- 5 -
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering,
290 U.S. 111, 115 (1933).
Generally, section 280A(a) prohibits deductions allocable to
the business use of a “dwelling unit” used by a taxpayer during
the taxable year as a personal residence. However, if a portion
of the dwelling unit is used as a taxpayer’s principal place of
business, deductions allocable to that use are permitted, though
they are limited if the gross income from the business use is
less than the total business expenses. Sec. 280A(c)(1), (5).
Here, petitioners had insufficient gross income from their
woodworking business in 2001, 2002, and 2003 to offset deductions
for either the furnace or the workshop after the application of
section 280A(c)(5).
Respondent does not dispute the Wyoming workshop was used as
petitioners’ principal place of business with respect to their
woodworking business. The issue is simply whether the garage-
turned-workshop should be considered part of the Wyoming
residence and thus be subject to the home office limitations of
section 280A.
Notably, the workshop was attached to the house, and
petitioners used its entrance to gain access to the residence in
the winter. Aside from common sense--an attached garage is
considered part of one’s home under normal circumstances--caselaw
has held that even a detached office building located on the same
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: March 27, 2008