Business expense or not

[Taxadvisor VA]

Client owns an Scorp. For the 1st 6 months of 2013,she earned wages through her own contracts within her own business. She got an offer that she couldn't refuse to work outside her own business. She does maintain a "business use of home " which is for the convenience of her new employer. I told her that the internet she now uses should be part of home office expenses on her 1040 (F2016) and not her own Scorp. She doesn't see it that way. With her telephone expense she is still advertising her own business (landline) so I don't have a problem with that as her own company expense. Her cell phone expenses are now geared toward this new W2 job and so those expenses should not strictly be her own company expense. Her utilities & other qualifying expenses she and I are in agreement.

What do you think about the internet & cell phone? Should it be 100% her Scorp business? I don't think so! What do you think?
Thanks,
Taxadvisor VA

[jsamans]

Well, the S-Corp can pay 100% of the cell phone bill and provide the cell phone to her as a non-taxable fringe, but only if there is a compelling business reason that she needs the phone (TTB 13-28). If she's doing no work through the S-Corp, that'd be a hard sell.

Regarding the Internet service, I think that this should be prorated.

[Taxadvisor VA]

Business exp or not

jasmans- You make good points. Thanks for responding.
Best Regards,
Doug