| "Oh My God", cries out my fifteen year old daughter. | | | | deduction). When others write of the home office |
| "Oh My God Is Right", replies her brilliant and handsome | | | | deduction, it makes me wonder whether other issues |
| father. This is an example of two people saying the | | | | have been taken into consideration. Should the |
| very same thing, but for entirely different reasons. I | | | | business be organized as a sole proprietorship to take |
| can't help but wonder when I read other income tax | | | | advantage of this home office deduction? Would it |
| and business articles if the writer has the same | | | | have been better to incorporate and rent office space |
| understanding of purpose that I hold so very dear. | | | | from our personal residence thus changing the way |
| When we go into business, the idea is to make money | | | | we record this transaction on our personal income tax |
| by fulfilling a dream. If we are not in pursuit of profit, we | | | | returns? Does the person who has written the article |
| are not in pursuit of a dream, and we don't have | | | | have a good understanding of revenue procedure |
| deductions against taxable income. This my friends is | | | | 2005-14, thus explaining how the sale of a principal |
| how we play the game and I am about to explain | | | | residence, with business use of the property, is handled |
| what running a business is all about. Let me assure you | | | | for income tax purposes? As an aside, the treatment |
| that economic benefit is first, followed by the art of | | | | of selling a principal residence with business use in the |
| practicing income tax to enhance our return on | | | | property can be quite favorable (audio CD for Home |
| investment. | | | | Office Deductions at |
| Income tax deductions can be a beautiful thing. In order | | | | I think it is important to note here that the home office |
| for a tax deduction to be beneficial, there must be | | | | deduction is only of value when the business is |
| some income. Income is the spice of life and how we | | | | profitable. In a year where the business is at a loss, the |
| survive and thrive in a free market society. When we | | | | home office deduction is not currently deductible but |
| first think of starting a home-based business (or any | | | | can be carried over for future use. Remember the |
| business for that matter), we are in hopes of providing | | | | hobby rules when starting a new business venture and |
| goods or services that folks are willing to buy. If and | | | | be sure that the business is seeking a profit. The |
| when we can master this very difficult task, we can | | | | guideline to follow is 3 out of 5 years should be |
| think of the joys of revenue enhancement as it relates | | | | profitable (2 out of 7 years for businesses involving the |
| to income tax savings through planning. When I think of | | | | horse trade) to keep the burden of proof on IRS |
| the home office deduction, I am thinking of a profitable | | | | regarding whether or not one is seeking a profit |
| business that has thought long and hard in regards to | | | | motive. If this test is not met, it doesn't mean the jig is |
| its entity selection, its operations, and its plan for the | | | | up, it just means that the burden switches to the |
| future. I know that I can use expenses that would | | | | taxpayer to determine profit motive. I just can't help but |
| otherwise not have been deductible and use them to | | | | wonder, when I say home office deduction, and some |
| reduce not only income tax exposure, but will reduce | | | | else says home office deduction, if we are actually |
| exposure to payroll taxes as well (please check out | | | | both saying the same thing. "Oh My God", I really do |
| my audio CD at for the full picture on the home office | | | | wonder. |