A different Home Office question

theoretcally it's possible you could have used your computer and printer 75% for business at a location outside your home office

doesn't sound like "exclusive and regular business use" test is met, therefore, no depreciation of home office space. tests for deductible home office expenses are tough hurdles to clear

I don't care about depreciation. I'm thinking more about the commuting test e.g. treating driving from my home office to my first business destination of the day as deductible business mileage.

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. Stu

"Doug" asked:

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 deductible.

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 used exclusively.

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 cabinets, etc.

Dick

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 take seriously. Stu

Doug,

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?) Thanks,

Maren 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, however.

. . .

Monday through Friday it is used exclusively for business.

Saturdays I sometimes use it to play computer games.

That's exclusive use on a regular basis.

Seth

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 binding authority.

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 regular basis. Stu