Taxpayers are husband (Jacob Poppy) and wife (Dr. Sadie Poppy). They have a daughter, Madeline, who is 5 years old. Jake provides financial and other consulting services to unrelated clients. He conducts all consulting activities primarily from his home offices and visits the client locations on a very limited basis. In addition to the consulting activities, Jake conducts all general and administrative functions for the business at his home offices. Jake also handles the administrative and billing tasks associated with his wifes non-medical employment. Sadie is a physician engaged in the practice of pediatric critical care medicine. In her professional capacity, she conducts the following activities: Medical - Sadie is employed by a hospital as the Division Chief of the Pediatric Intensive Care Unit (PICU). The pediatric intensive care operation is owned by a joint venture of a major university system and the hospital. As such, she has functional reporting requirements to both the university medical system and to the hospital system. Sadie provided the following breakdown with respect to her work activities: a) Clinical Activities time spent on PICU wards as attending physician 140 shifts per year (shift can be from 10 to 24 hours) or approximately 1,680 hours per year which represents approximately 38% of the time working for the hospital/university system. b) Administrative Activities approximately 62% of time: i) Research, teaching and on-site administrative meetings approximately half are conducted at the hospital location and the other half at the universitys administrative offices: 90 shifts or approximately 720 hours per year. ii) All other administrative activities including on-call activities, schedule preparation, daily review of patient charts, employee performance assessments and planning activities, financial budgeting and financial performance assessment, and most non-face-to-face administrative activities are conducted from the home office locations. Sadie must be available on a 7/24/365 basis to sign-off on certain highly technical and invasive patient procedures, to address any staffing or other emergencies, and to consult with other physicians on any difficult or unique cases. Because of this, the PICU pays for dedicated landline phones to both her home offices. An estimate of time conducting administrative functions or on-call activities is approximately 12 hours per day, less the estimates from above: 365*12 = 4,380 total annual hours, less (1,680+720) = 1,980 hours spent on off-site administrative functions. Sadie is provided an office at the hospital location which is primarily used during her clinical time and for very limited general and administrative activities. Expert Witness - Unrelated to the PICU, Sadie consults as an expert witness and provides her opinion to various attorneys regarding treatment of patients in medical malpractice suits. The vast majority of these services are conducted in her home offices, but some time is also spent at the various law firms or in court when actually testifying. In this regard, she is an independent contractor. Sadie is also a psychic and an astrologer. Because she is aware that this could impact her other employment, she performs these services only for family, friends and clients who have been referred by family and friends. Because she is obviously very busy and very well-compensated for her other, less controversial work, referral clients pay exorbitantly for these in-person services, which Sadie performs in her home offices. In this regard, she is also an independent contractor. Taxpayers have two homes, one in the city and one in the mountains. All the activities noted above are, at various times, conducted at both locations throughout the year. Taxpayers report that the office spaces are used exclusively for business activities and that no personal activities are conducted within the designated space. According to the Taxpayers, in City House, a specific 360 square foot room was used for both individuals from 1/1/20 to 7/31/20. Jake used 150 dedicated square feet of space, Sadie used 150 dedicated square feet of space and there is 50 feet of shared space housing printers, scanners, filing cabinets and other office equipment and supplies. Pictures of the room from June 2020 show that it was furnished with two desks, two office chairs, two credenzas, two bookshelves, one worktable, one sofa, one recliner and a 46 LCD TV mounted on a wall next to framed prints of various local stadiums and arenas. There is also a 10 square foot closet in the room in which the Taxpayers store office supplies, ski equipment and winter clothing. From 8/1/20 to 12/31/20, Sadie moved her office to a separate 200 square foot structure on the property previously used exclusively as a pool house, leaving the furniture and equipment in the existing office space and purchasing additional office furniture and equipment for the new space. The pool is used only on the 4th of July for an annual party, at which time the pool house is also used by guests. In Mountain House, Jake uses a dedicated 200 square foot room as his office. Pictures of the room from November 2020 show it furnished with one desk, one office chair, two bookcases, one filing cabinet and a 36 floor easel in one corner. Sadie uses a built-in desk space in a passageway between the kitchen and dining room, although not separated from the rest of the room it occupies 15 square feet. Whenever Sadie can work remotely, the Taxpayers spend that time at Mountain House. As a result, the Taxpayers spend about 8 months of the year at City House and 4 months at Mountain House.

Looking to identify deductions for home office expenses as provided by IRC in the above set of facts.

Please provide all relevant IRC and any case law to support your position.