The home business use need not be full-time. The U.S. Tax Court said his residence office deductions met the home business tax deduction tests. Stock market part-time investors have a more difficult time qualifying. But the U.S. Court of Appeals said he was a passive, long-term investor so he could not deduct his office expenses. If Moller had been an active ''day trader'' with frequent transactions, his home office expenses probably would have been deductible.
Taxpayers can no longer use room counts to calculate their home office deductions.
Then 25 percent of your applicable home expenses are tax-deductible. But some business expenses are 100 percent deductible, such as the cost of an exclusive business telephone line and expenses for painting your home office. If your business day begins at your home business location, and you used your car or truck for business in 2000, its business operating costs are deductible at 32.5 cents per business mile. If you spent more than these amounts on equipment for your home business in 2000, the excess can be depreciated over its useful life. If your home business did not produce any taxable profit, then you can't deduct your home business expenses.