The entity is an SCorp with one shareholder. The day care center is licensed and operates out of the shareholder's residence. The instructions for a day care indicate form
8829 should be used to determine indirect cost however form 8829 refers to Schedule C. The SCorp has to file form 1120S. Any help out there?
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 :)
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