Charles E. & Sandra A. Anderson - Page 10

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          section 280A an exception for establishments that reach a certain           
          size or commercial level, petitioners would in effect grant to              
          taxpayers owning large hotels deductions that would be prohibited           
          to owners of small hotels simply by virtue of the disparity in              
          the size or commercial nature of their respective hotels.                   
               Section 280A(f)(1)(B) specifically refers to hotels and in             
          so doing does not place any limitation on the size or nature of             
          the hotel.  The narrow reading by petitioners of section                    
          280A(f)(1)(A) is not consistent with the statutory language.                
               Even if petitioners’ legal argument had validity, which it             
          does not, the facts herein are quite different from petitioners’            
          extreme hypothetical situation.  Nearly one quarter of                      
          petitioners’ moderately sized bed and breakfast inn is used                 
          exclusively or partially for personal purposes.                             
               If we find that section 280A is applicable to petitioners’             
          Inn, in the alternative petitioners argue that their business use           
          of the dual-use portion of the Inn should be treated as used                
          exclusively in the business of operating a bed and breakfast and            
          therefore as qualifying for business deductions under the Hotel             
          Exception of section 280A(f)(1)(B).                                         
               Petitioners misread the exclusive-use rule of the Hotel                
          Exception.  Thereunder, as explained, only the portion of                   
          petitioners’ Inn used solely and exclusively in the business of             
          operating the bed and breakfast is treated as business property.            
          The dual-use portion of the Inn, because it was used partially              





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