Discussion:Recording home office deduction
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Discussion Forum Index --> Tax Questions --> Recording home office deduction
| 29 January 2007 | |
| I'm not sure if this belongs on the tax board or the accounting board...sorry! Not to mention that I feel foolish for not being sure of the answer.
I have a client that is taking the home office deduction on his Schedule C. I;m thinking I need to record this on his company books as well? Yes? He is a SMLLC. TIA. | |
| January 29, 2007 | |
| Should go on Form 8829 first and then flow back to the C (and A, usually, for mort. int/p taxes). | |
| 29 January 2007 | |
| :-)
Is that "don't do it" not necessary, or "doesn't matter if you do it or not" not necessary? I will give him a reconcilation of book to tax for his records. Thank you for your response. | |
| 29 January 2007 | |
| It is a tax deduction that he really wouldn't be able to calculate for his books. I suppose if you wanted to you could debit office rental "expense" and credit investment from owner as your reconciliation entry from book to tax. | |
| 29 January 2007 | |
| JR...I have the tax pieces in the correct place, I'm wondering if I should record the home office deduction amount on his company books. I think this is more of an accounting question, sorry to be confusing. | |
| January 29, 2007 | |
| I usually do make an entry in the company's books, if I do their monthly accounting and provide them with monthly financial statements. You can make an entry similar to what Waynecpa told you. Either way, it increases the owner's basis. | |
| 29 January 2007 | |
| Deback, I don't think it increases basis...the net effect is zero. | |
| January 29, 2007 | |
| When I keep the books, for some I do make an entry...it's usually for those who like my tax projections throughout the year to be fairly close to year end actual, so I fine tune it with that. Depends on how much or if the owner uses the P/L. | |
| January 29, 2007 | |
| You're right, Glmpllc. I was in a hurry and just meant that the credit entry would be to increase the basis (the owner's equity account). I didn't have time to get into the fact that the debit to the expense would decrease the net income, which is transferred to the capital account at the beginning of the next year. | |
| 8 February 2008 | |
| So am I to assume that this is an Accountant choice issue as to whether or not the entry is made? | |
| 8 February 2008 | |
| Also, I believe this is the only business use of personal items that would not trigger a reimbursement to the sole proprietor for the use. For instance, business use of personal vehicle triggers a payment (based on actual or standard) as would reimbursing the business owner for business use of phones or internet.
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| 8 February 2008 | |
| While not necessarily required, the business portion of a sole proprietor's internet, phone, and vehicle expenses do represent a bona fide expense to the business, no? These expenses are used in creation of the recognized revenue and would therefore need to reside on the books of the company.
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| 8 February 2008 | |
| Please delete "tax" from the context of your inquiries here. This is purely an accounting matter, where e.g., you wish to charge draw for personal cell phone use which are in expenses, since Acctg 101 is cool with that. If we're going to furnish F/S to a lender for a loan, we want more not less income, and it should tie out to 1040 if we have to give lender that document too. | |
| 8 February 2008 | |
| The amounts that would be part of the reimbursement and therefore expense would then funnel to schedule c or form 8829, which makes this a tax matter. You can work from tax source documents alone and still get there though.
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