Home Office Deductions

If you have a home office and misuse the rules on home-office deductions, you may be denied not only that write-off, but all home-office deductions.



Two people ran a partnership from their home. The partnership deducted the rent it paid the couple for office rent in the home. When the IRS denied all deductions related to business use of the home, the case ended up in court.



Finding no written rental agreement, the court held the rental deal to be simply tax planning because the terms were not arm's length, and there was evidence that the office was used for nonbusiness purposes. The court then denied utility, repair, maintenance, mortgage interest, property tax, and office depreciation expenses. [Chaney v. Commissioner, T.C. Memo. 2009-55]

excerpted from AIPB General Ledger