One IRS rule that you should be aware of concerns the home office deduction. If you sell your home and have a capital gain, you have to claim a portion of that gain as income for your business and pay income taxes on it should you make a profit that year. The percentage of your home that you claim for your home office is used to compute the portion that is applied to your business income. The IRS rules go back five years on home office deductions for capital gain purposes. So, if you run your taxidermy shop out of your home and plan to sell your house within the next five years and you would expect a capital gain on that sale, you need to talk to your accountant who should be able to lay out your options. We plan to move in about five years, so we will quit taking the home office decuction for this years taxes.
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I have had two CPA's tell me the same thing. Both recommended taking the percentage of the electric, gas and other expenses that the shop occupies. If you use 20% of your home for shop, display and storage then take that percentage of the expenses as a business expense.
i got bit by this very thing. Had my shop in the basement and was depreciating the portion of the house that was used exclusively for business purposes. Had depreciated 17K off and had to go back and pay the taxes on it.It hurt!