Client is 100% Scorp shareholder. Sole work location 100% home office. CPA told him to charge rent for home office, deduct from corporate return, claim as income on individual. I said no can do. Deduct % for indirect and all direct only. Feedback?
This sounds the same as if a S Sorp shareholder owned a building and rented to the S Corp. The S Corp takes the deduction, the shareholder includes the rental income on their 1040.
Probably overstated in my description. My understanding is that the employer can deduct the rent and the employee claims the rental income. Deductions for home office are not allowed. So basically you report the rental income, still take interest and RE taxes but on Schedule A. Other items I'd like to take as a rental (home owner's insurance, utilities, depreciation, etc.) are not allowed. QuickFinder gives a work around that there is NO rental agreement/exchange of rent and then the business reimburses the employee for the business % utilities, etc. as a non-taxable fringe. Looks like this would work out better for my guy. In the interim, I found out he is a Personal Services Corp and not an Scorp, so I don't know if the same rules apply or not ...
Do you have a cite for "Deductions for home office are not allowed."?
We are filing our taxes as an S Corp for the first time this year. I work from home and use one of the rooms as an office. Can I deduct part of the rent and utilites. Should I produce the rental agreement when I file my taxes?
You probably should produce the rental agreement for your tax preparer and see what he or she has to say about it.
You should also begin a new topic thread when you have a new question. Many of us will glance at this item on the ProSeries list, see that it was first asked nearly three years ago, and promptly ignore it.
2008 QF for Small Business, page P3. It cites IRC Section 280A(c)(6).
