Professional Tax Software Tax Research Software
Parker Tax Pro Library
online tax research Parker Pro Library accounting tax research Like us on Facebook Follow us on Twitter View our profile on LinkedIn Find us on Pinterest
Stay Informed Of The Latest Articles From Our BiWeekly Bulletin
Parker Tax Publishing - Tax Research
Tax Research Articles Tax Research Parker's Tax Research Articles Accounting Research CPA Client Letters Tax Research Software Client Testimonials Tax Research Software tax research

Federal Tax Research Parker Tax Publishing

Professional Tax Research for Accountants



No Home Office Deduction for Employee Working from Home for Her Own Convenience. (Parker's Federal Tax Bulletin: July 17, 2013)

While the taxpayer could deduct home office expenses for the portion of time she was an independent contractor, she could not deduct such expenses once she became an employee because working at home was at her request and for her convenience. Fontayne v. Comm'r, T.C. Summary 2013-54 (7/3/13).

Jean Marie Fontayne and Yves Fontayne were married and timely filed their 2008 federal income tax return. In 2008, Yves worked full time as an employee of a semiconductor sales company. From January to July 2008, Jean Marie worked part-time from her home as an independent contractor for the same company. In July 2008, Jean Marie became a full-time employee of the company. Per her request and for her convenience, the company allowed her to work from home up to three days a week.

In January 2008, Jean Marie and Yves moved into a new home. Jean Marie designated a room, which included a bathroom and a closet, as her home office. She did not see any clients or anyone from her company at her home office. In November 2008, the couple improved the home office area. They moved walls to increase the size of the office, replaced carpeting, retiled the bathroom, installed a central vacuum and under-the-floor heating system, and installed a fireproof safe in the closet. On their Schedule C, Profit or Loss From Business, the couple reported a tentative profit of $24,728 from Jean Marie's work for the company and expenses of $24,728 for the business use of their home. The couple's home was 3,100 square feet and they claimed that 554 square feet, or 17.87 percent, was used regularly and exclusively for business.

OBSERVATION: A taxpayer can deduct the business portion of general repairs that benefit the taxpayer's entire home and maintain it in good working condition over its useful life. Generally, the business portion of such general repairs is determined by applying the home's business use percentage to the full cost of the repairs.

After auditing the couple's 2008 return, the IRS issued a notice of deficiency disallowing some claimed business expenses as personal expenses, reducing the percentage of business use of the couple's home used to calculate business expenses, and prorating other claimed home office expenses reflecting Jean Marie's change of employment status from part-time independent contractor to full-time employee.

Code Sec. 262 precludes deductions for personal, living, or family expenses. Code Sec. 280A(a) denies deductions with respect to the use of a dwelling unit that the taxpayer uses as a residence during the tax year. However, Code Sec. 280A(c)(1)(A) allows the deduction of expenses allocable to a portion of a dwelling unit that the taxpayer uses exclusively and regularly as the principal place of business for a taxpayer's trade or business. In the case of an employee, the exception applies only if the use of the home office is for the convenience of the employer.

The IRS asserted that the home office expenses should be limited to the time period when Jean Marie was a part-time independent contractor. The IRS also adjusted the percentage of the couple's home used for business and disallowed business expenses deductions claimed for repairs and maintenance, utilities, and other expenses.

The Tax Court agreed with the IRS that only home office expenses incurred when Jean Marie was a part-time independent contractor were deductible. Because she was allowed to work from home part-time at her own request and for her own convenience once she became an employee, she was not entitled to any home office expense deduction for that time period. In determining the portion of the home used as a home office, the court rejected Jean Marie and Yves inclusion of the square footage of a hallway, bathroom, entryway and closet since those areas were not used exclusively as a home office. The court disallowed deductions for the costs of moving walls to increase the size of the home office, replacing carpeting, retiling the bathroom, installing a central vacuum and under-the-floor heating system since those expenses were capital expenditures and were not currently deductible. Deductions for telephone expenses at the home were also disallowed as personal expenses.

Finally, the court imposed the accuracy-related penalty. The court concluded that Jean Marie and Yves were negligent in preparing their return.

For a discussion of the home office deduction, see Parker Tax ¶85,500.

Staff Editor Parker Tax Publishing


Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker's Tax Library - An Affordable Professional Tax Research Solution.

Professional tax research

We hope you find our professional tax research articles comprehensive and informative. Parker's Tax Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Parker Tax Research

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Parker Tax Research Library

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker's Tax Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!


James Levey

Parker's Tax Library - An Affordable Professional Tax Research Solution.

    ®2012-2017 Parker Tax Publishing. Use of content subject to Website Terms and Conditions.

IRS Codes and Regs
Tax Court Cases IRS guidance