Home Office Deduction for C and S Corporation
Don’t Rent Your Home Office to Your Corp.
IRC Section 280A(c)(6) prohibits claiming deductions for the rental of your home office to your corporation. Therefore, if you rent your office to your corporation, you would have to report the income but neither you nor your corporation would be allowed to deduct any of the expenses.
Here’s a better way! Reg. Section 1.62-(d)(1) allows reimbursement of home office expenses, including depreciation. Have your corporation write you a letter requiring that you find suitable (additional) office space that provides confidentiality regarding your payroll, accounting, and tax records. The letter should state that the corporation will reimburse you for your office expenses. Use Form 8829 to calculate the expenses.
This way, your corporation gets the deduction, and you don’t have to report any income.