Discussion:S. 280A rental of residence 14 days or less
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Discussion Forum Index --> Tax Questions --> S. 280A rental of residence 14 days or less
| 17 April 2007 | |
| If a shareholder of an corporation rents his residence to the corporation for 14 days in a year, the rental income received by the shareholder is not included in his gross income and the corporation gets deduction for the rental expense. Am I deciphering the code right? | |
| 17 April 2007 | |
| Just based on the surface, w/o any facts, 162 ordinary and necessary business expense requirement doesn't seem like it was met. Why would the C corp rent for just 2 weeks? This arrangement doesn't make sense. The IRS can always recast a transaction for substance over form. If I were an agent, I would call this a dividend to the shareholder and be done with it. It seems too cute to me. | |
| 18 April 2007 | |
| s. 280A(a) no deduction for use of taxpayer's residence.
s. 280A(d) residence = if used for personal purposes for more than 14 days or ... (let's ignore for now) s. 280(g)(2) the income derived not included in the gross income. doesn't that translate into - if a shareholder/employee rents his house to the corporateion, let's say for business meetings, for 14 days or less, it is not incldued in the shareholder's gross income. Correspondingly, the corporation will get a deduction as a busness expense. | |
| 9 June 2007 | |
| http://findarticles.com/p/articles/mi_m1272/is_2702_132/ai_110531030
Does anyone else have a problem with this? Self-rental to your own C or S corp < 14 days "meeting room" space in your residence. Not taxable income, but deductible????? | |
Death&Taxes (talk|edits) said: | 11 June 2007 |
| Kevin, there is an entire Code to play with, outside "Notwithstanding any other provision of this section or section 183." I would suspect the Service attack would come on the 'ordinary and necessary' line, more likely the latter word than the former.
I wonder how much benefit there could be to this 'windfall' that has arisen after 30 years of 280A being enacted. If Fair Market Rental would be 2500 per month, 14 days would be approximately $1,150 of tax free income. Double that for the deduction at corporate level and multiply by tax bracket. | |
| 11 June 2007 | |
| Someone has made the argument that if they rented a "boardroom/meeting room" in a hotel, they would pay $250 to $650 a day, and that it was ordinary and necessary to hold regular board meetings (to hold elections, etc., and complete those minutes). So the ante is really $3,500 to $9,100 a year. | |
| 11 June 2007 | |
| I posted a response on 6/9/07 to Kevin's question. My response seems to have been deleted....why? | |
| 11 June 2007 | |
| JAD, I don't see it in the history tab for this page on 06/09. When I go to your EDITS, I don't see ANY for 06/09. | |
| 11 June 2007 | |
| Well, you certainly know how to move around this site better than I....I did post another on 6/9 that shows up on my talk page w/ all the history, and I responded to your post at the same time. Weird. Anyway, thanks for checking. | |
| 31 December 2007 | |
| What if a related corp rents from a related party for less than 14 days?
280A Describes a day of personal use of a dwelling unit is any day that it is used by: 1. You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home under a shared equity financing agreement. 2. A member of your family or of a family of any other person who has an interestin it, unless the family member uses it as his or her main home and pays a fair market rental price.
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| 31 December 2007 | |
| I think the retlated parties are the key issue here...no deduction unless includable in income by the related party Sec 267(a)(2) or paragraph 1527 in the US Master Tax Guide. | |
