Question

Dr. Nicole Ergo is a professor of accounting at Becker University, i.e. an employer of Dr. Ergo. He has often scheduled to meet with his doctoral students at his house with four rooms. In his house, Dr. Ergo has dedicated two rooms for business related to classes he teaches. In these rooms, five computers are installed with electronic databases and statistic software, such as SPSS and SAS for doctoral students to carry out their research projects under the supervision of Dr. Ergo. Dr. Ergo has an office on campus but his office is too small to accommodate five computers and his doctoral students. Dr. Ergo calls you to determine whether he could deduct expenses related to his home office. Your memo should include a discussion of Section 280A.

Tax Memorandum to include:

Client Name and Tax Year:

Relevant Facts:

Specific Issues:

Citations to Relevant Authority (Support):

Discussion and Conclusions:

BE DETAILED IN YOUR RESPONSE.

Answer 1

Working from home is enjoyable thing and getting the deduction of home expenses as business expenses is an added perk.

The freelancers and the persons that owns a small business generally work from home and claim the home expenses as business expenses.

Hence the IRS has made Section 280A that contains the rules about what the expenses can be claimed as deduction.

Client Name and Tax Year:

Dr. Ergo

Relevant Facts

This is important that the home is regularly used for business purpose, any occasional use cannot be treated as home office case.

Specific Issues:

We may have to prove that we use the home as a principal place of business, if we owe other offices as well then also we can claim the deduction for use of home as office but we have to prove that we use the home as the business place on regular basis.

Citations to Relevant Authority (Support):

IRS section 280A

Discussion and Conclusions:

The use of house can be claimed as a business expense provided that

Some part of house is used exclusively for business purposes

The house is used as a primary place of business

The house should not be leased and then used as a business place.