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In Grigg v. Commissioner, 979 F.2d 383, 385-386 (5th Cir.
1992), affg. T.C. Memo. 1991-392, in which the taxpayer, similar
to the taxpayer in Byers v. Commissioner, supra, used a
condominium for part of the year as a rental and for part of the
year as a personal residence, the Court of Appeals, in dicta,
stated that section 280A does apply to large hotels:
[A] taxpayer may * * * [take deductions] for the entire
portion of the hotel which is used solely for
commercial purposes. The portion of the hotel which is
used for personal use obviously does not fit the
exception and therefore is a dwelling unit, subject to
the provisions in section 280A.
Thus, for example, if 98 units of a 100 unit hotel
are used exclusively as a hotel and 2 units are used
for personal reasons, the deductible expenses for the
98 units are excepted from section 280A and cannot be
limited thereby since that portion of the hotel meets
the requirements of the hotel exception. The other two
units are dwelling units since the owner has not used
them exclusively as a hotel. * * * [Fn. ref. omitted.]
The purpose of section 280A is to prevent taxpayers from
taking business deductions which in effect relate to personal
living expenses. By reading into the statutory language of
2(...continued)
taxpayer-owner of a 500-room hotel uses one of the suites as his
personal residence and chooses each morning to read the newspaper
in the hotel lobby. Petitioners argue that the taxpayer’s
personal use of the lobby would be de minimis and should not
result in the disallowance of business expenses relating to the
hotel lobby. Respondent agrees that, “Arguably, merely reading a
newspaper in a lobby does not rise to ‘use for personal
purposes’” but cautions that “the owner might be wise to do his
reading elsewhere”. Herein, we do not decide whether there is a
de minimis exception to the exclusive-use limitation of sec.
280A(f)(1)(B).
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