                  T.C. Summary Opinion 2007-196



                     UNITED STATES TAX COURT



              LUCIEN JOSEPH LARVADAIN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6295-05S.               Filed November 21, 2007.



     Keith S. Blair, for petitioner.

     C. Teddy Li, for respondent.



    COUVILLION, Special Trial Judge:1   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed.   Pursuant to

section 7463(b), the decision to be entered is not reviewable by



     1
        With the consent of the parties, the Chief Judge
reassigned this case, after the death of Special Trial Judge
Carleton D. Powell, to Special Trial Judge D. Irvin Couvillion
for disposition on the existing record.
                                 - 2 -

any other court, and this opinion shall not be treated as

precedent for any other case.2

     Respondent determined a deficiency of $7,106 in petitioner’s

2001 Federal income tax.   The sole issue for decision is whether

petitioner is entitled to deductions for certain expenses claimed

on Schedule C, Profit or Loss From Business, for the year at

issue in excess of amounts allowed by respondent.   That issue is

premised on whether petitioner conducted a trade or business

activity principally in his home.

     Some of the facts were stipulated.   Those facts, with the

annexed exhibits, are so found and are made part hereof.

Petitioner’s legal residence at the time the petition was filed

was Glen Burnie, Maryland.

                             Background

     From 1974 to 1991, petitioner was an employee of the

National Oceanic & Atmospheric Administration (NOAA), a Federal

agency.   Petitioner’s background is in naval navigation.   He left

his employment with NOAA in 1991 and commenced a self-employment

activity which dealt essentially in the sale of charts, maps,

nautical supplies, and navigational services to boat and yacht

owners.   Petitioner discontinued that activity around 1996 and

reestablished a relationship with NOAA as an independent



     2
        Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year at issue.
                                 - 3 -

contractor providing navigational services and, in particular,

training NOAA employees at the U.S. Coast Guard branch facility

at Silver Spring, Maryland.   Petitioner was not engaged with NOAA

as an employee.   His relationship was based on a contract for

training new employees, preparation of manuals, desk reference

guides, and other navigational matters used by such employees.

Petitioner was not required to be at NOAA offices on a daily

basis and was allowed to prepare his manuals, guides, and other

contract requirements at home.    The time petitioner spent at NOAA

facilities was to train employees.       However, NOAA made available

to petitioner at all times office space and equipment necessary

for him to perform his services under the contract.      Petitioner

estimated that during the year at issue, he was at NOAA

facilities between 35 and 40 percent of the time for the training

of NOAA employees.   The remainder of his time was spent at home

where he performed his other obligations under the contract

(preparing training manuals, etc.).      None of the training

activities took place at his home.

     Petitioner’s contract with NOAA was obtained by bid.       He was

paid by the hour.    For the year at issue, petitioner contracted

to perform 976 hours of work which translated to 122 work days.

The compensation for that amount of time was $30,256.3


     3
        On his income tax return for the year at issue,
petitioner reported $35,222 of income from NOAA. There is no
                                                   (continued...)
                               - 4 -

     On his 2001 Federal income tax return petitioner reported

his income and expenses from the NOAA contract on Schedule C in

amounts as follows:

     Income

          Gross income                                  $35,222
          Cost of goods sold                              1,650
          Gross profit                                   33,572

     Expenses

          Advertising                            $400
          Car & truck                          10,389
          Insurance                             1,572
          Mortgage interest                     8,520
          Legal/professional                      360
          Repairs/maintenance                   2,299
          Taxes/licenses                        2,730
          Utilities                             3,690
          Other expenses
            Postal & shipping            420
            Business calls & faxes     1,195
            Computer & software
                 services                425
                                               2,040

          Total expenses                                 32,000

          Net profit                                     $1,572

     In the notice of deficiency respondent disallowed the

claimed deductions for advertising expenses, car and truck

expenses, legal/professional expenses, and other expenses which

consisted of postal and shipping, business calls and faxes, and

computer and software services on petitioner’s Schedule C for


     3
     (...continued)
dispute as to the amount of petitioner’s income and, the Court
surmises that petitioner was paid for additional services he
performed.
                                - 5 -

lack of substantiation.   Although petitioner substantiated $1,514

for insurance, $3,027 for repairs and maintenance expenses, and

$898 for utilities, respondent disallowed those expenses as

personal in nature.

