Source: http://thinkandcode.info/home-office-deductions-p7618/
Timestamp: 2019-07-15 18:52:05
Document Index: 81490139

Matched Legal Cases: ['§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280', '§280']

Home Office, Vacation Home, and Home Rental Deductions (Portfolio 547) - Tax & Accounting - thinkandcode.info
This Portfolio describes §280A, which limits deductions attributable to the business and rental use of a dwelling unit if the property is also used by a taxpayer as a residence.
Tax Portfolio, Home Office, Vacation Home, and Home Rental Deductions, No. 547, describes the operation of §280A, which limits deductions attributable to the business and rental use of a dwelling unit if the property is also used by a taxpayer as a residence during the tax year. Section 280A is intended to prevent taxpayers from converting nondeductible personal expenses into deductible business expenses.
The Portfolio analyzes the scope and application of §280A, which applies generally to deductions allowable with respect to a dwelling unit personally used by a taxpayer as a residence. A dwelling unit may be a house, apartment, condominium, mobile home, boat, or similar property with basic living accommodations. Section 280A also applies to other property, such as a garage, which is closely related to the dwelling unit. Section 280A prescribes criteria for determining whether a taxpayer’s use of a unit during the tax year is sufficient to trigger the section.
When it applies, §280A generally disallows home business and rental deductions. However, §280A carves out six statutory exceptions to the general disallowance rule. In particular, deductions are not prohibited by §280A for a portion of a dwelling unit used regularly and exclusively: (1) as the taxpayer’s principal place of business for any business; (2) as a place where patients, clients, or customers regularly meet or deal with the taxpayer in the normal course of business; or (3) in the case of a separate structure not attached to the residence, “in connection with” the taxpayer’s business. Deductions also are not prohibited by §280A for the regular (although not necessarily exclusive) use of a residence for certain storage uses, and for providing day care services. Finally, deductions attributable to the rental use of a residence are not prohibited by §280A.
The standard for determining a “principal place of business” historically caused a significant amount of controversy among taxpayers, the IRS, and courts. This critical standard, one of the lynchpins of §280A, is analyzed in detail in this Portfolio. In Comr. v. Soliman, (1993), the Supreme Court enunciated two primary considerations for determining whether a home office constitutes a taxpayer’s principal place of business: (1) the relative importance of the activities performed at each business location, and (2) the relative amount of time spent at each location. A “principal place of business” also includes a place used by a taxpayer to conduct substantial administrative or management activities, if the business has no other fixed location where the taxpayer carries out administrative or management functions.
III. Exceptions to §280A Disallowance Rule
IV. Additional Requirements for Expenses Allowable Under §280A
V. Disposition of Property for which Expenses under §280A Have Been Deducted
VI. Interaction of §280A with Other Code Provisions