Self Rental vs. Accountable Plan for S-Corp

Hi everyone,

I'm a newly minted EA taking over my dad's tax accounting practice. One of our clients has a woodworking business that operates as a single-member S-Corp. The woodshop is in a garage attached to the client's personal residence. We're debating the best way to handle the space for tax purposes.

The proposed approach is to have the S-Corp pay fair-market rent to the client (homeowner) for exclusive business use of the garage/woodshop. The rent would be deducted by the corp, and the client would report it on Schedule E.

My dad (a CPA with over 40 years of experience) is adamant that all expenses directly attributable to the rented space, including separately metered utilities, repairs/maintenance specific to the garage, insurance allocable to it, supplies, and depreciation on the garage portion, are fully deductible on Schedule E against the rental income.

I'm reading IRC §280A(c)(6) and related guidance (e.g., Pub 587, older court cases like Feldman) as saying that when you rent part of your dwelling unit to your employer (here, the S-Corp where the homeowner is the sole employee/shareholder using the space), the normal rental deductions are severely restricted. Specifically, you're limited to only the allocable mortgage interest, real estate taxes, and casualty losses, and everything else (utilities, repairs, depreciation, etc.) is disallowed.

Even with exclusive business use and separate utility metering, it seems §280A(c)(6) still blocks the operating expense deductions.

Questions for the pros:

1. Am I reading §280A(c)(6) correctly? Is this truly a "self-rental trap" where you end up with net taxable rental income and little/no meaningful deductions?
2. Does separate metering or 100% exclusive business use change anything?
3. If the garage were fully detached, would that potentially allow full commercial rental deductions (treating it as non-residential)?
4. For a setup like this, is an accountable plan reimbursement still the clearly superior option?

Trying to advise the client correctly as I take on more responsibility. Appreciate any cites to code, regs, or reliable sources. Thanks!