Possible home office scenarios for an S corp

Some potential uses of the home office deduction from the perspective of the S corp...
If you are an employee of your own one-man corporation, whether a regular “C” corporation or a “sub-chapter S” corporation, you have three choices for handling the costs of a qualifying home office:
• You can deduct the costs as an unreimbursed “employee business expense” under “Job Expenses and Most Other Miscellaneous Deductions” on Schedule A. Expenses in this category of itemized deduction are only deductible to the extent that the total exceeds 2% of your Adjusted Gross Income.
• The corporation can pay you rent for the home office.
• The corporation can pay you for the costs of a home office under an “accountable” plan for employee business expense reimbursement.

The third option, being reimbursed under an accountable plan, provides the greatest tax savings. It is an excellent way to get money out of your closely-held corporation tax-free. The corporation can deduct the amount of the reimbursement and you do not have to report the payment as income.
This option is “more better” than having the corporation pay you rent for the home office. While your corporation can deduct the rent paid to you, you must report the rent as income on Schedule E. You can only deduct the pro-rated share of real estate taxes, mortgage interest and casualty losses against the rental income on Schedule E, expenses that are otherwise deductible in full on Schedule A. You cannot deduct the proportionate share of any other expenses "with respect to the use of [the] dwelling". While this generally includes insurance on the dwelling, repair and maintenance on the dwelling, depreciation on the dwelling, and certain other indirect expenses, it does not include expenses which are not "with respect to the use of [the] dwelling" (such as the cost of electricity used to power office lights and equipment).