09/17/2026
In Deihl v. Commissioner, T.C. Memo. 2005-287, an Arizona couple operating a multilevel marketing business used their approximately 10,000-square-foot Paradise Valley residence as part of their business image.
Their strategy was intentional: projecting wealth and success was intended to motivate distributors and help build their downline. The residence was used for meetings, training sessions, entertainment, and large company events. Their companies also paid substantial amounts for remodeling and improvements to the property and claimed more than $1.4 million in amortization deductions related to the residence over 1996â1998.
The Tax Court denied the deductions.
The problem wasnât simply whether the house benefited the business. The couple also lived there and used the property personally, including the pool and gardens, and entertained family and nonbusiness guests. The court found that no portion of the residence met the exclusive-business-use requirements of IRC §280A.
That distinction matters.
An expense doesnât become deductible simply because it supports your business, generates income, impresses clients, or helps you market yourself. When your home is involved, §280A imposes specific requirements and exceptionsâand the facts of how the property is actually used matter.
There are legitimate ways a residence can intersect with a business, including a qualifying home office, certain detached structures used exclusively and regularly for business, and qualifying short-term rentals under §280A(g). But each has its own rules.
What do you think? Should the code allow? What other deduction questions does this spark ?
