8-59 Problem Materials e In each of the following independent situations, indica
ID: 2518702 • Letter: 8
Question
8-59 Problem Materials e In each of the following independent situations, indicate whether the s-26 Mome Offic aspaver is entitled to deduct expenses related to the home office ac, a dermatologist employed by a hospital, also owns several rental properties He regularly uses a bedroom in his home solely as an office for bookkeeping and other activities related to management of the rental properties b. R, an attorney employed by a large law firm, frequently brings work home frorm the office. She uses a study in her home for doing this work as well as paying bills, sorting coupons and conducting other personal activitie c. M is a research associate employed by the Cancer Research Institute. His du- es include designing and carrying out experiments, reviewing data, and writing articles and grant proposals. His employer furnishes M a laboratory but due to insufficient space cannot provide an office for him. Thus, for about three hours each day, M uses a portion of his bedroom (where he and his wife sleep) to do the writing, reviewing, and other related activities. T is a self-employed tax consultant. He has an office downtown and a home of- fice. He occasionally meets with his clients in the home office since it is often more convenient for the clients to meet there d. e. S, an artist, converted a detached garage to a studio for painting. She sells her f. D has four toddlers. Since her home is virtually a nursery already, she decided to 8-27 Home Ofice. R is considering purchasing a home priced somewhat over her budnt paintings at her own gallery located in town turn her family room into a daycare center.Explanation / Answer
Answer to Question
1a) Tax payer are generally entitled to deduct expense as home office in case the home is used regularly and exclusively for business purpose and the same is the principla place of business. In the current situation, C is using the house solely and regularly for the book-keeping and management of rental property. Further, the house is the principal place of business as all activities are carried from the house. Thus, C is entitled to deduct expenses related to home office
b) An employee is entitled to deduct expense related to home office provided the room is used exclusively and regularly for office purpose and the employee brings work home for the convenient of employer. However, in the present situation, it seems that R brings work home for her own convenient. Further, R is not using the study only for office work but using the same for personal activities also. Hence, the criteria regarding exclusively used and convenience of employer not satisfied, thus R is not entitled to deduct expenses related to home office
c) An employee is entitled to deduct expense related to home office provided the room is used exclusively and regularly for office purpose and the employee brings work home for the convenient of employer. In the present situation, M brings the work home for the convenience of employer but the room used is not being exclusively used for office purpose. Since, M and his wife sleeps in the bedroom. Thus, M is not entitled to claim expenses related to home office
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