Question
Simplified method for home office deduction not allowed
Hi,
My wife runs a small ceramics studio from our home. I want to claim a deduction for the part of the home she is using (170 sqft / 3,600 sqft). TT refuses to d iso saying that the business is at a loss, however the net profit is 1,305$. Opening Form 8829, it appears TT is calculating a gross income limitation of -1,161. Looking at how this should be calculated, my understanding is that (from the IRS instructions):
| Line 1. If all gross income from your trade or business is from this qualified business use of your home, figure your gross income limitation as follows. | |||
| A. | Enter the amount from Schedule C, line 29 | _____ | |
| B. | Enter any gain derived from the business use of your home and shown on Form 8949 (and included on Schedule D) or Form 4797 | _____ | |
| C. | Add lines A and B | _____ | |
| D. | Enter the total amount of any losses (as a positive number) shown on Form 8949 (and included on Schedule D) or Form 4797 that are allocable to the business, but not allocable to the business use of the home | _____ | |
| E. | Gross income limitation. Subtract line D from line C. Enter the result here and on line 1 of the simplified method worksheet | _____ | |
A, should be the gain mentioned above,
B 0 (no capital gain from the business)
C = A
D is zero (no loss from the business reported)
E = C-D = A?
What I am not understanding? Thanks for your help,
Jerry
