Office at home

[OldJack]

That may be true, but I don't think there is any specific case to point to that says that is true. What is the difference between one taxpayer operating two separate businesses out of the same office verses a husband and a wife each operating separate businesses out of the same office?

The code is clear unless you have doubt as to what "a taxpayer", "the taxpayer", or what "exclusive use" means. Note the last sentence [280A(c)(1)(A)] of this quote:

-HEAD-
Sec. 280A. Disallowance of certain expenses in connection with
business use of home, rental of vacation homes, etc.

-STATUTE-
(a) General rule
Except as otherwise provided in this section, in the case of a
taxpayer who is an individual or an S corporation, no deduction
otherwise allowable under this chapter shall be allowed with
respect to the use of a dwelling unit which is used by the taxpayer
during the taxable year as a residence.
(b) Exception for interest, taxes, casualty losses, etc.
Subsection (a) shall not apply to any deduction allowable to the
taxpayer without regard to its connection with his trade or
business (or with his income-producing activity).
(c) Exceptions for certain business or rental use; limitation on
deductions for such use
(1) Certain business use
Subsection (a) shall not apply to any item to the extent such
item is allocable to a portion of the dwelling unit which is
exclusively used on a regular basis -
(A) as the principal place of business for any trade or
business of the taxpayer,

[Bees Knees]

The code is clear unless you have doubt as to what "a taxpayer", "the taxpayer", or what "exclusive use" means. Note the last sentence [280A(c)(1)(A)] of this quote:

You can't just go by the code. I could also say it is clear exclusive use means exclusive use. That is, no other use other than that used by one business. But we know that isn't the case.

The conclusion of the court in Hamacher v. Commissioner, 94 T.C. 348, clearly allows for multiple uses of an office in home, provided each business using the office otherwise meets all the qualifications. It seems very similar in principal to the case of two or more taxpayers using the same office for business where each would otherwise qualify on their own. I think the court would have reached the same conclusion if we were talking about a husband and wife using the same office for two separate businesses, each otherwise qualifying on their own for the deduction. Note what the court said:

“Because petitioner used his home office for two business uses, this case presents a unique question: When a taxpayer uses one home office for two separate and distinct business activities, whether both business uses must be of the types described in section 280A(c)(1) in order to satisfy the exclusive use requirement of that section. This is a fundamental question and one of first impression.”

“In resolving this issue we are assisted by the legislative history of section 280A. Section 280A was added to the Internal Revenue Code by the Tax Reform Act of 1976 to provide "definitive rules relating to deductions for expenses attributable to the business use of homes."

“Congress, in 1981, amended section 280A(c) to liberalize the home office rules, particularly as they were being interpreted by the Internal Revenue Service, to permit a business expense deduction for taxpayers having more than one trade or business. Prior to the amendment, the Internal Revenue Service allowed home office deductions only if the taxpayer was using his residence as the principal place of business of his main business activity…By adding the words "for any trade or business of the taxpayer" to the end of subparagraph (A) of section 280A(c)(1), Congress made it "clear that a taxpayer can have a principal place of business for each separate trade or business of the taxpayer and if the regular and exclusive use tests are met, can deduct the expenses attributable to using his residence as the principal place of business for ONE OR MORE SUCH BUSINESSES."

In light of the above statutory framework and legislative history, we conclude that expenses attributable to the use of a home office in conducting two or more separate business activities may be deductible. Section 280A was not intended to compel a taxpayer to physically segregate his different business activities when it would otherwise be unnecessary, or to discourage an industrious individual from conducting more than one business activity out of his home…Therefore, the exclusive use requirement of section 280A(c)(1) does not demand that a home office be used exclusively in connection with only one business or only one of the types of uses enumerated in subparagraphs (A), (B), and (C). Thus, the fact that petitioner used his home office in conducting two business activities does not, in and of itself, violate the exclusive use requirement or destroy the applicability of section 280A(c)(1).”

“We also conclude, however, that when a taxpayer utilizes one home office in conducting numerous business activities, each and every business use must be of the type(s) described in section 280A(c)(1). Otherwise, the exclusive use requirement of that section will not be satisfied and the general nondeductibility provision of section 280A(a) will apply. Therefore, if only one of a number of uses qualifies under subparagraph (A), (B), or (C) of section 280A(c)(1), the expenses attributable to the business use of a home office will not be allowable as deductions even if the other uses are business related.”

[OldJack]

You can't just go by the code. I could also say it is clear exclusive use means exclusive use. That is, no other use other than that used by one business. But we know that isn't the case.

“Congress, in 1981, amended section 280A(c) to liberalize the home office rules, particularly as they were being interpreted by the Internal Revenue Service, to permit a business expense deduction for taxpayers having more than one trade or business. Prior to the amendment, the Internal Revenue Service allowed home office deductions only if the taxpayer was using his residence as the principal place of business of his main business activity…By adding the words "for any trade or business of the taxpayer" to the end of subparagraph (A) of section 280A(c)(1), Congress made it "clear that a taxpayer can have a principal place of business for each separate trade or business of the taxpayer and if the regular and exclusive use tests are met, can deduct the expenses attributable to using his residence as the principal place of business for ONE OR MORE SUCH BUSINESSES."

Bees...I agree with all your research quotes and contend that they further support my position as they all also state "a taxpayer" or "the taxpayer" and not "taxpayer(s) and/or spouse". I also noted the Congress intent quote did not use the words taxpayers (plural), rather it is clearly singular the same as the code.

Inasmuch as none of your research quotes disagree with the code I would trust the wording of the code to be applicable in this case. The code quote: "A) as the principal place of business for any trade or business of the taxpayer" doesn't come anywhere near including "husband and wife with separate businesses" or "any trade of business of joint filing taxpayers". Bees, if you disagree how about showing us something that clearly gives authority overruling the code or let us know that it is just your opinion that it would be accepted by the IRS on audit.

[Bees Knees]

Bees, if you disagree how about showing us something that clearly gives authority overruling the code or let us know that it is just your opinion that it would be accepted by the IRS on audit.

It is just my opinion. There is no clear ruling because it never came up. If we were talking about two unrelated people sharing the same office, I would be on your side 100%. Somehow, though, it just doesn't feel right to take such a rigid stand when it comes to a husband and wife. Yes, I know that technically, they are two separate taxpayers. It is just my opinion, that if that issue ever did come up in court, the court would treat a husband and wife as one taxpayer for purposes of Section 280A, provided they filed a joint return.