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of the taxpayer or a debt the loss from the worthlessness of
which is incurred in the taxpayer’s trade or business.
Petitioners did not claim a deduction for bad debt expense
on their return. Shortly before trial, however, petitioners
asserted they were entitled to a $55 deduction for bad debt
expense incurred in connection with a trade or business.
Petitioners introduced a check for $55 to Phillip Peterson. In
the memo section of the check is written “Loan”. Even if we
assume that the $55 represents a loan made in connection with a
trade or business, there is no evidence that the debt became
wholly or partially worthless within the taxable year 2002.
Accordingly, petitioners are not entitled to a deduction.
D. Home Office Expense
Section 280A(c)(1) permits the deduction of expenses
allocable to a portion of a dwelling unit that is used
exclusively and on a regular basis as either (1) the principal
place of business for the taxpayer’s trade or business, or (2) a
place of business that is used by clients or customers in meeting
or dealing with the taxpayer in the normal course of the
taxpayer’s trade or business. The deduction cannot exceed the
gross income derived from the business use of the residence over
the sum of certain deductions allocable to such income. Sec.
280A(c)(5); Cunningham v. Commissioner, T.C. Memo. 1996-141,
affd. without published opinion 110 F.3d 59 (4th Cir. 1997).
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