Table of Contents

Course Learning Objectives. v

Introduction to the Course. v

Chapter 1 – Qualifying for a Home Office Deduction. 1

Chapter Learning Objectives. 1

Introduction. 1

Home-Office Deduction Requirements. 1

Exclusive Use Requirement 1

Exceptions to Exclusive Use Requirement 2

Storing Inventory or Product Samples. 2

Use as a Daycare Facility. 3

Regular Use for Trade or Business Requirement 3

Home Office Used on Regular Basis. 3

Home Office Used in Connection with a Trade or Business. 4

Principal Place of Business Requirement 4

Administrative or Management Activities. 5

Taxpayers with More than One Trade or Business. 5

Exceptions to Principal Place of Business Rule. 6

A Place to Meet Patients, Clients or Customers. 6

A Separate Structure. 7

When the Taxpayer is an Employee. 7

Summary. 7

Chapter 1 Review Questions. 10

Chapter 2 – Figuring the Home Office Deduction. 11

Chapter Learning Objectives. 11

Introduction. 11

Methods of Figuring the Home-Office Deduction. 11

Actual Expense Method. 11

Nature of the Expense. 11

Percentage of the Home Used for Business. 12

Calculating Percentage of Home Used for Business. 13

Deductible Expenses for Home-Office Deduction. 13

Expenses Deductible by All Homeowners. 13

Expenses Deductible by Taxpayers Using a Home for Business. 14

Depreciation. 14

Insurance. 18

Rent Paid on Unowned Property. 18

Repairs. 18

Security System.. 18

Expenses for Utilities and Services. 19

Deduction Limit 19

Figuring the Deduction Limit when Taxpayer has Multiple Places of Business. 20

Simplified Method. 20

Depreciation and Actual Expenses Related to Use of Home not Deductible. 21

No Deduction of Actual Expense Carryover 21

Expenses Deductible Irrespective of Business Use. 22

Special Rules Applicable to Simplified Method. 22

Shared Home Use. 22

Multiple Qualified Business Uses. 22

More than One Home During the Year 22

Part Year Use or Area Changes. 22

Gross Income Limitation. 25

Determining the Home-Office Deduction for Daycare Facilities. 25

Deducting the Cost of Meals and Snacks. 30

Standard Meal and Snack Rates. 30

Sale or Exchange of a Taxpayer’s Home Used for Business. 31

Final Regulations on Deduction vs. Capitalization of Tangible Property Costs. 32

Summary. 32

Chapter 2 Review Questions. 35

Chapter 3 – Deducting & Recordkeeping. 36

Chapter Learning Objectives. 36

Introduction. 36

Where to Deduct Expenses of a Home Office. 36

Self-Employed Taxpayer & Statutory Employee Deduction of Home Office Expenses. 36

Expenses Deductible Irrespective of Business Connection. 36

Deductible Mortgage Interest 36

Qualified Mortgage Insurance Premiums. 38

Real Estate Taxes. 39

Expenses Deductible only when Home is used for Business. 40

Actual Expense Method. 40

Business Expenses Not for Use of Home. 40

Employees’ Deduction of Home Office Expenses. 40

Calculating an Employee’s Home-Office Deduction. 41

Partners’ Deduction of Home-Office Expenses. 42

Recordkeeping Requirements. 44

Summary. 44

Chapter 3 Review Questions. 46

Answers to Chapter Review Questions. 47

Chapter 1 Review Questions Feedback. 47

Chapter 2 Review Questions Feedback. 49

Chapter 3 Review Questions Feedback. 52

Glossary. 54

Index. 56

Final Examination. 58

CPASelfstudy.com Course Evaluation. 63