- quote -

Moral of the story is Do NOT cordon off one room and
dedicate it solely as an office in home, therefore you will
NOT have office in home expenses, and will NOT have to
recoup depreciation when you sell your house.

Unless, of course, you're talking about BIG BUCKS!

ChEAr$,
Harlan Lunsford, EA n LA

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downeaster1000[at]yahoo.com (Winter) wrote:

- quote -

I may be wrong, because you didn't give a lot of relevant
facts, but it does not appear from what you write that you
will have (or even mean to have) a qualified home office.
And if you do not have a qualified home office, you will
have no deduction for expenses you incur by staying home to
work. Not some deduction for what you think your additional
expenses are, but no deduction at all. You can read the
details in IRS Pub. 587, "Business Use of Your Home".

You need a space that is segregated (doesn't need to be in a
separate structure or have a separate entrance, just needs
to be clearly set apart) and used exclusively as your
principal place of business. This means it has to be the
only fixed location where you do managerial or
administrative tasks, or you regularly meet with customers
there, or it is a separate structure. And it means that you
can do nothing else in that space. (There are exceptions for
storing inventory or operating a day-care center that
probably don't matter to you.) Finally, if you are an
employee, your home office needs to be for the convenience
of your employer (a letter from your employer stating that
you are expected to conduct certain business activities at
home is a good way to cover this).

If you do have a home office, you then allocate expenses to
it. Utilities that you pay for the house as a whole are
treated as indirect expenses. You need to, in some
reasonable way, allocate part of those utilities to the part
of your house that is a home office. The most common way is
to go by square footage. If you use 200 sf of a 2000-sf
house for a home office, 10% of most utilities are
attributable to the home office.

--
Chris Green

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- quote -

If you have qualified business use of your home and enough
gross income from that business use to that entitle you to a
depreciation deduction, you are required to reduce your
basis in the home by the amount of depreciation allowed
(deducted) or allowable (could have been deducted).

Whether you choose to deduct the depreciation on your
current return(s) will not matter. For tax purposes, you
will still be treated as if you had taken the allowable
deduction, and your basis will have to be reduced. For more
information, refer to Publication 946, How to Depreciate
Property, Publication 544, Sales and Other Dispositions of
Assets, and Publication 587, Business Use of Your Home.

You may download the references at http://www.irs.gov

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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Winter wrote:

- quote -

No.

- quote -

A separate entrance is NOT required. Only that the room (or
marked off section of the room) be used EXCLUSIVELY for your
business -- and that, if you DO have office space at the
company, you must meet clients there.

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"Winter" <downeaster1000[at]yahoo.com> wrote:

- quote -

You must take office-in-home deductions or none at all.
This incremental costs you refer to do not apply.

Wayne Brasch, CPA, M. S. Taxation

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I have just started working as an independent sales agent. I
may or may not end out having office space with the company
but either way I will end out working at home a great deal
more.

Can I deduct the incremental fuel oil and electricity costs
that will go with being at home more as a direct cost based
on a reasonable estimate?

At this point, I am not talking about what it would look
like if I set up separate, segregated office space with a
separate entrance and all of that (in other words a true
home office by IRS standards). I am just interested in
knowing whether I can just do a direct charge to the
business for those extra costs because they are clearly only
a result of the business since I otherwise would not be here
during the day and would not have those incremental costs.

Thank you.

Winter

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