Discussion:Double Dip-Pays Office rent and has Home office
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| {{ForumReplyPost|UserID=WIBadgerCPA|Date=3 July 2008|Text=Obviously my mistake. I don't know how I missed "Then he needs to determine the percentage of time he uses the home office each year" as 3 determine the percentage 5 = 15?}} | {{ForumReplyPost|UserID=WIBadgerCPA|Date=3 July 2008|Text=Obviously my mistake. I don't know how I missed "Then he needs to determine the percentage of time he uses the home office each year" as 3 determine the percentage 5 = 15?}} | ||
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| + | {{ForumReplyPost|UserID=RJM|Date=3 July 2008|Text=If the attorney is a principal owner and taxed as a corporation, the HO deduction is not permitted I think, under the 280 rules and regs. There are several old threads on this if my aged mind is not mistaken.... A workaround is for corp to pay the attorney rent for the HO and also reimburse prorata home expenses like utilities, etc. As I recall, several posters in past consider this overly aggressive, but I think not because the attorney personally should declare the rental income. Net savings on the rent portion is the payroll taxes on the rent dollars.}} | ||
Revision as of 14:47, 3 July 2008
Discussion Forum Index --> Advanced Tax Questions --> Double Dip-Pays Office rent and has Home office
Discussion Forum Index --> Tax Questions --> Double Dip-Pays Office rent and has Home office
Mrbarrytax (talk|edits) said: | 1 July 2008 |
| Client is attorney and has staff, meets clients, and pays rent for an office. Additionally, he would like to claim Home office since he stores files and occasionally meets clients there as well. Can he claim both the rent and the Home office deductions? | |
| 1 July 2008 | |
| Can't have a home office if you have another principle place of business. | |
| 1 July 2008 | |
| Check out IRC 280A - it looks like a home office would be allowed if the attorney meets there with clients on a "regular" basis, even if his main place of business is elsewhere.
I don't know how the IRS defines "regular" - you may have to come up with what you feel is reasonable. I would think once a week, minimum. I'm sure your client has an appointment book he can use as documentation for the client meetings at his home. The storage exception wouldn't apply to an attorney - only to sales people. If you go for the home office deduction, then his driving from home to his rented office would be deductible. Good luck! | |
Mrbarrytax (talk|edits) said: | 1 July 2008 |
| ARE THERE ANY COURT DECISIONS OUT THERE? | |
| 1 July 2008 | |
| Solomon He was an MD who worked in a hospital, but didn't have an office there. | |
| 1 July 2008 | |
| He can do it. He must use his home office exclusively for business. And he must meet clients there.
If he has a separate structure at his residence for his office, it is not necessary that he meet clients to qualify. Exclusively used for business means exclusively, it can't be his desk in the den, etc. Ugh, as far as tax resources, cases...I think you need to start building your library, and I'm sure you must get mail from CCH, and all the rest of them. If not, there may be materials in your local public library main branch, or in a local law school library. P.S. He will probably have a higher audit risk. If he's not willing to keep good records (correct client log), and proof to substantiate, then I'd advise him not to take the deduction even if he technically qualfies. | |
| 2 July 2008 | |
| Sec. 280A will allow a deduction for home office for this taxpayer if he satisfies either of the following conditions: 1) He uses the office exclusively and regularly to meet with clients in the normal course of his business; or 2) He uses the office exclusively and regularly to perform administrative or management activities of his business and there is no other fixed location of his business where he conducts substantial administrative or management activities for his legal practice. | |
| 2 July 2008 | |
| He does not have to have a designated room or separate home office. He needs to figure the square footage of the desk and storage areas. Then he needs to determine the percentage of time he uses the home office each year. The allocation calculation is:
a. home office expenses times home office expenses percentage b. answer to a. times home office use percentage this is the actual amount he can take. | |
WIBadgerCPA (talk|edits) said: | 2 July 2008 |
| Percentage of time would mean its not exclusively used as the home office, so it wouldn't qualify, would it? | |
RoyDaleOne (talk|edits) said: | 2 July 2008 |
| Read multiply for times, not hours and minutes. | |
Death&Taxes (talk|edits) said: | 2 July 2008 |
Someone else who remembers being taught the "Times Tables" 
| |
WIBadgerCPA (talk|edits) said: | 2 July 2008 |
| The only time the hours used would come into play is when calculating for child care provider, correct? Otherwise, percentage of time disqualifies home office. | |
| 2 July 2008 | |
| WI CPA, you are missing the point: "times" means "multiplied by" in TaxEA's post. Not time on a clock, but 3 X (times) 5 = 15 | |
| 2 July 2008 | |
| The language is "regular and exclusive" use at least it was when I wrote my grad school tax thesis on the Solomon case. It was difficult to write 30 pages on the home office issue but that was in the fall of 1993 and I have forgotten most of what I wrote.
Other than those here on this board, there are probably few who actually qualify under the terms of regular and exclusive use. | |
| 3 July 2008 | |
| My calculation is to determine "regular and exclusive" use. And thank you Kevinh5 for your input. I think justification can be made that this space is "regular and exclusive" to his business for the home office and the calculations are necessary because he obviously doesn't use this space 8hr every day but that doesn't negate that it is "regular and exclusive" to the business.taxea | |
WIBadgerCPA (talk|edits) said: | 3 July 2008 |
| Obviously my mistake. I don't know how I missed "Then he needs to determine the percentage of time he uses the home office each year" as 3 determine the percentage 5 = 15? | |
| 3 July 2008 | |
| If the attorney is a principal owner and taxed as a corporation, the HO deduction is not permitted I think, under the 280 rules and regs. There are several old threads on this if my aged mind is not mistaken.... A workaround is for corp to pay the attorney rent for the HO and also reimburse prorata home expenses like utilities, etc. As I recall, several posters in past consider this overly aggressive, but I think not because the attorney personally should declare the rental income. Net savings on the rent portion is the payroll taxes on the rent dollars. | |
