DANRVAN

And I have been looking at this from the perspective of my personal OIH as well, and admit I have been doing it wrong. There is no way I can justify allocating a personal expense.

I did say "most likely", which is the case of a traditional OIH, and yes I made that assumption from the OP, shame on me.

But different in the case of an OIH. The wiring provides electricity which is an ordinary and necessary allocable expense. The water lines provide an expense which is most likely used 100% personal in the residence; and zero to the exclusive OIH portion.

I have referred to the code throughout this thread which refers to an "allocable" expense. "Allocable" is an an accounting term that relates to cost, benefit, or usage. How can you allocate an expense which is basically 100% for personal use (as in the case of the water usage) as on ordinary and necessary business expense? Unlike electricity which is an ordinary and necessary expense for the OIH. It is not the same as an office in town where a restroom is necessary. Whereas the bathrooms in our home are not part of the OIH and the water used in them is not deductible.

That was not a conclusion based on the pub (which is not an authoritative cite) but on the code. FAQs are also not authority, and some have been proven wrong in the past. The average US household water usage is supposed to be about 300 gallons a day, how much of that is consumed in an an area dedicated 100% to an OIH as an ordinary and necessary business expense? For mine, I have to say about zero. Therefore it is not an allocable expense per the code. But that does not make it an ordinary and necessary business expense. And I am not worthy to cast the first stone in this case. We have a separate electric meter on our well. I have always included that as part of OIH utility cost; at least up until now. After reading the code and understanding the word "allocable" in accounting terms; and knowing our daily water use is about 100% personal for washing clothes, showers, watering lawns, washing vehicles ..etc, I cannot deduct it in good conscience. But as Sara pointed out, if we were running a daycare the cost of water would be an "allocable" expense.

Unlike electricity, gas, or heating oil, water is not allocable to an area used exclusively to the home office. There is direct benefit from the the utilities used to power, heat or cool the home office as ordinary and necessary expenses; the home office consumes a portion of those utilities and they are rightfully allocated per the code section. On the other hand, how much water is used as an ordinary and necessary expense in a home office? Notice that pub 587 does not include water as a utility allocable to a OIH: Utilities and services. Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning services, are primarily personal expenses. However, if you use part of your home for business, you can deduct the business part of these expenses. Generally, the business percentage for utilities is the same as the percentage of your home used for business. Bottom line, water is not a cost of using a OIH so it is not allocable.

But OP said he was deceased. Can he provide any evidence of the transaction? Courthouse records? 2nd party to the transactions? Third parties?

That is an excellent point Sara. I have never thought about it, but it certainly follows the meaning of sec 280A (c)(1) "apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis—"

Not always, I was reviewing past three returns for new clients. Prior preparer had been using 12/31/xx for husband and 12/31/yy for wife which is carried to front page of the Oregon returns. Years of birth were correct but not dates, and they were accepted for e-file by fed and state. Also had another case where dates and year of birth were off for both spouses, but had been accepted in the past by fed and state.

I am not sure what your question is Catherine, but personal use includes any day a rental is used by anyone paying less than fmv.

That will do it. As long as it covers the period of the tax deduction I would be fine with it. Personally, I have never asked to see a letter or statement, but know my clients well enough that documentation could be provided; and most are receiving LTC payments. Not to say that is the right way to do it.

So her state is not tied to the IRC? Oregon is basically tied to fed, so 1040 A rolls into state A.

Have you tried the pre-qualifier site? https://irs.treasury.gov/oic_pre_qualifier/

Nothing to report other than the sale of the house. As Bulldog mentioned, the escrow deposit is basically a balance sheet transaction. The escrow deposit is part of the sale proceeds.

Actual number of days rented divided by the number of times it was rented will give you the actual average rental period. The number of weeks available or days available do not equate to days used.