office in home for llc

[ljwalters]

Client is general partner for LLC. There is an office down town but she works mostly from home. She does not have an office at the "Office". All the space is leased out to her contract workers. (yes this is legit) How do I add an office in home to her personal return. Do I have to use a 2106 and put it on the A? Or is there some way to link it to her K-1 to go towards her SE income. Her portion of the profits was over 75K this year.

Linda and buddy

[mcb39]

Unreimbursed Expenses?

[jainen]

>>Do I have to use a 2106 <<

Oh please! Since my first days reading tax books I've heard professionals warn that O.I.H. is a big audit flag. And indeed the IRS seems to be pretty interested in the topic. Its use has expanded over the years, but each step had to be hard fought in Congress or court. So why are we so casual about it? The IRS even wrote a 35-page manual all about business use of home. Pub 587--ignore it at your risk (or rather, your client's risk).

It explains that a partner calculates the deduction on the worksheet and reports it as Unreimbursed Partnership Expenses (see the instructions to Schedule E). But you can ONLY do that "if you were required to pay these expenses under the partnership agreement." Sorry, lj. In my opinion "this is legit" just doesn't cut it.

[ljwalters]

Jainen,

The “this is Legit” was referring to the office leased out to contract workers. The partnership takes in well over $450,000 income. And the income is split between X and herself.

The office in home is of course solely used for business. Bookkeeping, Contract seeking and Data Gathering. She is not licensed to do the work her company does. She does Every Thing else.

I Do take offense at the fact that you “assume” the office in home is a joke. Bring on the audit. All tax returns I do are clean and ready on my part. I take office in home. It is still an available form and deduction, is it not?

All that aside, THANK YOU for leading me to the right paragraph on Sch E.

What if it is not under the partnership agreement, can’t take them on the E, does it mean she can not take them on the A?

Linda and Buddy

[grandmabee]

On A its for employee business expense and she is not an employee

You can make adustments to the partnership agreement as long as all partners agree. something to think about for 2011

[jainen]

>>What if it is not under the partnership agreement, can’t take them on the E, does it mean she can not take them on the A.<<

She is not an employee, so she can't deduct it as an employee expense. Even if she WERE an employee, she could only take it if it were for the convenience of the employer. Pub 587 says "If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home." Similar reasoning applies to partners--it must be required by the company, not just something the individual partner wants.

Although the partnership agreement may be changed, doing so retroactively would be too tax-motivated to stand.

[ljwalters]

Thanks every one. Your right she is not an employee. That settles every thing. I guess I’m just not thinking to well these last couple of days. I just got back from the vet to put Buddy down. Very Hard. And at this time of year.

And Jainen I ‘m sorry I barked back earlier. Thanks for keeping me from making a mistake on this return. Maybe I should just quite for a couple of days to get my head straight.

Linda

[Margaret CPA in OH]

Linda, you do need to take a little time. There is never a good time to make that tough call for compassion but now is especially bad. My turn was 2 years ago. My heart goes out to you and all who loved Buddy. Take a walk and let yourself grieve...

[NECPA in NEBRASKA]

Linda, I am so sorry for you. That is such a terrible hard thing to do. I still cry when I think about having to put my cat down 15 years ago. The pain eases, but never goes away. Buddy was lucky to have someone to love him so much.

Bonnie

[Kea]

Linda, I am so sorry for your loss, too. As the others have said, it's always hard. But now is not the time to be quiet - especially when your head & heart are not on taxes. I'm sure most of us here understand what you are going through. Your clients may or may not. They may only care about the deadline. And IRS won't care at all.

We had to put our first dog down in early October one year. Fortunately, I didn't have many extensions to do. But I can tell you I really didn't want to do any of them.

[jainen]

>> I just got back from the vet to put Buddy down<<

Oh dear. By the time I got to work on Monday my son called and said little Sparky wasn't breathing. Ten minutes earlier he had been licking water from my fingertips.

Well, life goes on, so here's my final word on this thread. It's all just theoretical! Not a one of us would actually refuse to take the Office in Home expenses (as UPE on Schedule E, from the worksheet in Pub 587). Just explain the rules and tell her to modify the partnership agreement by next year. You know she's going to say, "What's a partnership agreement?" But they're pulling in a half mil--better spell out exactly who gets what and who has to pay what.

P.S. No need to apolgize for getting mad at me. Everybody (including me) knows I'm a big jerk, at least in my online persona on this forum!

[kcjenkins]

Linda, so very sorry for your loss. Anyone who does not understand that Buddy was a close family member just does not understand anything.

As for the deduction, take it as UPE, and tell her to put it in the partnership agreement if it is not already there. Actually, you CAN take it on the A as an 'investment expense' but that is not the best way. And since it clearly IS for the benefit of the business, which would otherwise have to rent her an office space somewhere, it is certainly justifiable to take it on the E.

[Lion EA]

I'm sorry, Linda; we all "knew" and loved Linda and Buddy. And, Jainen, sorry about Sparky.

[kcjenkins]

Linda and Jainen, take the next 2 weeks to grieve, then PLEASE go to your local shelter and find a new friend who needs you as much as you need him/her. There are so many wonderful dogs available, and although the new one never 'replaces' the old one, they do make their own spot in your heart, and help you heal as well. I still miss my darling Little Bit, but the two strays that now share my life give me lots of smiles and happiness.

I was not looking for them, but they found me anyway, both in odd ways. But now, they make me happy, and they really do wonders for my husband, who can enjoy them without having to feel he's shorting them because he can't talk to them! They talk to him with kisses, wags and cuddles, and he loves them both so much.

[Gail in Virginia]

My heart goes out to you both, losing a companion at this season of the year. Our pets give so much to us, and ask for so little in return. They are such a blessing and it is so hard to make the decision to end their suffering; it is equally hard to lose them unexpectedly for whatever reason. I have done both, and I feel sure I will again because I just cannot imagine a life without the love and companionship pets offer.