Situation

Thank goodness, I have been a subscriber for years.

Last week, I took my CPA with me to the IRS office for an audit.

The IRS rejected my home-office deduction because I have a shared office at the Coldwell Banker real estate office where I am an agent. My use of the Coldwell Banker office consists of floor duty once every other week and sales meetings twice a month. All my other work is done in my home office, including every administrative and management task.

And as you have often instructed, I use my home office exclusively and regularly for business.

Here is what happened.

First, my CPA agreed with the IRS that I should not get a home-office deduction because Coldwell Banker gives me an office. Second, they both agreed that Soliman (the case where the anesthesiologist worked at three hospitals and lost his home office) controlled my deduction.

Question

Based on my reading of your articles, I am pretty sure my CPA and the IRS are both wrong. Can you help me out?

Answer

Yes, we can help. You are right on both counts: your CPA and the IRS are wrong. Your CPA is a particular disappointment.

Soliman Has Not Controlled Anything Since 1998

Your CPA is working from a case that lawmakers overturned. The Supreme Court decided Soliman in 1993. Congress found the result unfair and rewrote the rule in the Taxpayer Relief Act of 1997, but because of budget constraints made the new rule effective for tax years beginning after December 31, 1998.

That is 27 years ago. The rewritten statute added the administrative-or-management-activities test to the definition of “principal place of business,” and it is still the law in 2026. Nothing in the Tax Cuts and Jobs Act (TCJA) or the One Big Beautiful Bill Act (OBBBA) changed that rule.

Your Ammunition Comes from the IRS Itself

IRS Publication 587, Business Use of Your Home, gives you the answer to the more-than-one-office objection on page 3 under the subheading “Principal Place of Business,” which states:3

You can have more than one business location, including your home, for a single trade or business.

A few lines down in the same section, you will find the two-part test your facts satisfy:

1. You use your home office exclusively and regularly for administrative or management activities of your trade or business.

2. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.

Floor duty every other week and two sales meetings a month are not substantial administrative or management activities. They are selling and showing up. Every bit of your billing, record keeping, scheduling, and file management happens at home.

The Paragraph That Answers the Auditor Directly

Keep reading toward the end of page 3 and the list headed “Administrative or management activities performed at other locations.” It names five things that do not disqualify your home office. The last one on the list is written for your exact situation:

You have suitable space to conduct administrative or management activities outside your home, but choose to use your home office for those activities instead.

The auditor’s entire theory is that Coldwell Banker gives you a desk. The IRS’s own publication says that a desk you choose not to use does not cost you the deduction. Print that sentence, and give it to the IRS auditor and your CPA.

Then turn to page 5, Example 3 in the same section. It features a self-employed anesthesiologist who spends most of the time working in three local hospitals, one of which provides a small shared office that the taxpayer rarely uses.

Those are Soliman’s facts, restated by the IRS. The example ends with the home office qualifying and the deduction allowed. The IRS is now publishing the losing taxpayer’s fact pattern as a winner.

One Trap in the Same Publication

Look at Figure A on page 4, the IRS flowchart for deciding whether the deduction is allowed. The second question is whether you are using the space as an employee.

Answer “yes,” and the chart routes you straight to no deduction. That box is the permanent post-2025 rule for W-2 workers, and it is the box the auditor may be trying to put you in.

Your written independent contractor agreement is what keeps you out of that ugly no-deduction box.

A heads-up. For readers who are corporate owner-employees, you can ignore that box because although you work as an employee, you are not claiming the home office as a deduction on your personal return. You are being reimbursed by the corporation, which creates a deduction for the corporation and a non-taxable event for you.

Key point. One major benefit to an agent who drives often: when your home office is your principal place of business, the trips between your home and other work locations in the same business become deductible business mileage rather than non-deductible commuting.

Takeaways

• A licensed commission-paid real estate agent is an independent contractor (not an employee), files Schedule C, and keeps the home-office deduction in 2026.

•  W-2 employees permanently lost the deduction. OBBBA made the TCJA suspension permanent, so it is not coming back in 2026.

•  Soliman stopped controlling for tax years beginning after 1998. A tax preparer still citing it is 27 years behind.

•  The IRS publication on the home office says in plain English that you can have more than one business location, and that choosing your home office over available outside space does not disqualify you from the deduction.

Both your CPA and the IRS are behind the times here. Obsolete knowledge is inexcusable but not uncommon, even among professionals. That is exactly why you protect yourself with your membership in the Bradford Tax Institute.