use occurs (but which are not allocable to such use) for such taxable year. Any amount not allowable as a deduction under this chapter by reason of the preceding sentence shall be taken into account as a deduction (allocable to such use) under this chapter for the succeeding taxable year. Any amount taken into account for any taxable year under the preceding sentence shall be subject to the limitation of the 1st sentence of this paragraph whether or not the dwelling unit is used as a residence during such taxable year. This Court has held on several occasions that the home office deduction of a writer is limited to the gross income from writing. Gestrich v. Commissioner, 74 T.C. 525 (1980); Warganz v. Commissioner, T.C. Memo. 1981-403, affd. without published opinion 696 F.2d 987 (3d Cir. 1982); Parker v. Commissioner, T.C. Memo. 1984-233. Section 280A(c)(5) thus limits petitioners’ deduction of their office expenses attributable to the Vista Loma and Deepak addresses. Their deduction is limited to the amount of petitioners’ gross income derived from Mr. Radnitz’s use of the home offices reduced by the deductions allowable without regardPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011