My corporation (I own majority) owns a building, in which I rent from as an individual, for my side business. Can I deduct this on my Schedule C?
Section 162 says if you have equity you cannot. I'm confused.
Thank you.
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You can deduct it on your Sch C IF the corporation reports the rental income on it's return.
@orlycpa wrote:Section 162 says if you have equity you cannot. I'm confused.
You do not have equity in the building, the corporation does. If you had equity in the building individually, you would essentially be renting to yourself.
Thank you so much! So does anything change if I am paying above market rent?
Ah - gotcha. So even though I'm a majority shareholder in the corporation that I'm renting from?
Yes, because the corporation is a separate entity for federal income tax, and other, purposes.
Careful about renting above FMV as the IRS could consider this a tax avoidance scheme by moving income from the Sch C subject to SE taxes to a corporate return which may not.
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