Home office deductions are still a gray area

Article Abstract:

The Supreme Court made use of two tests in 'Soliman' to find out if an anesthesiologist should be allowed to avail of tax deductions from his home office. The first test considers the relative importance of the functions conducted at all business locations. The second test looks at the amount of time spent at all business locations. This two-part test is more constricting than the three-part test favored by the Tax Court and the Fourth Circuit, which allow deduction for taxpayers as long as their home office is essential to their business and is the only place where certain functions can be performed and their work is spent at a desirable length of time at the home office. In response, the IRS issued Notice 93-12, Rev. Rul. 94-24 and IA-023-39, all patterned after the Supreme Court test. The new tests are more restricting because a deduction is not allowed by default. Congress is mulling over proposals to revise these rules.

Public Finance Activities, Tax Deductions & Exemptions

---

Special rules for electronic retention of tax records

Article Abstract:

Taxpayers who file their records on electronic media must familiarize themselves with IRS policies for record maintenance contained in Rev. Proc. 91-59 and the standards released by the National Archives and Record Administration (NARA). Rev. Proc. 91-59 provides that documentation should comprehensively describe the system by indicating the application being performed, the procedures used in each application, the controls applied to guarantee accurate and dependable processing and the controls employed to block the unapproved addition, alteration or deletion of retained records. Specific documentation that should be kept for retained files are record formats, flowcharts, label descriptions, source program listings of programs that created the files, comprehensive charts of accounts, proof of period checks of the records, and proof that records are reconciled with books and tax return.

Laws, regulations and rules, Tax administration and procedure, Tax administration, Data processing, Electronic data processing, Records management

---

Home office deductions alive and well after 'Soliman.'

Article Abstract:

An increasing number of taxpayers are using home offices even though claiming tax deductions from these offices can be difficult. Sec. 280A disallows deduction except when the office is operated for any of the five allowable business uses. Deduction is possible if the home office is used as the principal place of business, place of business where patients and clients meet in the normal course of business, separate facility for business, storage of inventory or samples for selling goods, and place of licensed day care. The hardest obstacle to overcome in qualifying for deduction is Sec. 280A(c)(1)(A), which requires establishing that a home office is the principal place of business. Guidance is provided by the Supreme Court in the 'Soliman' case. Further assistance is provided by the IRS' Revenue Ruling No. 94-24.

Similar abstracts:

• Abstracts: Postural control and detection of slip/fall initiation in the elderly population. Cognitive abilities in driving: differences between normal and hazardous situations
• Abstracts: Information technology, organizational design, and transfer pricing. Costly arbitrage and the myth of idiosyncratic risk
• Abstracts: Promoting angiogenesis to a fault. Recent patents in angiogenesis research. Neural progenitors from human embryonic stem cells
• Abstracts: Powerhouse offer. Gas will be 'bedrock fuel.'(Ghana places more importance on gas in energy policy)
• Abstracts: Understanding the rationale of strategic technology partnering: interorganizational modes of cooperation and sectoral differences

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.