Question

List the two requirements for a home office to constitute a "principal place of business" for which related expenses may be deducted.

Answer 1

To qualify as a 'principal place of business' for tax deduction purposes, a home office must be used exclusively and regularly for business purposes and must be the primary location where the business is conducted or where administrative and management activities occur.

Step-by-step explanation:

In order for a home office to constitute a 'principal place of business' for which related expenses may be deducted, there are two requirements:

1. The home office must be used exclusively and regularly for conducting business. This means that the space should be used solely for business purposes and not for personal activities. Additionally, the business use of the home office must be regular and ongoing.
2. The home office must be the primary location where the business is conducted or where the majority of the administrative and management activities are performed. This means that the home office should be the main place where the business owner carries out their work and runs their business operations.