S-Corp deductions

[jasdlm]

Client is sole shareholder and employee of S-Corp. Has W2 (as appropriate). Office is in client's home. This is my first year to prepare both returns.

On schedule E, there is the standard flow through from the S-corp. Item 2, however, just says 'unreimbursed expenses' and is listed as a loss (in an amount I can't come up with give then backup that is attached to the return). There is also a depreciation schedule. The item depreciated says 'business use of home', and the TP residence is listed. I am guessing that the depreciation is part of the amount on schedule E, unreimbursed expenses, that I can't calculate.

All expenses for the S-corp were taken on the S-Corp return. I can't figure out what these unreimbursed expenses would be, or why they wouldn't need to go on a 2106 and Schedule A, subject to the 2% haircut.

There is no 8829 or 2106. Someone with more experience please walk me through this. I want to deduct everything I can for the client, but I'm not following the previous preparer's method very well. I understand that partners (1065) can take unreimbursed expenses against partnership income. Is this similar? What would be the standard for proving they are shareholder expenses rather than employee expenses?

Thanks!

[grandmabee]

That's how you handle partnership for partners unreimbused expenses. Can't do that on a s-corp. They did it wrong. Any employee expense would be 2106 or set up an accontable plan and have s corp reimbuse. Home office for a s- corp partner is hard to get.

[Maribeth]

Client is sole shareholder and employee of S-Corp. Has W2 (as appropriate). Office is in client's home. This is my first year to prepare both returns.

On schedule E, there is the standard flow through from the S-corp. Item 2, however, just says 'unreimbursed expenses' and is listed as a loss (in an amount I can't come up with give then backup that is attached to the return). There is also a depreciation schedule. The item depreciated says 'business use of home', and the TP residence is listed. I am guessing that the depreciation is part of the amount on schedule E, unreimbursed expenses, that I can't calculate.

All expenses for the S-corp were taken on the S-Corp return. I can't figure out what these unreimbursed expenses would be, or why they wouldn't need to go on a 2106 and Schedule A, subject to the 2% haircut.

There is no 8829 or 2106. Someone with more experience please walk me through this. I want to deduct everything I can for the client, but I'm not following the previous preparer's method very well. I understand that partners (1065) can take unreimbursed expenses against partnership income. Is this similar? What would be the standard for proving they are shareholder expenses rather than employee expenses?

Thanks!

The corporation can reimburse the shareholder for out-of-pocket expenses in running the office. Things such as utilities can be reimbursed under an accountable plan from the corp to the shareholder. They are deducted on the corporation's tax return, not the shareholder's.

Maribeth

[jasdlm]

Thanks so much to both of you. I thought that I must be missing something. I appreciate your responses.