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Xac/280 Week 9 Final Paper

Satisfactory Essays

Prior to the issuance of §280A in 1976, taxpayers were permitted to deduct reasonable expenses related to the use of a home office under §162(a) as long as the test of being appropriate and helpful was satisfied. The new rule imposed exceptions to the original requirements which resulted in the deduction under many circumstances to be disallowed. One of the exceptions covered under §280A(c)(1)(a) requires that the space is the principal place of business.
As telecommuting has become an increasingly popular form of work engagement, the utilization of the business use of the home deduction has also increased. The implementation of §280A(c)(1)(a) created confusion as to the definition of principal place of business and has culminated in controversy and litigation resulting in the additional requirement under the Tax Reform Act of 1997 which provided that, for purposes of the deduction, “there is no other fixed location of the trade or business where the taxpayer conducts these activities”. This requirement essentially eliminated the ability for employees that telecommute to deduct business expenses related to the use of the home (Banatte & Damtew, 2008).
Employers allow telecommuting for many reasons, including the ability to recruit better talent, decrease overhead expenses, increase productivity, expand the employee base to include those with disabilities (Anderson, Bricout & West, 2001; Lipin, 2010; Myungjung & So Hee, 2017), and to support …show more content…

Research Questions The research questions examined in this study are as follows:
1. How did the implementation of §280A effect the deductibility of the home office expense?
2. What is the principal place of business for telecommuters?
3. Is telecommuting allowed because it is for the convenience of the employer?
4. What revisions to §280A are needed in order to include taxpayers that

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