Paul L. Caron

Thursday, August 18, 2011

Tax Court: Accountant Cannot Deduct Bathroom as Home Office

Tax Court Logo 2 Bulas v. Commissioner, T.C. Memo. 2011-201 (Aug. 17, 2011):

Petitioner has a master’s degree in accounting from Florida International University. He worked for the Internal Revenue Service for 7 years, working as a tax technician, revenue agent, Appeals auditor, and Appeals officer. In 1985 petitioner started the accounting business he continues to operate today. This business provides tax return preparation services and has helped prepare approximately 180-220 returns per year.

Petitioner has two daughters. In 2007 his daughters were 17 and 20 years old, respectively. His older daughter was a fulltime student at Rutgers University from September 1, 2005, through May 9, 2007. His younger daughter was a high school student in 2007. Petitioner’s daughters provided administrative assistance in his accounting business, but the business did not issue either a Form W-2, Wage and Tax Statement, or a Form 1099- MISC, Miscellaneous Income, to report any wages to either daughter. Petitioner paid his daughters’ credit card bills....
Petitioner used one of the bedrooms of his residence exclusively as his office for his accounting business. Petitioner argued that he also used the hallway and the bathroom adjacent to this bedroom exclusively for his accounting business. Petitioner testified, however, that his children and other personal guests occasionally used the bathroom. Accordingly, the hallway and the bathroom were not used exclusively for business purposes. ...
Petitioner argues that both his daughters were paid wages for administrative work performed for his accounting business in 2007. However, neither daughter was issued a paycheck, Form 1099-MISC, or Form W-2. Further, neither had tax withheld. Petitioner testified that he paid his daughters for their work by paying their credit card bills but has not provided any evidence to substantiate amounts paid. Accordingly, we sustain respondent’s determinations with respect to the wages paid to petitioner’s daughters.
(Hat Tip: Bob Kamman.)

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hey, if that what make you happy then fine just don't harm the daughters

Posted by: Accountant Sutherland | Sep 16, 2011 2:16:45 AM

haha roger very good

Posted by: Swift PAT | Aug 24, 2011 12:35:41 PM

If He deducted His Clob Lobster then It would be Legal.

Posted by: Sam | Aug 20, 2011 9:34:28 AM

Very clever, Roger! Ten points for that one!

Posted by: American Delight | Aug 19, 2011 1:20:59 AM

Certainly that "business" involved paperwork that he should have taken to court, if he wanted to raise a stink. (I'm acting like I'm in third grade again.)

Posted by: Woody | Aug 18, 2011 9:30:02 PM

I would say the more precise argument is that he was doing his "business" in there.

Posted by: Roger | Aug 18, 2011 4:06:21 PM

Too bad. That's probably where he did most of his thinking.

Posted by: Woody | Aug 18, 2011 7:41:51 AM