Question: Clint, a self-employed engineering consultant, is contemplating purchasing an old building for renovation. After the work is completed, plans to rent out two-thirds of the

Clint, a self-employed engineering consultant, is contemplating purchasing an old building for renovation. After the work is completed, plans to rent out two-thirds of the floor space to businesses, and to live and work in the remaining portion. Help Clint by labelling each of the items below as "Relevant" or "Not Relevant" regarding tax issues surrounding his plans. a. Will the renovation expenses qualify for the tax credit for rehabilitation expenditures? b. What is the impact of passive activity loss rules on deductibility of rental losses (if any) once the building is renovated? c. Can he take the office in the home deduction? The Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Only self-employed taxpayers are eligible for the home office deduction. d. How much depreciation expense can he take once the building is placed in service? e. How will he allocate expenses between rental and personal-use portions of the renovated building? f. Has Clint been self-employed for more than one year? g. Will Clint be able to use a nonrefundable credit? Relevant / Not Relevant

Clint, a self-employed engineering consultant, is contemplating purchasing an old building for renovation. After the work is completed, Clint plans to rent out two-thirds of the floor space to businesses, and to live and work in the remaining portion. Help Clint by labelling each of the items below as "Relevant" or "Not Relevant" regarding tax issues surrounding his plans. Relevant / Not Relevant a. Will the renovation expenses qualify for the tax credit for rehabilitation expenditures? b. What is the impact of passive activity loss rules on deductibility of rental losses (if any) once the building is renovated? c. Can he take the office in the home deduction? The Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Only self-employed taxpayers are eligible for the home office deduction. d. How much depreciation expense can he take once the building is placed in service? e. How will he allocate expenses between rental and personal-use portions of the renovated building? f. Has Clint been self-employed for more than one year? 9. Will Clint be able to use a nonrefundable credit?

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