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Discussion:S Corp Home Office Safe Harbor?

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Discussion Forum Index --> Advanced Tax Questions --> S Corp Home Office Safe Harbor?


Discussion Forum Index --> Tax Questions --> S Corp Home Office Safe Harbor?

Noobie (talk|edits) said:

28 January 2014
Can we use the new home office safe harbor rules in respect to a S Corp's home office?

Death&Taxes (talk|edits) said:

28 January 2014
Good question! Can the S Corp reimburse based on the $5 a square foot (up to 300 sq feet) without running into 280A(c)(6)? Would this be an accountable plan?

Ckenefick (talk|edits) said:

28 January 2014
I don't see a problem with it. To me, seems akin to a per diem.

JR1 (talk|edits) said:

January 28, 2014
But realize that you're foregoing deduction for the biz portion of mort. int and taxes as biz expense. This only makes sense for employees with office in home where it all ends up on Sch. A anyway.

Doug M (talk|edits) said:

28 January 2014
The first sentence of the rev proc says:

"This revenue procedure provides an optional safe harbor method that individual taxpayers may use to determine the amount of deductible expenses..."

Ckenefick (talk|edits) said:

28 January 2014
Technically, I think the individual is using said safe harbor "to determine the amount of deductible expenses"...it's just that the individual will submit an expense report and someone else will ultimately take the deduction, as determined by the individual...

Not that I care...I think the safe harbor is a joke.

Nightsnorkeler (talk|edits) said:

28 January 2014
I just had this discussion with an associate last night. Page 5 of Rev. Proc. 2013-13 states:

.02 Reimbursement or other expense allowance arrangement. The safe harbor method provided by this revenue procedure does not apply to an employee with a home office if the employee receives advances, allowances, or reimbursements for expenses related to the qualified business use of the employee’s home under a reimbursement or other expense allowance arrangement (as defined in § 1.62-2) with his or her employer.

So, does this disqualify the shareholder-employee from being reimbursed using this method?

My vote was yes.

Ckenefick (talk|edits) said:

28 January 2014
One interpretation is that said language is referring to a reimbursement of actual expenses, not a reimbursement of the safe harbor amount.

WEISSEA (talk|edits) said:

28 January 2014
Journal of Accountancy article 1-15-13 implies safe harbor ok for employee.

"To use the sale-harbor method, taxpayers must continue to satisfy all the other requirements for a home-office deduction, including the requirement that the space in the residence used as an office be used exclusively for that purpose and the limitation that an employee qualifies for the home-office deduction only if the office is for the convenience of the taxpayer’s employer."

Death&Taxes (talk|edits) said:

28 January 2014
"One interpretation is that said language is referring to a reimbursement of actual expenses, not a reimbursement of the safe harbor amount" and therefore if it is not a reimbursement of expenses, isn't it a de facto rental of space to the corporation.

Doug M (talk|edits) said:

28 January 2014
The same article also states

"Individual taxpayers who elect this method...."

Ckenefick (talk|edits) said:

28 January 2014
I'm sure an individual, who actually owns the house, would have to agree to the (safe harbor) method used to compute the deduction. And, I would think that the same individual couldn't also use the actual expense method, kinda like a car, kinda like the Standard Mileage Rate. You can't get the SMR reimbursed and actual expenses.

isn't it a de facto rental of space to the corporation.

The interpretation would be that you can't use the safe harbor method and an actual expense method.

Another interpretation would be : If you reimburse the safe harbor amount, you can't use the safe harbor amount because reimbursements of the safe harbor amount are not allowed. Kinda circular.

If the Rev Proc wanted to disallow the reimbursement of the safe harbor computed amount, it could have just come out and said so.

My take is that the Rev Proc may have intentionally skirted the issue.

WEISSEA (talk|edits) said:

28 January 2014
"The same article also states "Individual taxpayers who elect this method...."

Its the S corp owner as an employee who has the home office so I don't see the issue with "individual". Besides because of 2% and AMT issues OIH not attractive option, rather an S corp reimbursement plan for actual out of pocket employee OIH expenses.

WBR (talk|edits) said:

27 February 2014
Would this reimbursement method also apply for shareholders of a regular corporation and partners of a partnership?

Ckenefick (talk|edits) said:

28 February 2014
If you go with Weiss' idea: An actual reimbursement for actual OIH expenses...then we don't even need to have this conversation.

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