S Corp.-OIH

[OldJack]

Roland, if you will read the code and cites again I think you will realize that it doesn't refer to what tax form the expenses are to be deducted. It flat says "in which the taxpayer uses the dwelling unit (or portion) in performing services as an employee of the employer."

The original post was for expenses associated with a portion of a dwelling unit of an employee of an S-corp and the expenses are not deductible anywhere against rental income received from the S-corp. Your conclusion is incorrect and "non sequitur" if that is the appropriate way to use the term.

Now... you would be correct if this is just rental property that is not the employees dwelling unit.

[Bird Legs]

To all you smart & intelligent

practitioners, whether you be tax preparers, EAs, CPAs, CFPs, thanks for your
responses.
They are enlightening, entertaining.
Really do appreciate all of you helping this old man out at different times and in
different situations.
Thanks

[Roland Slugg]

Court case on point

Dear Bird Legs

I hope the above responses help you form an opinion regarding the matter in your original post. FYI, there is a 1985 Tax Court case exactly on point, and you may wish to read it. It affirms my position that the allocable expenses are deductible against the rental income. The case is: "Feldman v. Commissioner, 84 T.C. 1." In its opinion the court says, "Jeez, Old Jack, OF COURSE the expenses are deductible against the rental income!!" Okay, I made up the "Old Jack" part ... but not the rest. Read it ... and smile.

[Unregistered]

Dear Old Jack

"Non sequitur" is neither an insulting nor a disparaging term. If you choose to view it as one, of course, that's up to you.

Your selected quotes from part of Code §280A and RIA's analysis are correct as to the disallowance of an OIH deduction. It isn't allowed in that situation. The original post in this thread, however, and the fundamental issue at hand is NOT an OIH deduction. It is rental deductions on Schedule E ... a distincly different matter.

When a taxpayer's C or S corp pays him rent for the use of a room or rooms in his residence, the rent paid is deductible by the corporation and taxable to the employee/landlord ... on Schedule E. That's a wash, except for a possible difference in tax rates for the corp versus the individual. So are the direct and allocated expenses related to the rented space lost? Of course not. Just as a self-employed person can take an OIH deduction for those expenses via F-8829, a taxpayer renting space to his corporation deducts the expenses on Schedule E, where they reduce the related rental income. This is not an OIH deduction ... it's a straightforward deduction of legitimate expenses related to taxable rental income.

"Non sequitur" is pejorative, at least to my ears. In fact, I've also found the "I do what I can" bit really condescending. There are some very sharp minds on this board, which I feel deserve a bit more respect.

[Bird Legs]

Roland, your post is

very much appreciated. I do have a question.
Wasn't the court decision of Feldman V Commissioner 84 tc 1 done away with
code section 280(a)(c)(6) Public Law 99514 to do away with the deduction
of household expenses from the rental income of the S Corp?
More clarification if you please. Need all the help you can give on this.