A home office is an area that must be used exclusively for
business. But, on my tax return I claim only 75% business
use of my computer and printer. Have I just shot down my
home office deductions by basically admitting on Form 4562
that I've spent time in my home office performing
non-business activity? All assuming that I'm not going to
take the unbelievable position that I remove the computer
from the home office when I use it for personal tasks, thus
preserving the "exclusively for business" character of the
First the code doesn't require "exclusive use." The exact
phrase is "exclusively used on a regular basis". The phrase
"on a regular basis" would be useless if they really meant
to require completely exclusive use. So there's an argument
that, as long as you use it exclusively for business
regularly 75% of the time, it's still ok.
Next, there are some parts of the home office that do not
need to comply with the "exclusive use" requirement. If the
home is the sole business location, any storage space for
inventory or product samples can be deducted whether they
meet the exclusive use test or not.
To me that implies you can have a legitimate home office
even if it doesn't qualify for deductibility.
Not true. As described, it is commuting.
Partially correct. If you have to make stops at multiple
clients or one client and your employee office, the mileage
in the middle is at worst an unreembursed employee expense.
Everyone can have a home office. It's a matter of
exclusivity of use and what expenses are and are not
Maybe I should buy a new dictionary? I don't understand how
a home office can be used exclusively "some of the time."
Doesn't exclusively mean that there is no other use? In, as
in your example, the home office is used for non-business
purposes 25% of the time, I don't see how you can say it is
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
If I was the IRS auditor on this case and you said that to me
in my office, I write it down and repeat it back to you to
make sure I got it right. Then I'd e-mail to everyone under
the subject of "Tax Humor".
Want an example of exclusive use NOT on a regular basis?
W-2 taxpayer buys/inherits/whatever a house with too many
bedrooms, sets up a bedroom as a home office, and goes looking
for a business to run out of it. He is meticulous in meeting
the exclusively rule, but he goes from one part-time business
to another with large lapses of time between this businesses.
He is simply doing this for tax purposes and that don't count.
As always it comes down to facts and circumstances.
This is true, but generally deminimus.
I absolutely agree with you there. Back to your 75% business
use. You can have a non-exclusive home office but not the
accrual deductions, e.g., space depreciation, heating,
utilities, etc. that you get with exclusiveness. You get a
private business line deduction and you can 179 all of the
items that meet the exclusive use test, e.g., desk, file
I have no idea if the courts would agree with me. I haven't
checked, and probably won't unless paid to do so.
As you are aware, the law is not always common sense. I'm
just talking about rules of statutory construction. The way
the statute is drafted, at least to me, indicates that
"exclusive use" does not necessarily need to mean 100
percent of hte time. It could be argued that it's used
exclusively for business purposes during regular business
hours, and that could qualify as "on a regular basis."
Again, I'm not aware that anyone has ever made this argument
before. And it might well be laughed out of the courts.
But it's an argument that a court would certainly have to
so far, as I don't have (or claim) a home office (a small
plant nursery doesn't need an exclusive office), I grow most
of my plants at home, load my truck full on weekends and (so
far have considered this commuting) drive to the farmer's
market to sell them. Is this transportation rather than
commuting? - Relatively big deal in my case as the farmer's
market is 21 miles one way. -
I am also an employee (different line of work) - and run my
business partly out of my office (my place of employemnt
allows that, I can store some things there (seed business)
and I occasionally have a customer come by and pick up
things) -. As my workplace serves dual purposes for me I
have always considered going from it (especially when
transporting dirt, fertilizer or plants) to the farm (17
miles from work) transportation/business.
Going from home to my place of employment (3 miles) to me is
commuting, in any case, and for whatever reason.
What is commuting here, and what is transportation? (If I
take plants to work from home as somebody has asked to buy
them, is it not commuting anymore?)
Palms, Etc.: Tropical Plant Seeds - Hand-made Jewelry -
Plants & Lilikoi
Presumably the desk and chair don't meet a 100% business use
test if the computer that sits on said desk doesn't. Still,
getting 75% of the maximum 179 deduction isn't worthless.
As the original poster, I'm most interested in deducting (a)
the prorated cost of my internet service (presumably 75% of
said cost), and (b) mileage from my home office. I'm not so
concerned about the space prorations. I never said what
business I'm in: real estate, regarding which I a primary
buyer, not a broker. I can hardly buy a house or strip
center without (a) driving to go look at it, (b) possibly
hiring professional inspectors whom I may need to meet at
the property, necessitating additional trips, and (c)
whether I sell or lease it, meeting prospective buyers and
tenants at the property. Lots of endless, boring driving. Oh
yeah, there's some negotiation in the middle. The
administrative end of things is exclusively done at home,
The phrase "on a regular basis" does have a use beyond what
you see. If a taxpayer uses an area of their house for one
hour for business and does not use it for anything at all
the other 8,759 hours (assuming not a leap year) then they
have exclusive use. But the taxpayer does not have regular
use. Consequently no deduction.
See Proposed Regulation 1.280A-2(g)(1):
"(1) In general.
Paragraph (b), (c), or (d) of this section may apply to the
use of a portion of a dwelling unit for a taxable year only
if there is no use of that portion of the unit at any time
during the taxable year other than for business purposes."
Note the words "no use" and "at any time" in the regulation.
This proposed regulation was issued in 1983 so it is
I don't mean to be flip here, but you should ask the
question you want answered and provide appropriate
background (like you did in the paragraph above). In this
case, it would be something along the line of "I conduct
business from my house. I do not have an office outside the
house. I begin and end my day working in my home office
(please do not address the "home office issues), is the
mileage I drive from my home office to various meetings
throughout the day and back to my home deductible?"
Yes if you do in fact perform meaningful business
activitities in the home office both before you leave for
your first appointment in the morning and again when you
return from your last appointment in the evening. To not
perform meaningful business activities in your 'home office'
at either end of the day would convert the beginning and/or
end of day mileage into non-deductible commuting expenses.
Since it is a proposed regulation, it's got less authority
than one that's been enacted. Even one that's been enacted
is only binding to the extent that it is consistent with the
statute. If my reading of the statute is correct, the
regulation is inconsistent with it and, as a result, not
binding at all.
On the other hand, the courts agree with you. They read the
phrase, "exclusively used on a regular basis" as if it had a
comma after "used" and require both exclusive use and on a