     In the notice of deficiency respondent determined that

petitioner is entitled to deduct $2,010 as real estate taxes,

$12,740 as mortgage interest, and $400 as a charitable

contribution deduction on Schedule A, Itemized Deductions.

                            Discussion

     Section 162(a) allows a taxpayer to deduct all ordinary and

necessary expenses paid or incurred in carrying on a trade or

business.   Under section 280A, however, deductions associated

with a home office are generally disallowed unless the home

office is used exclusively and regularly as the principal place

of business of the taxpayer.4

     Petitioner presented no evidence to substantiate deductions

claimed for advertising expenses, car and truck expenses,

legal/professional expenses, and other expenses which consisted

of postal and shipping, business calls and faxes, and computer

and software services claimed on Schedule C.   Secs. 162, 274(d),

280F(d)(4).   Respondent’s determination as to these adjustments

is sustained.



     4
        Petitioner does not argue, nor does the record establish,
that petitioner satisfied the requirements of sec. 7491(a).
                               - 6 -

     In addition, section 280A(a) provides as a general rule that

“no deduction * * * shall be allowed with respect to the use of a

dwelling unit which is used by the taxpayer during the taxable

year as a residence.”   However, section 280A(c)(1) sets forth the

following exceptions to the general rule:

          SEC. 280A(c). Exceptions for Certain Business or
     Rental Use; Limitation on Deductions for Such Use.

                 (1) Certain business use.--Subsection (a) shall
          not apply to any item to the extent such item is
          allocable to a portion of the dwelling unit which is
          exclusively used on a regular basis--

                     (A) the principal place of business for
                  any trade or business of the taxpayer,

                     (B) as a place of business which is used
                  by patients, clients, or customers in
                  meeting or dealing with the taxpayer in the
                  normal course of his trade or business, or

                     (C) in the case of a separate structure
                  which is not attached to the dwelling unit,
                  in connection with the taxpayer’s trade or
                  business.

     In determining whether petitioner’s home was used

exclusively and regularly as his principal place of business,

there are several factors that militate against petitioner in

this case.   First, petitioner was not required under his contract

with NOAA to perform his contract obligations at home.   Second,

petitioner admitted at trial that he performed services under the

contract at NOAA’s offices from 35 to 40 percent of the time and

the remainder of his contract obligations were performed at home.

Third, employees of NOAA that petitioner trained were not
                               - 7 -

required to report to petitioner’s home for their training, and

there is no evidence that petitioner ever trained NOAA employees

at his home.

     As to the disallowed claimed deductions for insurance,

repairs and maintenance expenses, and utilities, those expenses

related to petitioner’s use of his home in connection with his

NOAA contract.

     Generally, in determining whether a home constitutes the

taxpayer’s principal place of business, the Court examines the

various locations in which the activity is conducted, the

relative importance of the activities performed at each business

location, and the time spent at each place.   To be sure, although

petitioner’s home was helpful and used in connection with his

NOAA contract, the evidence in this case fails to persuade the

Court that petitioner’s home was the principal place of his

business activity nor was his home exclusively used for such

activity.   Rather, the Court finds that the training of the NOAA

employees was of primary importance and that the NOAA facility

was petitioner’s principal place of business.   The Court,

therefore, concludes that the facts of this case do not establish

petitioner’s entitlement to deductions for home office expenses

under section 280A(c)(1).   The Court sustains respondent’s

determinations.

                                         Decision will be entered

                                    for respondent.
