Jack- wrote:

- quote -

Generally greater benefit - I agree. However, there is one
case I can think of where it may be a detriment: EIC. If
there are no AGI-dependent deductions on Schedule A, taxable
income should then come out to be the same, but the raising
of GI & AGI could yield a greater EIC amount. Currently,
EIC is computed at a rate higher than SE tax.

Getting to the original question, I'm not certain there's an
election here. However, if the mortgage interest is from an
equity loan, not acquisition or construction debt, then
technically it matters what was done with the loan proceeds
- which will qualify it or not. There's also the matter of
consistency from year to year.

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Joe Btfsplk wrote:

- quote -

Agreed.

MTW

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- quote -

Save your research time then. Three different categories of
expenses are to be deducted in order, and to do otherwise
would not be a true return of income.

ChEAr$,
Harlan Lunsford, EA n LA

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

I don't think he understands that the deduction for mortgage
interest and taxes on Form 8829 is allowed even if it
creates a loss for the business. Other expenses can only be
used to bring the profit down to zero, but the tax and int
are allowed on top of that to create a loss.

It is an advantage since it reduces the Adj gross income
which provides a greater deduction for some items like
medical expenses and employee business expenses which are
reduced by a percent of AGI.

Also, the business portion of the tax and int is allowed
even if the person's remaing itemized deductions are too
small to make itemizing helpful.

Even if there is no advantage, there would never be a
disadvantage.

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MTW <mtwingcpa[at]yahoo.com> wrote:
- quote -

Maybe because the 8829 would lead to an unusable operating
loss, while the Schedule A deduction would reduce income?

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

Maybe his business-use-of-home expenses exceed the income
from the activity. Prorated mortgage interest and taxes are
allowed on the 8829 without respect to that limit, while the
other expenses are subject to it. By putting all the
mortgage interest and property tax on A, he gets to deduct
more of the other expenses on the 8829, so his total taxable
income is less.

(Without research, I would guess that this is not allowed.)

--
Don EA in Upstate NY

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Not necessarily BUT why would you want not to do so??? The
tax benefit is generally greater if you take the deduction
as a business expense. You thus reduce your adjusted gross
income and save on any employment taxes which may come due
as a result of your increased profit.

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penelopetax wrote:

- quote -

Why would you want to do that?

MTW

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Do I have to prorate the business portion of my home
mortgage on the 8829 or can I elect to use it all on my Sch
A?

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