home office Deduction

[Gene V]

but my understanding is that a home office that is attached to the home has to be the primary place where you do business. In other words if taxpayer or clients brought units to the home office where he repaired them, then yes the home office would be the primary work location and the expenses would be deductible. The bare fact that he spent some time every working day in the home office doing tasks without doing which he would not be able, practically or legally, to continue in business I believe would be irrelevant. In the HVAC business one's primary business location is the buildings where climate control systems are installed.

Have I missed a change since in the law?

A trade or business can have more than one location. The home office can be use for
administrative or mangement activities. Example include billing customers, keeping books and records,setting up appointments, etc.

See TTB page 5-14 Example #1 under Administrative or management activities.

[erchess]

Thank you

very much. Not sure how I missed that change.

[joanmcq]

You missed that change at least 5 or 6 years ago. Maybe ten.

[JohnH]

Corp vs Sched C?

I disagree with the contention that a sole-owner corp will not enjoy some liability protection. The corp firewall has to be maintained (minutes, no comingling of personal & business expenses, etc). Even if the protection is not rock-solid, a properly maintained corp provides an additional hurdle anyone contemplating a lawsuit must overcome in order to try and get at personal assets. It will discourage many lawyers from even trying, and they will tend to settle for the liability coverage, which any properly run business must have whether incorporated or not.

Another benefit I didn't see mentioned with respect to corporations is the advantage of a SEP. A sole proprietor must fund their SEP contribution out of earnings after taking the 15% S/E tax haircut. A corp sharehodler (S or C) can fund the SEP contribution with funds not subject to Social Security withholding & matching. This effectively makes about 15% more available for the funding the SEP contribution.