In Uncategorized on 03/11/2020 at 16:25

Although claiming rent for a house in a residential community is a business expense for your picture framing business seems a wee bit of a stretch, Edwin D. Benton and Sheila E. Benton, 2020 T. C. Sum. Op.12, filed 3/11/20, manage to pull it off.

First, IRS blows an essential part of the play.

“The parties stipulated that petitioners did not reside in the house where Mr. Benton conducted his business.” 2020 T. C. Sum. Op. 12, at p. 8. Thus Section 280A(d), the residence smackdown, is off the table. IRS forgot Taishoff’s well-settled maxim: “Stipulate, Don’t Capitulate.”

Second, Ed has testimony that helps STJ Daniel A (“Yuda”) Guy put away IRS’s shootdown of Ed’s $38K rent deduction.

“Mr. Benton testified that he used the house exclusively for business purposes and offered photos to show that he displayed framed pictures and various types of artwork in some of the rooms.  In addition one of Mr. Benton’s customers appeared at trial and testified that she visited the house two or three times during the year in issue to pick up photos that Mr. Benton had framed for her and it was her impression that he used the house to conduct the framing business.  We conclude that petitioners did not use the house in question as a residence, see sec. 280A(d), and that section 280A is not applicable.” 2020 T. C. Sum Op. 12, at pp. 8-9.

Ed has trouble with his auto deduction (Section 274 roadblock), and Sheila doesn’t establish she had the 12 straight weeks of unemployment compensation she needs to duck the 10%  additional tax-early withdrawal penalty per Section 72(t)(2)(D) on her IRA drawdown.

So a Taishoff “Good Job” goes to Steven H. Hornstein, Esq., Ed’s and Sheila’s trusty attorney, who got IRS to stip away the Section 280A(d) defense.

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