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Posted by Bill Brown on December 26, 2006, 5:38 am
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> Can you provide an example of what constitutes for this
> purpose "claiming a home office", with no depreciation
> taken?
That would be deducting all the eligible home office
expenses (a percentage of insurance, maintenance, utilitiles,
property taxes, mortgage interest, etc) EXCEPT depreciation
on Schedule C.
Failing to do that means the tax payer pays not only more
income tax but more self-employment tax as well. A taxpayer
in the 15% bracket could pay almost 30% of the foregone
depreciation in extra taxes.
Later, when selling the house, the taxpayer would pay a
MAXIMUM of 25% in taxes on the recaptured depreciation.
Taking depreciation on a qualified home office seems like
a no-brainer to me but since the question keeps coming up it
is clear that some people have some goal in mind other than
maximizing their own after-tax dollar wealth.
By the way, the income tax hit for failing to deduct
depreciation can be cured by a change in accounting method
in the year of sale to deduct all the previously undeducted
depreciation. There is no cure for failing to reduce SE tax.
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Posted by Bill Brown on December 28, 2006, 8:54 pm
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Steve Pope wrote:
> Sure, my point here is that there's no line on Schedule C
> called "home office deduction". If TP is a homeowner and
> files a Sched C and does not include any depreciation for a
> fraction of his home on the Sched C, then I *think* the TP's
> position must be that whatever expenses are on his schedule
> C have some justification other than a "home office" that
> meets the regular/exclusive/priciple place of business
> definition.
If the TP doesn't have a qualified home office then the TP
cannot deduct a fraction of utilities, casualty insurance,
maintenance, etc. Other expenses (office supplies, for
example) are deductible whether the TP has a qualified home
office or not.
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by Seth Breidbart on December 29, 2006, 8:07 am
Please log in for more thread options > If the TP doesn't have a qualified home office then the TP
> cannot deduct a fraction of utilities, casualty insurance,
> maintenance, etc.
What about, say, the electricity used by his business-only
computer (and the air conditioner to keep it alive)?
Seth
Moderator:
Electricity should be separately metered should he get
audited. A rider on his Homeowner's equipment for
computer, office furniture and fixtures, etc. is definitely
deductible. I would not advice trying to 179 the alcohol
cabinet. :)
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Stuart A. Bronstein on December 29, 2006, 8:52 pm
Please log in for more thread options sethb@panix.com (Seth Breidbart) wrote:
> What about, say, the electricity used by his business-only
> computer (and the air conditioner to keep it alive)?
>
> Moderator:
> Electricity should be separately metered should he get
> audited. A rider on his Homeowner's equipment for
> computer, office furniture and fixtures, etc. is definitely
> deductible. I would not advice trying to 179 the alcohol
> cabinet. :)
But the cabinet is storage space, so it qualifies even if
it's not used solely and exclusively for business.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bill Brown on December 29, 2006, 8:52 pm
Please log in for more thread options >> If the TP doesn't have a qualified home office then the TP
>> cannot deduct a fraction of utilities, casualty insurance,
>> maintenance, etc.
> What about, say, the electricity used by his business-only
> computer (and the air conditioner to keep it alive)?
As Dick said, it would have to be separately metered. The
after tax effect of that strategy would probably be
negative.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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