Your new client, Ashley and Ed, came to you because they received an audit letter from the IRS. After reviewing the letter, the problem is with their home office deductions. They are both self employed. Ashley is a very talented and successful artist and crafts person, Over the years, she has accumulated lots of samples, fabrics and prototypes which are all essential to her trade. She stores all her samples and some of the fabrics in the attic, the toy prototype is stored in her daughter's room and the rest of the fabrics in the living room. Ed is a plumber and he stores his tools and plumbing supplies in the basement, garage and part of the alley walkway. On their business taxes, both claimed home office deductions, with Ashley claiming 32% of the home expenses and Ed 28%.

The IRS would like to make an onsite inspection. How would you advise Ashley and Ed?