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Home Office Deduction

Posted by Mike C Posted on Oct 26 2011

Home Office Deductions: The taxpayer operates a tax preparation business out of his home and uses one room regularly and exclusively as his office as required under IRC Sec. 280A(c) . He also built a bathroom for his clients' use that is across the hall from his office. In addition to home office deductions, the taxpayer deducted wage expenses for administrative assistance provided by his two daughters who he compensated by paying their credit card bills. The Tax Court allowed the home office deductions attributable to the area of the bedroom, but not the hallway and the bathroom since the taxpayer's children and personal guests occasionally used the bathroom. The court also denied the wage deductions since there was no evidence to substantiate the amounts paid. Luis Bulas , TC Memo 2011-201 (Tax Ct.).