The answers to these frequently asked questions (FAQs) are based on guidance developed by the Statements on Standards for Tax Services (SSTSs) Guidance Task Force in response to questions that were presented during the SSTS public exposure period and since that time in administering the SSTSs. These FAQs are not rules, regulations or official statements of the Tax Executive Committee issued pursuant to its rule-making authority and, therefore, are not authoritative guidance.
The SSTSs should be used in conjunction with these FAQs. The answers to these FAQs may not necessarily address the requirements of other regulatory bodies, including State Boards of Accountancy, the Internal Revenue Service and other tax regulatory bodies whose rules may differ from those of the AICPA. A member should always consult these other sources to ensure compliance with all appropriate regulatory requirements.
A taxpayer has accurate records regarding her actual home office expenses. Is an estimate of the business portion of her principal residence provided by the taxpayer reasonable (in the following situation)?
A taxpayer uses her home office regularly and exclusively as her principal place of business. The taxpayer does not have a survey of her home but has measured the floor space of the room used as an office and has furnished the member with the total floor space in her home. The taxpayer estimates that the home office occupies 300 square feet of 2,400 total square feet of the home. In addition, the taxpayer has accurate records of the actual expenses paid for her home. Is the estimate prepared by the taxpayer reasonable?
The taxpayer's estimate appears to be reasonable and meets the criteria under SSTS No. 4.
A taxpayer doesn't have accurate records regarding her home office and the member thinks the taxpayer's estimates aren't reasonable. Should the member use the taxpayer's estimates (in the following situation)?
A taxpayer uses her home office regularly and exclusively as her principal place of business. The taxpayer communicates to the member that she does not have a record of the actual expenses paid for the home office, but she provides the member with an estimate of her expenses for the entire home without separating them into the proper categories needed for reporting on her tax return. The taxpayer has also provided the member with an estimate of the home office square footage and total square footage, which the member considers not reasonable. Is the estimate provided by the taxpayer reasonable?
The taxpayer’s estimate is not reasonable and does not meet the criteria under SSTS No. 4, paragraph 2. The estimates furnished by the taxpayer are not reasonable based on the facts and circumstances known to the member.
The AICPA’s Statements on Standards for Tax Services (SSTSs) are enforceable tax practice standards for members of the AICPA. Additional guidance is also found in the corresponding interpretations and frequently asked questions (FAQs). Access to the complete set of SSTSs and guidance are available in the AICPA’s Statements on Standards for Tax Services Library.