Neal N. and Ruby W. Viar - Page 15

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          However, a taxpayer shall not be treated as using a dwelling unit           
          for personal purposes by reason of a rental arrangement for any             
          period if for such period such dwelling unit is rented, at a fair           
          rental, to any person for use as such person’s principal                    
          residence.  Sec. 280A(d)(3).                                                
               Under section 267(c)(4), “The family of an individual shall            
          include only his brothers and sisters (whether by the whole or              
          half blood), spouse, ancestors, and lineal descendants”.  Mrs.              
          Viar’s brother, therefore, was a family member of petitioners               
          under the plain language of section 267(c)(4).  As a result, the            
          use of that dwelling was personal as to petitioners, and section            
          280A precludes their deduction of the expenses related thereto.             
          Moreover, because no evidence was presented as to the fair rental           
          value of the dwelling or the value of the improvements made by              
          Mrs. Viar’s brother, petitioners do not fall under the fair                 
          rental exception of section 280A(d)(3).  McDonald v.                        
          Commissioner, T.C. Memo. 1991-242; Gilchrist v. Commissioner,               
          T.C. Memo. 1983-288.  Accordingly, petitioners are not entitled             
          to deduct the depreciation and insurance expenses associated with           
          the Morningside Heights property under the legal provisions                 
          cited.  Respondent is sustained on this issue.6                             

               6    As noted earlier, respondent allowed the claimed                  
          deductions for taxes on the dwelling as an itemized deduction.              

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