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The issue for decision is whether petitioners’ bed and
breakfast inn is to be treated as a dwelling unit subject to the
general disallowance rule of section 280A(a) and to the
exclusive-use limitation of section 280A(f)(1)(B). If so, none
of the expenses relating to the portion of petitioners’ bed and
breakfast inn that is used for both business and personal
purposes are allowable.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
Background
The facts of this case have been fully stipulated by the
parties under Rule 122 and are so found.
At the time the petition was filed, petitioners resided in
Sutter Creek, California.
In April of 2000, petitioners purchased a bed and breakfast
inn located in Sutter Creek (the Inn). From the time of its
purchase, petitioners and petitioner Sandra Anderson’s parents
have used a portion of the Inn as their personal residence, and,
after making repairs and improvements, petitioners continued
operating the Inn as a bed and breakfast under the name of
“Eureka Street Inn”.
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Last modified: May 25, 2011