Rental properties for worker housing

I’ve been chewing on a bit of a logistical puzzle lately and wanted to see if anyone here has navigated this before. Suppose I have a legal entity—not registered for sales tax—and I want to rent an apartment from an individual to serve as housing for myself in my capacity as director. The situation is that my business operations are centered in Washington, D.C., but my actual residence is in some small town in the Midwest. Under these circumstances, would it be permissible to lease that space for my own accommodation? Furthermore, can I legitimately record both the rent payments and the utility bills as deductible business expenses in my accounting books?

Thanks a million in advance for any insight you might have.

mistypuma59 said:I’ve been chewing on a bit of a logistical puzzle lately and wanted to see if anyone here has navigated this before. Suppose I have a legal entity—not registered for sales tax—and I want to rent an apartment from an individual to serve as housing for myself in my capacity as director. The situation is that my business operations are centered in Washington, D.C., but my actual residence is in some small town in the Midwest. Under these circumstances, would it be permissible to lease that space for my own accommodation? Furthermore, can I legitimately record both the rent payments and the utility bills as deductible business expenses in my accounting books?

Thanks a million in advance for any insight you might have.

If you provide an apartment for the director to use, it counts as a fringe benefit—so you'll have to cover the payroll taxes and income tax, but yeah, you can claim those costs.

mistypuma59 said:I’ve been chewing on a bit of a logistical puzzle lately and wanted to see if anyone here has navigated this before. Suppose I have a legal entity—not registered for sales tax—and I want to rent an apartment from an individual to serve as housing for myself in my capacity as director. The situation is that my business operations are centered in Washington, D.C., but my actual residence is in some small town in the Midwest. Under these circumstances, would it be permissible to lease that space for my own accommodation? Furthermore, can I legitimately record both the rent payments and the utility bills as deductible business expenses in my accounting books?

Thanks a million in advance for any insight you might have.

Look, if the director isn't officially an employee of the LLC, you're looking at capital gains income... basically 40% plus local surtaxes, and no social security contributions involved.

If your headquarters is located elsewhere and you only find yourself in Washington, D.C., every once in a while, you could—theoretically—file travel reimbursements and claim workdays (plus per diems) as business expenses, effectively treating the rest of your rental days as a form of non-taxable compensation.
I say "theoretically" because if you’re constantly in Washington, D.C., this wouldn't fly with the IRS. Plus, St. John's is just too close to Washington, D.C. for those kinds of tax gymnastics to work.