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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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My wife has a home based business and we are exact with the

Customer Question

My wife has a home based business and we are exact with the home office deduction. (I.e. We don't screw around.) My question is in regards ***** ***** whole house automatic stand by generator. I understand that the percentage of the generator is the percentage of the home office, but... We simply would not need the generator if my wife did not have the home office. We would get by with the $1,000 gasoline model as opposed to the $10,000 whole house model. Is there any hope I can deduct more than the home office percentage? Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Hi and welcome to our site!

In general - if the generator is used ONLY for the home office part of the property - there is no issues - we would deduct the full related cost as business expenses.

However if the generator is used for BOTH purposes - business and personal - the cost MUST be prorated.

The IRS requires that peroration to be REASONABLE.

As a rule - apportioning based on the total area vs the area used for business purposes is considered a reasonable and widely accepted.

However - other reasonable allocations are possible.
For instance - if there were NO the home office - and the whole house woudl be used for personal purposes only - and the $1,000 gasoline model woudl be good on that condition - but you choose larger and more expenses model ONLY because of business use - then your allocation might be considered reasonable.
But if you based an allocation on the imaginary situation that IF your house woudl be smaller then the smaller model would be acceptable - in this case I doubt the IRS finds that allocation reasonable.

So - different allocation possible - but it must be reasonable and based on existing facts and circumstances.

Expert:  Lev replied 1 year ago.

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