Corporation Can’t Deduct Rent Paid to Corporation’s Sole Owner Doctor and Employee

Christopher C.L. NG MD, Inc. APC v. Comm'r, T.C. Memo. 2018-14, the Tax Court held that a corporation, solely owned by a doctor who was also the corporation's sole employee, could not deduct expenses relating to the purported rental of part of the doctor's home. In reaching its decision, the court relied on the fact that the corporation did not produce any evidence of a written rental agreement or other documentation to support its position that the amounts claimed were actually rent and the fact that the doctor also did not treat the arrangement with the corporation as a bona fide rental arrangement because he did not report any reciprocal rental income on his Schedules E for the years at issue.

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