Home office as UPE

If you don't mind me asking, how did you end up claiming these expenses? I am currently in a similar situation, except I have more than just home office expenses that my husband and I paid. In 2010, the LLC income-which was just around $22,000 before COGS-was all we had, so I don't want to reduce it by saying that we increased our equity and allow the business to take the deductions, and thereby, reducing net income. I've started putting everything on Form 2106, but even the IRS couldn't tell me exactly where I should claim all of the expenses we paid for the business. All they said was that I should consult a tax advisor (like I have the $ to do that), or put them in as the partnership paid them (not going to do). Last year, we paid a CPA $1,300 (through bartering) to do our personal and business tax returns. He messed them up and didn't even mail or file our 1065! He put the expenses we paid in 2009 (our first tax year) as nonrecourse loans (wrong!) and deducted all the expenses on the business' return, which was also wrong. So this year, I'm doing the taxes, but where to claim these expenses are causing me grief. I've read, during my research, that they should be claimed as misc itemized deductions on Schedule A. They aren't misc, though. They are specific to categories such as business miles, travel, meals, utilities, and more.

Thank you in advance for your response.

If you don't mind me asking, how did you end up claiming these expenses? I am currently in a similar situation, except I have more than just home office expenses that my husband and I paid. In 2010, the LLC income-which was just around $22,000 before COGS-was all we had, so I don't want to reduce it by saying that we increased our equity and allow the business to take the deductions, and thereby, reducing net income. I've started putting everything on Form 2106, but even the IRS couldn't tell me exactly where I should claim all of the expenses we paid for the business. All they said was that I should consult a tax advisor (like I have the $ to do that), or put them in as the partnership paid them (not going to do). Last year, we paid a CPA $1,300 (through bartering) to do our personal and business tax returns. He messed them up and didn't even mail or file our 1065! He put the expenses we paid in 2009 (our first tax year) as nonrecourse loans (wrong!) and deducted all the expenses on the business' return, which was also wrong. So this year, I'm doing the taxes, but where to claim these expenses are causing me grief. I've read, during my research, that they should be claimed as misc itemized deductions on Schedule A. They aren't misc, though. They are specific to categories such as business miles, travel, meals, utilities, and more.

Thank you in advance for your response.

Hi, Folks...the issue with the home office calculation has one of two tests...either the number of rooms test, or the percentage of use test. Taking all expense items from your home, including utilities, taxes, insurance, etc., but NOT including any Home Owner Association fee, and multiply the % determined from the above formula by the total amount of expense. For example...a 3000 sq. foot house, that has 7 rooms, and one of the rooms exclusively used for office is 400 sq. feet. The Code allows you to use whichever calculation works to be the greater deduction. So...100% / 7 rooms = 14.29% x total monthly expense. Say the total expense per month is $3,000. Then $3,000 x14.29% = $428.70 per month for home office allowance, using the number of rooms test. Using the percentage of use test, given the same circumstances, the total square feet of the home would be divided into the total square feet of office space...400 / 3000 = 13.33%. As you can see, given this fact set, the number of rooms test is the better alternative for calculating the allowance. For those of you not familiar with entity structure planning, bear in mind that, depending on the entity classification, if you have a single member LLC, by all means file forms 8832 and 2553 with the IRS asap so that you can elect to have the LLC taxed as an S-Corp. Preferably, there will be two companies...an LLC/LP combination. The LLC would file form 8832 to be taxed as a C-Corp, and would serve as the Management Company for the LP. There are a ton of fringe benefits under the IRC available to business owners, but you really have to know what you are doing, and know which sections of the Code to back up your tax position.

