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My CPA in Toledo said to pay myself rent from my LLC, and the $9,400 number on my Schedule C proved it
Back in 2019 my CPA in Toledo told me to have my LLC pay me rent for the home office instead of just taking a draw, and I figured it was one of those gray-area tricks that would get flagged. I ran it that way for two years and my Schedule C showed $9,400 in rent paid to me as an individual, with zero questions from the IRS. My old business partner tried the same thing without a written lease and got a letter asking for proof, so the paperwork seems to be the whole game here. Has anyone else run a rent arrangement like this and gotten pushback later?
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pat_murray536d ago
Man, I had a buddy who tried this exact thing and it bit him. He had his S-corp paying him rent for a home office but never bothered with a lease, just wrote himself a check every month and called it good. Two years in, the IRS sent him a letter wanting the lease, proof of fair market rent, and receipts showing the company actually paid it. He scrambled to put together a lease after the fact and it did not go well for him. The guy I know who did it right had a signed lease, set a rate based on what similar space rented for in his area, and kept a separate bank account so the paper trail was clean. That is the whole ballgame right there, the paperwork has to exist before the audit, not after. Your partner getting that letter without a lease pretty much proves your point.
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