I am a sole owner of a S-Corp. I started to renovate part of my home into a home office. I obtained a loan to fund the construction. However, this project is turning into more problems than it's worth. I want to scrap the project. I spent approximately $129K from my business, can I deduct this expense on my 2020 business tax return? If so, how much? I will be in the red if I deduct the full amount. An prompt response would be much appreciated. Thank you.
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Since the business doesn't own the home it cannot deduct any home business expenses unless they rent space from you and then you will need to report the rent on a Sch E where you can depreciate the portion of the home basis. The money the corp spent on your home is a draw to you and not a deduction.
If I take the $129K as a distribution it will result in a significant capital gain on my personal tax return. Is there any other options, like (reluctantly) continuing with the construction?
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