Question

T's employer provides an office for her in its downtown headquarters. Which of the following statements is true?

a. T maintains an office in her home that she uses to conduct work related to her rental property. Even though the rental activities may be considered a business, no deduction can be allowed because T's principal business is that of being an employee and its primary location is downtown.

b. T regularly meets with clients of her employer's business in her home office, which is exclusively used for such purpose. T is entitled to the home office deduction without further inquiry.

c. T maintains a home office that is exclusively used on a regular basis to conduct work regarding her investment portfolio. No deduction is allowed.

d. None of the statements above are true.

Answer 1

T's employer provides an office for her in its downtown headquarters. Which of the following statements is true?

Answer: C

T maintains a home office that is exclusively used on a regular basis to conduct work regarding her investment portfolio. No deduction is allowed.

C is true because the investment portfolio work does not constitute a business and no deduction would be allowed.

Item a is false because a deduction is allowed as long as the home office is the prin-cipal place of any business. Assuming the real estate activity is a business, then the home office would qualify as the principal place of business for that business.

Item b is false because T is an employee, and employees must also satisfy the convenience-of-the-employer test.