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Exclusively Exclusively
Total Business Personal Dual-Use
Square Square Percent SquarePercent Square Percent
Feet Feet of Total Feet of Total Feet of Total
Main floor 2,058 829 15 623 11 606 11
Upstairs floor1,548 1,548 27 0 0 0 0
Basement 2,058 1,986 35 72 1 0 0
Total 5,664 4,363 77 695 12 606 11
In the preparation of petitioners’ 2000 Federal income tax
return and in calculating the depreciation and interest
deductions relating to the business of the bed and breakfast, to
the total 606 square feet dual-use portion of the Inn petitioners
applied the 75 percentage of the time that such portion of the
Inn was used for business purposes, resulting in 455 square feet.
Petitioners added this 455 square feet to the 4,363 square feet
of the Inn used exclusively for business, and petitioners
calculated that a total of 4,818 square feet of the Inn was used
in the business of the bed and breakfast.
Petitioners then calculated a business-use percentage for
the entire Inn by dividing the total business square feet of
4,818 by the Inn’s total square feet of 5,664. Under this
calculation, the Inn was treated by petitioners as used 85
percent for business and 15 percent for personal use.
On Schedule C, Profit or Loss From Business, of their 2000
joint Federal income tax return, petitioners applied the above
percentages (85 percent business, 15 percent personal) to the
total depreciation and interest expenses relating to the Inn.
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Last modified: May 25, 2011