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For more information on the home office deduction, please see IRS Publication 587.
This determination is made based on all the facts and circumstances (see Publication 587, Business Use of Your Home (Including Use by Daycare Providers)).
For more information about deductions for business use of a home, search for publication 587 at
For more information on tax deductions when using your home to conduct business, check out the IRS Publication 587 "Business Use of Your Home." Also be sure to visit the IRS's Self-Employed Individuals Tax Center.
To find out more about deducting your home office, read IRS Publication 587.
IRS Publication 587, Business Use of Your Home, notes that administrative or managerial activities include (1) billing customers, clients, or patients; (2) keeping books and records; (3) ordering supplies; (4) setting up appointments; and (5) forwarding orders or writing reports.
The instructions for the 2004 IRS Form 8829 "Expenses for Business Use of Your Home," Page 3, and the 2004 IRS Publication 587 "Business Use of Your Home," Page 10, both indicate that depreciation for business use of a home is based on the 39-year recovery period for nonresidential real property.
Page 4, IRS Publication 587, states, "You can have more than one business location, including your home, for a single trade or business.
In a display of goodwill, the IRS in Notice 93-12 dated February 22, 1993, announced that it would not challenge deductions taken on prior years' returns as long as taxpayers "reasonably followed" the previous guidance as set forth in IRS Publication 587, Business Use of Your Home.
The following example was adapted from IRS publication 587 dealing with an employee working at home for the convenience of his employer, where the gross income from the home office= $6,000, the mortgage interest=$8,000, taxes=$4,000, insurance=$3,000, utilities= $3,000, direct expenses=$2,000 and depreciation=$5,000.
Notice 93-12 announced modification of Publication 587. Notice 93-12, and now Publication 587, contain three examples dealing with the principal place of business question.