Cable TV in home office

[Margaret CPA in OH]

Client has home office for the convenience of the employer (company office is in this employee's home, in fact, as company cannot afford another office). Company is not paying rent to employee but he is taking home office deduction. Just asked now, in utilities, should he include cable tv. The office (used to be family room) has cable access. Company does not have a tv but employee has put a small tv to 'use during business hours to follow business news.' Deductible?

Sadly, I know maybe a bit too much but it shouldn't influence this. Company is on its last legs and employee was paid maybe for 6 of the last 12 months. I fired the company last year for a variety of reasons but this only remaining employee is still my client.

[kcjenkins]

Does he have the cable access for the internet access for the business? If so, deductible. If not, just for the TV, then no.

[Bees Knees]

The bigger picture is the exclusive use test for office in home. Having cable TV is an indication that the office might not always be used exclusively for business. It is kind of like playing computer games in your home office to relax between business activities. Or paying personal bills online with your home office computer. You run the risk of having an IRS auditor throw out your office in home deduction on the grounds that your home office is not being used exclusively for business. Of course, if you really want to get picky, there is a case to be made that everybody breaks the exclusive use test in one way or the other. But there is no reason to advertise that fact to the IRS by trying to deduct an insignificant personal expense like cable TV as a business expense.

[Margaret CPA in OH]

I think the cable tv is separate from the internet access which I believe is through the telephone company but I will double check. Otherwise I don't think he would ask.

This office space is truly office space. I've been there when they were clients and there are no comfortable, homey type accommodations. It was a family room in an earlier life as this is a residence. The employee is single, no kids. My guess, and it's only a guess, is that he would like to watch tv during the day occasionally and maybe or maybe not exclusively business news. I don't know that for fact, but there is precious little business now so what else would he do?

As for exclusive use of any office in home, there still is de minimus personal use, isn't there?

I will pass along the question and ask about exclusivity, though. This poor guy really needs to get another job but I think is too lazy. It's kind of nice for his commute even if he doesn't get paid. I just don't know how much longer he can hold on!

Thanks for comments!

[jainen]

>> there still is de minimus personal use, isn't there?<<

I am not aware that there EVER was. It must be exclusively business, period. The only de minimum rule that I know of is that "incidental activities" will not disqualify the home office--but that means doing minor administrative tasks at a different location, not doing personal stuff in the office. As for "precious little business now," if he is not using the office regularly as well as exclusively, it doesn't qualify anyway.

[Margaret CPA in OH]

Thanks, Jainen, I think I was confusing de minimus use things such as the occasional use of a copier at the workplace or making a personal phone call from the work place. I would rather imagine that 99+% of those of us with a home office would fail then. Sort of reminds me of the reporting requirement discussion recently for found money and a few bucks paid to a family member or friend for a ride to the airport. No mercy!

I do believe this place is used regularly, that is, every day for business. There just isn't much going on. They have lost several clients over the last 5 years and I don't think have any new ones as their technology is dated. This employee's lack of pay is reflective of the low cash flow but he does still provide tech support to the remaining clients.

[jainen]

>> I would rather imagine that 99+% of those of us with a home office would fail then<<

Bingo! That seems to be the position of the IRS as well. So why are we even having this discussion? Personally, I have never pretended I use my home office like that. This business is crazy enough without getting into what we might "imagine."