January 15, 2021

I recently had a prospective client ask me if they could write-off their home office deduction even though they went into
their office every day.
I said yes. Hmm but can they really? To make this work, the home office will qualify for the
deduction when it becomes an administrative office for your business.
This is true whether you are a proprietorship,
single-member LLC, partnership, or corporation.

Per Publication 587, the IRS says that for your home office to qualify you must meet the following requirements:

1. You use it exclusively and regularly for administrative or management activities of your trade or business.

2. You have no other fixed location where you conduct substantial administrative or management activities of your trade

or business.

Additionally stated, you can have more than one business location, including your home, for a single trade or business.

In Commissioner v. Soliman, 113 S.Ct 701 (1993), the Supreme Court reversed lower court rulings and upheld an IRS

interpretation of Section 280A that disallowed a home office deduction for a self-employed anesthesiologist who

practiced at several hospitals but was not provided an office space at the hospitals.
Even though the anesthesiologist used
a room in his home exclusively to perform administrative and management activities for his profession (bookkeeping,

correspondence, research, and communicating with fellow doctors, patients, and insurance companies), the Supreme

Court sided with the IRS position that the principal place of business was not his home office because the essence of the

professional service was performed at the hospital.

The Ways and Means Committee believes that the Supreme Courts decision in Soliman unfairly denies a home office

deduction for all the taxpayers who manage their businesses from their home.
Therefore, the statutory modification
adopted by the Committee will reduce the favoritism in favor of taxpayers who manage their business activities from

outside their home, enabling more taxpayers to work from home.

The actual wording of the law is: For purposes of [a home office] qualifying as a principal place of business, the term

principal place of business includes a place of business which is used by the taxpayer for the administrative or

management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business

where the taxpayer conducts substantial administrative and management activities of such trade or business.


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