William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

When may a taxpayer deduct as business expenses the costs related to the use of his residence?

Posted by William Byrnes on December 28, 2010

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Why is this Topic Important to Wealth Managers? Americans are increasingly using their personal residence as their office.  This trend has picked up much steam since the financial crisis began.  Businesses cut costs during this period by not just allowing, but requiring, employees to telecommute.  In fact, government, including the IRS, has also jumped on the bandwagon.

Yesterday we opened the discussion of when may a taxpayer be allowed to deduct a business expense from his gross income.  That article noted that Congress grants the authority to the Treasury department to write corresponding “Regulations” to address the administration and enforcement surrounding the ability of taxpayers to take such deductions allowed by the Code.  Treasury, being the Internal Revenue Service in this case, promulgated such regulations for Section 162 to guide taxpayers through its morass, and provide some example scenarios and the IRS’ application of the Code to those scenarios.

By example, Treasury’s Regulation for Section 162 states that: “Among the items included in business expenses are management expenses, commissions …, labor, supplies, incidental repairs, operating expenses of automobiles used in the trade or business, traveling expenses while away from home solely in the pursuit of a trade or business …, advertising and other selling expenses, together with insurance premiums against fire, storm, theft, accident, or other similar losses in the case of a business, and rental for the use of business property.”

Home Office Deduction

To read this article excerpted above, please access www.AdvisorFX.com


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