S-Corp Day Care Entity Operates in Shareholders Home

Use the 8829 as a worksheet. Enter the pro-rated amount of each expense on the most-appropriate line of the 1120S. IMHO, this isn't a good do-it-yourself situation, because IME you may have basis issues. Phoebe :)

Thanks all for the answer to the form 8829. However my question is to Phoebe regarding basis problem. What type of problem?

I misread, and assumed you were the S-corp owner (as opposed to a preparer). I don't think there's a basis problem; by "basis issue" I meant that you should remember to calculate basis. IME, home daycares often have a loss, particularly in the first year, especially because of the generous home office rules and the per diem allowance for meals provided. And IME, do-it-yourself-ers are often oblivious to basis limitations on losses. For a one-person company, it's not usually an issue, but the per diem meals allowance (in excess of what the company paid) could cause a loss in excess of basis. Unless the per diem is treated like percentage depletion, which is a possibility (never had an S-corp daycare). But my head is too full of other people's returns to even start looking it up. Phoebe :)