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Accountant not allowed to deduct his research carrel

August 18, 2011

As long as I have been in public accounting, the men's room has also been called the "research library." It's less so in this age of electronic research, but that didn't keep a Florida accountant from claiming a home office deduction for a bathroom. Unfortunately, he failed to restrict library access. From the Tax Court:

Petitioner used one of the bedrooms of his residence exclusively as his office for his accounting business. Petitioner argued that he also used the hallway and the bathroom adjacent to this bedroom exclusively for his accounting business. Petitioner testified, however, that his children and other personal guests occasionally used the bathroom. Accordingly, the hallway and the bathroom were not used exclusively for business purposes.

But what if the kids are employees? Oh, he tried that:

Petitioner argues that both his daughters were paid wages for administrative work performed for his accounting business in 2007. However, neither daughter was issued a paycheck, Form 1099-MISC, or Form W-2. Further, neither had tax withheld. Petitioner testified that he paid his daughters for their work by paying their credit card bills but has not provided any evidence to substantiate amounts paid. Accordingly, we sustain respondent's determinations with respect to the wages paid to petitioner's daughters.

The Moral? If they don't get a paycheck or an invoice, keep them out of that executive bathroom.

Cite: Bulas, T.C. Memo. 2011-201

Via The TaxProf

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