All right, Sharon, today we're going to be talking about the Augusta rule. Have you ever been to Augusta? I have. Yeah? You've been to the Masters? No. I haven't been to that, but I've been to Augusta. Okay. So the Augusta rule is what, you know, people would come down for the Masters and they would rent their houses out on the golf course, around the golf course, and so forth. And it allows you, kind of like the furniture market here in North Carolina, you rent your house out you can rent it for 14 days, and you don't have to pick that up as income. This got coined the term Augusta rule, but it's a section of 280A of the Internal Revenue Code, and it allows business owners to rent their personal residences to their own businesses, which is interesting. So you can rent your personal residence to your own business. Now, I'm going to say, I get a lot of questions about this. I see CRNAs that, you know, they've Googled this, or they've seen it out on YouTube, they've heard somebody talk about it. I'm going to say for most CRNAs, this is going to be a stretch for a deduction. But because I have so many that ask about it, I want you to understand it and work with your tax professional to see if it might be something that you could benefit from. Because you really, there are a lot of little nuances to this that need to be taken into account. So yeah, but that's the basics of it. You know, what it does is you can rent your home to your business, your personal residence, for up to 14 days, and your business can deduct it as a tax deduction, and you do not have to pick it up as income if everything is done properly. First is that it must be qualifying, okay? So you've got to have a qualifying period, and it's got to be temporary. You know, you can't rent it for, you know, a month straight. You know, it's got to be a reason there. And it's got to be exclusive for business use during that time. So in other words, you know, you can't be doing anything else in the house during that time period. The whole residence must be utilized for that business purpose. The other thing is you've got to have fair rental value, and you've got to determine what that fair rental value is. So what I encourage people to do that do use this is go out and say, you know, if your house is 5,000 square feet, whatever it is, if you went out and had to rent a 5,000 square foot place in your town, what would it cost? Call around, get two or three different quotes, estimates. Put that in your file. Take the average of those two or three, and then break it down by your day, and that's your daily rental rate for your property. So you've got to establish that fair rental value amongst rental real estate in that area that you would be using for this endeavor. So like I said, it does allow you to deduct a pretty sizable amount of money, but the key to this is keeping accurate records, documentation, you know, you want to make sure that you're actually utilizing it for a business purpose, and you need to document every step of the way. So if you're having a business meeting, who attended, what did you talk about? What was your agenda? Did you take pictures while everybody was there? What did you actually do? Did you have a rental agreement between you and your company? Do you have evidence of fair market value like we talked about before? You take all of that information, you put it in a little pile, and you keep it with your tax records. What is the eligibility of being able to do this? And we're trying to kind of compact this into a very short module, but one, you can have board meetings at your house, okay? Again, documenting who's there, what you talked about, and so forth. You can have retreats at your house. Again, business purpose for that retreat. Masterminds, a lot of people have mastermind groups that help them in their business, and you can have your mastermind come to your house, put together an agenda, and actually utilize your house for your mastermind meeting. Now, you cannot use it for entertainment. So in other words, if you've got a group of people coming over, and you're gonna drink wine, and eat cheese, and listen to jazz music, or whatever, and there's really no true business purpose, even though they might be clients of yours, or you might work with them, or they might be fellow CRNAs, that doesn't cut the mustard. Now, an employee holiday party. You can utilize this. There are two caveats to that entertainment, is the employee holiday party and the summer picnic. And Sharon, how many employees do you have? One, besides myself. Right, and the other is your husband. But the employee holiday party, again, could be a stretch. The summer picnic could be a stretch, okay? And that's why I said earlier, a lot of CRNAs who are doing 1099, can they actually do this? Can they have other contractors, or other employees, or other people that work for them? Yes, absolutely. But it makes it really tough if it's just you, and you are renting your house to yourself, for just you to come to your house and have a meeting. But the sizzle behind this is just, let's say the average daily rate for your home is $1,800 a day. And you used it for board meetings, retreats, masterminds, all these things for 10 days. Then you put $18,000 in your pocket, you deducted it from the business, and you put it in your pocket tax-free. So it can be a pretty strong benefit. Some other things to know about this, is if you're a sole proprietor, you cannot do this. You have to be an S corporation. Either an LLC or PLLC taxed as an S, or an actual S corporation in order to do it. You cannot do it if you take the home office deduction. So you're kind of, should I do this, should I do that? If you actually are taking this, and your home office deduction is $1,500, and you're gonna put, like in my example, 18 grand in your pocket, which one would I rather have? The other thing that gets missed a lot of times in this, is you do need to send yourself a 1099-MISC. Back to my example, 10 days at $1,800 a day, your company sends you, Sharon Pierce, a 1099-MISC for that $18,000. You get it, we adjust that on the tax return for rent that's non-taxable. The other thing is, it's good practice to issue an invoice from the homeowner to the corporation, documenting what actually happened, what took place. Again, documentation is the key to about everything with the IRS. If you issue an invoice, show that you rented it, you kept up with who was there, and what you talked about, and you keep that in a little file folder, and you stuck it with your tax return, you should be in good shape. But again, like I said, most CRNAs are gonna have a really, really tough hurdle to being able to do this. If you're thinking right now, oh gosh, can I do this, can I do that? Maybe, maybe not. You need to talk to your tax professional or somebody who specializes in this, and get them to help you walk through a scenario that would work for you, work for your business, and keep you out of stripes.

Augusta rule

renting personal residences

tax deductions

business meetings

IRS regulations

rental deduction

business use

1099-MISC

tax compliance