Take your papers and good riddance

[Mr. Pencil]

The phrase "for whatever reason" is not a "justification" for deductions,

My point exactly. If the reason is that the home office does not meet any of the fairly generous but still technical definitions of principal place of business, then the deduction can not be justified.

Principal place of business does not simply mean the place where most of the most important work is done. For a home office, it specifically means a place used exclusively and regularly for business. I can't say if that rule is good or fair, but I can say that it IS the rule. Transportation between a business location and a home office that is not used exclusively and regularly as a principal place of business is non-deductible commute.

[JohnH]

Isn't storage of inventory or product samples one of the exceptions to the exclusive use and separate space rules? (provided of course that the other qualifications are met).

[Janitor Bob]

No inventory....she just gets commission from sales and bonues for having parties. However, I'm sure she does have some "samples"...and these need to be stored somewhere....wondering if that alone could get her OIH

[Mr. Pencil]

Isn't storage of inventory or product samples one of the exceptions to the exclusive use and separate space rules?

It's not an "exception." It is just one way to qualify for business-use-of-home deductions. It does not meet the definition of a "principal place of business," which is another way to qualify. See Pub 587.

Transportation between a business location and a home office that is not used exclusively and regularly as a principal place of business is non-deductible commute. See Pub 463. Seriously, look this stuff up!

[JohnH]

Oh, pardon me.

I guess it's becoming obvious that one of us can't read very well.

I did look it up, and apparently Pub 587 is in error in calling it an "exception"

"Exceptions to Exclusive Use

You do not have to meet the exclusive use test if either of the following applies.

You use part of your home for the storage of inventory or product samples (discussed next).

You use part of your home as a daycare facility, discussed later under Daycare Facility ."

But I guess I should follow your wording rather than the Publication you suggested that I read, so I'll withdraw the use of the word "exception" if it bothers you.

[Janitor Bob]

I see...So while her one foot of storage space may get her OIH deductions....albiet a very tiny amount, it would still not qualify her for mileage from her home to clients as her home would still not qualify as principle place of business

This is what I got originally from reviewing Pubs 463 and 587.....but I started questioning when so many others started commenting. I reeally would like to get this client (possibly former client) what she deserves, but I just don't see it in this case.

[Mr. Pencil]

I'll withdraw the use of the word "exception" if it bothers you.

Thanks for the kindness. No words bother me (except profanity). I thought the discussion was about mileage, not O.I.H. Now I'm not even sure what the question was, but anyway it seems to have been pre-answered by reasonable research.

[Janitor Bob]

Client's main points of contention is that others she spoke to or heard about are claiming all of their mileage and deducting their cell phone bills...I presume to generate large losses that increase their refunds.

The crux of the problem is that from what I have read, I do not think I can allow mileage (to her home to clients' homes) unless she can somehow get her home to qualify as a principal place of business...otherwise, mileage would be commuting.

I could "possibly" get her OIH with a tiny storage area. That would provide an almost negligible amount of expenses to be deducted. However,it appears that doing so would still not qualify her home as her principle place of business...and, thus, no mileage.

To her other point, I do not see any way that any of her cell phone could be deducted since she does not have another main phone line into her home...just the cell. Even if she did have a separate land line, I thinking I coud still only deduct a percentage of the cell phone bill based on its % of business use.

This client has bought into the direct marketing pitch that I hear so often: "Be a distributor for our product and you can take all of these deduction on your taxes"....and some peple do claim everything...and they don;t get caught (at least not right away), so they are held as examples by people like my client...who now thinks less of my service because I somehow lack the skills to allow those deductions.

[JohnH]

Speaking of wierd client interactions, a very elegant lady just walked into my office to inquire if I would be wiling to consult with her on her tax return because she did a "simple 1031 exchange" last year and isn't sure how to handle THAT PART of her return. Ignoring the fact that I won't prepare PART OF a return, I explained that I looked into doing some dedicated work on 1031 exchanges several years ago, and after becoming aware of all the pitfalls I decided to avoid them altogether. SO I'm not the person she needs to be speaking with.

Naturally, it didn't end there. So we talked about 15 minutes about other rental properties she owns (more red flags for me), and something a little unusual about this "simple" 1031 exchange she failed to mention at the outset (something which might in fact blow the whole deal for her if it's ever examined). I wished her well, and as she was leaving she mentioned that maybe I should "read up on 1031 exchanges so I could help out if someone came in with the same questions in the future".

"Thanks for the advice, ma'am, but that particular train left the station long before you came in my door - did you miss the part where I said I DECIDED years ago not to do that very thing?". It's obvious once again that people frequently only hear what they want to hear.

Fortunately there are no papers to return in this case since I never accepted any from her. Didn't even ask her name. And best of all, I had not given her a business card. I've learned not to be so quick to hand out that card until I know a little more about the situation. (It would have been awkward asking her to return the business card as she left my office).

[easytax]

Client's main points of contention is that others she spoke to or heard about are claiming all of their mileage and deducting their cell phone bills...I presume to generate large losses that increase their refunds.

The crux of the problem is that from what I have read, I do not think I can allow mileage (to her home to clients' homes) unless she can somehow get her home to qualify as a principal place of business...otherwise, mileage would be commuting.

I could "possibly" get her OIH with a tiny storage area. That would provide an almost negligible amount of expenses to be deducted. However,it appears that doing so would still not qualify her home as her principle place of business...and, thus, no mileage.

To her other point, I do not see any way that any of her cell phone could be deducted since she does not have another main phone line into her home...just the cell. Even if she did have a separate land line, I thinking I coud still only deduct a percentage of the cell phone bill based on its % of business use.

This client has bought into the direct marketing pitch that I hear so often: "Be a distributor for our product and you can take all of these deduction on your taxes"....and some peple do claim everything...and they don;t get caught (at least not right away), so they are held as examples by people like my client...who now thinks less of my service because I somehow lack the skills to allow those deductions.

Agree with no phone cost in this case (although earlier mention of add-on features would be taken by me). As far as IHO - agreed that not possible as the sq. ft. would definitely not be worth the time in this case.

There is a big difference between being an employee and running a business --- so always think on the TWO DIFFERENT concepts and requirements. Going to a job is commuting BUT running a business may be something entirely different and the concepts, etc. stand alone /// Look at each separately, as if neither effected the other.

Also, no one has discussed the reasonable and necessary wording on ANY business, especially as pertains to Home BUSINESS ---- is it reasonable for her to conduct the business without the mileage (going to shows, etc.), --- my reason says NO -- so therefore it is reasonable for the mileage ---- reasonable and necessary (not always normal perhaps) but if it meets this test, then yes I would deduct it and since I believe I would "win" at an audit --- I am also protected by NOT being frivolous.

If the client has a reasonable expectation of profit (even if it takes decades) and does the "business" as a business -- then reasonable and necessary make a BIG part of the discussion and determination.