-33-
regular use, nor have they established that any portion of the
premises was used exclusively in a business.13 Accord Browning
v. Commissioner, supra. We reject petitioners’ claim for home
office deductions related to the residence.
D. Self-Employment Deductions Other Than Home Office Deduction
Section 162(a) lets taxpayers deduct “all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business”. Under that section, an
expenditure is deductible if it is: (1) An expense, (2) an
ordinary expense, (3) a necessary expense, (4) paid (in the case
of a cash method taxpayer) or incurred (in the case of an accrual
method taxpayer) during the taxable year, and (5) made to carry
on a trade or business. See Commissioner v. Lincoln Sav. & Loan
Association, 403 U.S. 345, 352-353 (1971); Lychuk v.
Commissioner, 116 T.C. 374, 386 (2001). In the case of personal
travel expenses, a taxpayer also must meet two additional rules.
First, the travel expenses must arise from travel that is related
primarily to the taxpayer’s business. See sec. 1.162-2(b)(1),
Income Tax Regs.; see also Reed v. Commissioner, 35 T.C. 199
13 In fact, Michelsen by her own account acknowledged that
the garage was not used exclusively for business purposes and
contended that the only portion of the residence used exclusively
for business was the room with the office. While petitioners ask
the Court to find as to the office that Michelsen spent much time
there working on expanding the Nature’s Touch shops through the
opening of additional shops, we decline to find such a fact on
the basis of the record at hand.
Page: Previous 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Next
Last modified: November 10, 2007