Here's a tax myth that refuses to die: buy furniture yourself and rent it to your S or C corporation—or own it and have the corporation reimburse you—to pull money out of the corporation more efficiently than simply having the corporation buy the furniture outright.

It feels true. It isn't.

Consider this case: You buy $100,000 of ordinary business furniture that depreciates to zero and has no resale value at the end. You rent the furniture to your corporation.

Run the numbers, and you’ll find that the rental and reimbursement routes deliver exactly what a straight corporate purchase delivers—the same deduction, the same dollars—while stacking on hurdles and a trap the purchase never touches.

Let’s see why the myth is so seductive, then break down the math and land on what actually works.

Why the Myth Is Seductive?

Extraction. In an S corporation you want money out without payroll tax; in a C corporation you want it out without the second layer of dividend tax (commonly known as “double taxation”). Rent, the story goes, is your deductible escape hatch.

But as you will see in this article, that’s not true.

First, the Section 179 Gauntlet!

Suppose you try to expense your $100,000 of furniture under Section 179 as a personal lessor. To make this work, you have to run the gauntlet and clear all three of these hurdles:

1. The lease term, counting renewal options, must run less than 50 percent of the property’s class life.

2. Your business deductions in the first 12 months must exceed 15 percent of the rent—and interest and depreciation don’t count toward that 15 percent.

3. Your equipment rental activity may not involve holding property simply as an investment for the production of income. In other words, to qualify for Section 179 expensing, your rental has to rise to the level of an active business.

Clearing the first hurdle is easy—keep the lease under 60 months on 10-year-class-life furniture.

Clearing the second hurdle, 15 percent business deductions on furniture, is a tall order. Perhaps the furniture needs a wash, wax, and polish every week during the first year.

Clearing the third hurdle is also problematic. How is the furniture rental an active business and not a passive investment?

But say you win all three of these. What have you won? The right to a deduction the corporation would have gotten with no hassle by simply buying the furniture itself.

You Can Skip the Gauntlet—and It Still Doesn’t Matter

You can sidestep all three Section 179 requirements by using regular or bonus depreciation. You just need a profit motive. That’s easy.

For property acquired and placed in service after January 19, 2025, 100 percent bonus depreciation is back, so your $100,000 can be written off in Year One.

Example. On July 1, 2026, you place $100,000 of office furniture in service. Either you expense the full $100,000 by not electing out of bonus depreciation, or you spread it over the seven-year MACRS schedule.

But here’s the rub: the corporation gets that exact same bonus or MACRS write-off if it buys the furniture. Depreciation doesn’t reward personal ownership. It’s available either way.

Oops! Then There’s This Trap!

Push the rental hard enough to clear the active-business bar, and you may push it into self-employment tax territory.

The tax code exempts real estate rentals from self-employment tax—even real estate rented with personal property — but there is no such exemption for renting personal property alone according to IRS chief counsel advice.

Sales Tax

Depending on your state, the rent you charge your corporation can trigger state sales tax on the lease.

Of course, the corporate purchase in that state would likely trigger the sales tax.

So we can pretty much ignore the sales tax as an issue. It’s basically the same with the rental and the purchase.

Now the Math—Where the Myth Dies

Put the $100,000 of zero-residual furniture through all three methods, and watch them converge.

Method 1: The corporation buys it. The corporation spends $100,000 to buy the furniture, claims $100,000 of bonus depreciation, and owns the soon-to-be-worthless asset. In an S corporation the deduction flows to your personal return on the K-1, and your income drops $100,000. Clean.

Method 2: You buy it and rent it to the corporation. The corporation deducts the rent. You report the rent as income and offset it with your depreciation. Because the furniture depreciates to zero, your total depreciation equals your $100,000 cost—so across the lease your depreciation simply cancels the rent you take in, leaving only your markup as taxable income. You did not manufacture a second deduction. You moved the same single-cost recovery onto your own return, added taxable margin on top, and exposed it to the possibility of the self-employment tax.

Method 3: You own it, and the corporation reimburses you. This is the “I depreciate it personally” version, run through an accountable plan.9 There’s no added benefit here. The corporation reimburses you the $100,000. It deducts the $100,000. You deduct $100,000 of depreciation. The net result is a $100,000 deduction to the corporation—the same result as in Method 1.

But Don’t I Get Money Out?

That was the original promise, so test it against the assumption.

Reimbursement moves no net money: you spend $100,000 to receive $100,000. It’s a wash, not an extraction. 

Rent moves money only to the extent you charge more than your costs—a markup. But that markup is taxable income to you, and the corporation’s deduction for it is matched by your income on it.

Nothing leaves the system untaxed, and if the activity is active enough to qualify, the markup and the rent may catch the self-employment tax. If so, this is a net loser.

What about keeping a valuable asset out of a C corporation so you aren’t double-taxed when extracting it later? That is the one place personal ownership can genuinely pay—but it depends on the asset having residual value. By assumption, this furniture has none. So that escape hatch is closed, and no exception survives.

Reporting, If You Insist

Run the rental anyway and, assuming it’s your only furniture rental activity, the income goes on Schedule 1, line 8l; the expenses—including any Section 179 deduction—go on line 24b.

Takeaways

With $100,000 of furniture that depreciates to zero, the verdict is clear.

In an S corporation, have the corporation buy the furniture and deduct it. The deduction passes through to you, you skip every hurdle, you skip the self-employment tax trap, and you’re done.

In a C corporation, have the corporation buy the furniture and deduct it at the corporate rate. With no residual value, there’s no future asset to extract and no double tax to dodge—so personal ownership buys you nothing.

If you have a non-tax reason to hold the furniture in your own name, the accountable plan reimbursement is the only clean way to do it—and even then it merely matches the tax outcome of a direct business purchase while adding paperwork. Renting matches it too, then saddles you with the Section 179 gauntlet and the self-employment tax trap.

The myth says owning the furniture personally beats letting the corporation buy it. The math says otherwise. Let the corporation buy the furniture.