- 6 - In the above calculations, petitioners treat the Inn as what they refer to as a “commercial structure,” and petitioners do not apply the exclusive-use limitation of section 280A(f)(1)(B) to the dual-use portion of the Inn. On audit, because petitioners used a portion of the Inn as their personal residence, respondent applied the exclusive-use limitation of section 280A(f)(1)(B) and disallowed all business deductions relating to the dual-use portion of the Inn. Respondent recalculated allowable depreciation and interest deductions relating to the bed and breakfast business based on an allocation factor of 77 percent (i.e., the portion of the Inn used exclusively in the business). Discussion Section 280A(a) provides a general disallowance rule for expenses relating to a “dwelling unit” that is used as a personal residence of the owner taxpayer. Section 280A(a) provides generally as follows:1 Except as otherwise provided in this section * * * no deduction * * * shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. For purposes of section 280A, a dwelling unit is treated as used as a taxpayer’s residence if the taxpayer uses the dwelling 1 Certain exceptions to the general disallowance rule of sec. 280A(a) are not applicable to the issue before us.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011