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The next issue is whether petitioners are entitled to
certain deductions claimed on Schedule E in excess of amounts
allowed by respondent. This issue is decided on a preponderance
of the evidence and without regard to the burden of proof.
Respondent disallowed petitioners’ claimed Schedule E
deductions for insurance and depreciation expenses with respect
to the Morningside Heights dwelling on the basis of section 280A.
Section 280A provides generally that, in the case of an
individual or an S corporation, no deduction otherwise allowable
shall be allowed with respect to the use of a dwelling unit that
is used by the taxpayer during the taxable year as a residence,
except as otherwise provided in section 280A. Section 280A(d)(1)
provides generally that a taxpayer is considered as using a
dwelling unit as a residence if the taxpayer uses the unit for
personal purposes during the taxable year for the greater of 14
days or 10 percent of the number of days the unit is rented at a
fair value. Section 280A(d)(2) defines use of a dwelling as
personal if it is used:
(A) for personal purposes by the taxpayer or any other
person who has an interest in such unit, or by any member of
the family (as defined in section 267(c)(4)) of the taxpayer
or such other person; [or]
* * * * * * *
(C) by any individual * * * unless for such day the
dwelling unit is rented for a rental which, under the facts
and circumstances, is fair rental.
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Last modified: May 25, 2011