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“exclusively” means “solely” and that “any rent-free personal use
of a unit during a taxable year precludes finding that such unit
was used ‘exclusively as a hotel.’”
Accordingly, once personal use exceeds the 14-day or 10-
percent trigger of section 280A(d)(1), under the Hotel Exception
the only portion of a hotel, motel, inn, or bed and breakfast
that is excepted from the general disallowance rule of section
280A(a) is that portion that is used exclusively in the business.
Under the exclusive-use rule, the Hotel Exception does not apply
to the dual-use portion of a hotel, inn, or bed and breakfast.
See Lofstrom v. Commissioner, 125 T.C. ___ (2005) (slip op.
at 11).
Petitioners, however, argue that a structure that otherwise
would fall within the section 280A(f)(1)(A) definition of a
dwelling unit, such as petitioners’ Inn, at some point may become
so commercial in operation and so different from a personal
residence that the general disallowance rule of section 280A(a)
should not apply to the dual-use portion, and business expenses
relating to the dual-use portion of the property (e.g., in this
case the lobby, registration area, office, kitchen, and laundry)
should be allowed. Petitioners implicitly contend that their Inn
has become so commercial that it should be treated the same as
petitioners would treat a large hotel.2
2Petitioners posit, for example, a situation in which a
(continued...)
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