Publication 334 |
2001 Tax Year |
Rent Expense
Rent is any amount you pay for the use of property you do not own.
In general, you can deduct rent on Schedule C or C-EZ only if
the rent is for property you use in your business. If you have or will
receive equity in or title to the property, you cannot deduct the
rent.
Unreasonable rent.
You cannot take a rental deduction for unreasonable rents.
Ordinarily, the issue of reasonableness arises only if you and the
lessor are related. Rent paid to a related person is reasonable if it
is the same amount you would pay to a stranger for use of the same
property. Rent is not unreasonable just because it is figured as a
percentage of gross receipts.
Related persons include members of your immediate family, including
only brothers and sisters (either whole or half), your spouse,
ancestors, and lineal descendants. For a list of the other related
persons, see Publication 538,
Accounting Periods and Methods.
Rent on your home.
If you rent your home and use part of it as your place of business,
you may be able to deduct the rent you pay for that part. You must
meet the requirements for business use of your home. For more
information, see Business Use of Your Home, later.
Rent paid in advance.
Generally, rent paid in your business is deductible in the year
paid or accrued. If you pay rent in advance, you can deduct only the
amount that applies to your use of the rented property during the tax
year. You can deduct the rest of your payment only over the period to
which it applies.
More information.
For more information about rent, see chapter 4 in Publication 535.
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