-31-
Commissioner v. Soliman, 506 U.S. 168 (1993); Browning v.
Commissioner, 890 F.2d 1084, 1087-1088 (9th Cir. 1989), affg.
T.C. Memo. 1988-293; Cao v. Commissioner, T.C. Memo. 1994-60,
affd. without published opinion 78 F.3d 594 (9th Cir. 1996).
Petitioners argue that they are entitled to a deduction for
each subject year attributable to their business use of a portion
of the residence. According to petitioners, the office,
guest bedroom closet, and garage (collectively, premises) in or
at the residence were used exclusively for business, and the
premises are approximately 25 percent of the residence’s square
footage. We understand petitioners to argue that, during each
subject year, Michelsen stored inventory on the premises and used
the premises to work on opening more Nature’s Touch stores. We
also understand petitioners to argue that Michelsen also used the
premises after the formation of NT to conduct her business as an
officer of NT.
We do not believe that petitioners meet any of the three
prongs underlying the just-referenced exception of section
280A(c)(1). As to 1997, when Michelsen operated the Nature’s
Touch stores as a sole proprietor, the stores’ principal place of
business was not in any part of the residence. Nor are we
12(...continued)
is the sole fixed location of that business. See sec.
280A(c)(2). That provision is inapplicable here, where the
residence was not the sole fixed location of the Nature’s Touch
shops.
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