If you don't mind me asking, how did you end up claiming these expenses? I am currently in a similar situation, except I have more than just home office expenses that my husband and I paid. In 2010, the LLC income-which was just around $22,000 before COGS-was all we had, so I don't want to reduce it by saying that we increased our equity and allow the business to take the deductions, and thereby, reducing net income. I've started putting everything on Form 2106, but even the IRS couldn't tell me exactly where I should claim all of the expenses we paid for the business. All they said was that I should consult a tax advisor (like I have the $ to do that), or put them in as the partnership paid them (not going to do). Last year, we paid a CPA $1,300 (through bartering) to do our personal and business tax returns. He messed them up and didn't even mail or file our 1065! He put the expenses we paid in 2009 (our first tax year) as nonrecourse loans (wrong!) and deducted all the expenses on the business' return, which was also wrong. So this year, I'm doing the taxes, but where to claim these expenses are causing me grief. I've read, during my research, that they should be claimed as misc itemized deductions on Schedule A. They aren't misc, though. They are specific to categories such as business miles, travel, meals, utilities, and more.

Thank you in advance for your response.
 

If you don't mind me asking, how did you end up claiming these expenses? I am currently in a similar situation, except I have more than just home office expenses that my husband and I paid. In 2010, the LLC income-which was just around $22,000 before COGS-was all we had, so I don't want to reduce it by saying that we increased our equity and allow the business to take the deductions, and thereby, reducing net income. I've started putting everything on Form 2106, but even the IRS couldn't tell me exactly where I should claim all of the expenses we paid for the business. All they said was that I should consult a tax advisor (like I have the $ to do that), or put them in as the partnership paid them (not going to do). Last year, we paid a CPA $1,300 (through bartering) to do our personal and business tax returns. He messed them up and didn't even mail or file our 1065! He put the expenses we paid in 2009 (our first tax year) as nonrecourse loans (wrong!) and deducted all the expenses on the business' return, which was also wrong. So this year, I'm doing the taxes, but where to claim these expenses are causing me grief. I've read, during my research, that they should be claimed as misc itemized deductions on Schedule A. They aren't misc, though. They are specific to categories such as business miles, travel, meals, utilities, and more.

Thank you in advance for your response.

If you don't mind me asking, how did you end up claiming these expenses? I am currently in a similar situation, except I have more than just home office expenses that my husband and I paid. In 2010, the LLC income-which was just around $22,000 before COGS-was all we had, so I don't want to reduce it by saying that we increased our equity and allow the business to take the deductions, and thereby, reducing net income. I've started putting everything on Form 2106, but even the IRS couldn't tell me exactly where I should claim all of the expenses we paid for the business. All they said was that I should consult a tax advisor (like I have the $ to do that), or put them in as the partnership paid them (not going to do). Last year, we paid a CPA $1,300 (through bartering) to do our personal and business tax returns. He messed them up and didn't even mail or file our 1065! He put the expenses we paid in 2009 (our first tax year) as nonrecourse loans (wrong!) and deducted all the expenses on the business' return, which was also wrong. So this year, I'm doing the taxes, but where to claim these expenses are causing me grief. I've read, during my research, that they should be claimed as misc itemized deductions on Schedule A. They aren't misc, though. They are specific to categories such as business miles, travel, meals, utilities, and more.

Thank you in advance for your response.

On the K-1 w/s, go to the QuickZoom button that says "enter out of pocket expenses" in Part II. Then at the bottom of the "Additional Information" w/s go to the QuickZoom button that says "supplemental business expenses w/s." QuickZoom Asset Entry w/s.

Thanks for the reply, but this doesn't give me access to a home office worksheet. I could enter the house as a depreciable asset here I suppose, but since the worksheet for the rest of the expenses isn't available it will probably make more sense to just do the whole thing outside the program and enter the total on the SBE worksheet.

BTW I did finally get a reply from Proseries, and their answer was "It's not available"

I still think this is so similar to the situation of a home office on a Form 2106 that it should be simple for them to do, but ....

How about doing the calcs for HO on sch. C, then put a negative expense amount to zero out the amount on sch c and enter the calculated figures in the UPE section?

>>just do the whole thing outside the program<<

The pub you cite has a worksheet for that very purpose. Intuit does offer such a link; it is available in Lacerte so perhaps you would be more comfortable with that more complete program.

What you are asking about is pretty rare. Usually a taxpayer can't show that all the other partners agree to treat his utilities as a necessary partnership expense.

Not rare at all due to the emegence of husband and wife LLC's with a home business who are required to do a 1065.