ILM 201049026 (Sept. 23, 2010)

(taxpayer is operator of adult home-care business offering full-time care; customer payments made monthly for room rent and services provided; taxpayer depreciated out business portion of home over 27.5 years and IRS agent rejected that, claiming it was 39-year property; on review by National Office of IRS, conclusion was that bedrooms constituted "dwelling units" under I.R.C. Sec. 168(e)(2) and that all of the gross rental income (not counting monthly fee for services) is "rental income" from the "dwelling units"; home qualifies as "residential rental property" depreciable using 27.5-year recovery period). 

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