I know this subject has been discussed many times, but I would like to come to a definitive answer once and for all. A S corp with one shareholder/employee has a direct sales business in their home. Can they be reimbursed for certain expenses associated wtih use of home?
In the 2004 Small Business QF on page D-5 under working condition fringe benefits it states, "An employer (the S corp) can reimburse the shareholder (as an employee) for direct expenses associated with business use of the home, including office equipment, supplies an allocated expenses such as utilities and maintenance costs under an accountable plan. Reimbursements are deductible by the employer and tax-free tothe employee if the expenses would have been deductible by the employee if paid out of pocket."
In the 2005 Tax Book page 19-11, under Shareholder's use of home, it states, "If general requirements are met, a shareholder is allowed to deduct expenses for business use of the home assuming the shareholder receives reasonable wages for services rendered. Such expenses are deductible as employee business expenses on Schedule A of Form 1040.
Is this a change in application? I think that the 2004 QF book was the written by the new staff of Tax Book. Maybe Brad can enlighten me. I want to make sure that I do this right. But I don't want to take a deduction that I shouldn't take. I have always taken it in the past for one S corp only because this one really does use her home for her business. She has one room devoted to her product and meeting with clients. She has books and equipment displayed in her living room and has meetings monthly for her customers.
Thanks in advance for your help.
Linda F
In the 2004 Small Business QF on page D-5 under working condition fringe benefits it states, "An employer (the S corp) can reimburse the shareholder (as an employee) for direct expenses associated with business use of the home, including office equipment, supplies an allocated expenses such as utilities and maintenance costs under an accountable plan. Reimbursements are deductible by the employer and tax-free tothe employee if the expenses would have been deductible by the employee if paid out of pocket."
In the 2005 Tax Book page 19-11, under Shareholder's use of home, it states, "If general requirements are met, a shareholder is allowed to deduct expenses for business use of the home assuming the shareholder receives reasonable wages for services rendered. Such expenses are deductible as employee business expenses on Schedule A of Form 1040.
Is this a change in application? I think that the 2004 QF book was the written by the new staff of Tax Book. Maybe Brad can enlighten me. I want to make sure that I do this right. But I don't want to take a deduction that I shouldn't take. I have always taken it in the past for one S corp only because this one really does use her home for her business. She has one room devoted to her product and meeting with clients. She has books and equipment displayed in her living room and has meetings monthly for her customers.
Thanks in advance for your help.
Linda F
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