Does he deduct mileage, or is that commuting?

He drove to a client site, and the client is related to his Schedule C business. So the miles are deductible on schedule C.

Yes, this is deductible.

Yes, this is deductible.

Provided that he has a qualifying office in his home (i.e., he doesn't use the workbench area for any other purpose).

What do you mean by the term "qualifying office"?

Let me expand why I am asking. I am concerned that your use of the word qualifying would lead one to conclude you mean regular and exclusive use of the space as an office. I.e., the ability to deduct business use of the home. This is not the rule for deducting transportation expense as regular and exclusive use is not a requirement.

280A(c)(1)(A) says that the home office must be the principal place of business. Does that mean exclusive use? The previous sentence 280A(c) (1) says "to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis" so it sounds like the home office must be exclusive use in order for you to home office expenses like mortgage on that part of the home, utilities, and all the fields on form 8829.

(1) Certain business use Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis - (A) as the principal place of business for any trade or business of the taxpayer, (B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or (C) in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer's trade or business.

But that just means that the home office deduction is allowed if a portion of the home is used exclusively and regularly for business. That does not disqualify mileage, or does it? The I found revenue ruling 99-7

In contrast, if an office in the taxpayer?s residence does not satisfy the principal place of business requirements of §

280A(c)(1)(A), then the business activity there (if any) is not sufficient to overcome the inherently personal nature of the residence and the daily transportation expenses incurred in going between the residence and regular work locations. In these circumstances, the residence is not considered a business location for purposes of Rev. Rul. 90-23 or Rev. Rul. 94-47, and the daily transportation expenses incurred in going between the residence and regular work locations are personal expenses (nondeductible under §§ 1.162-2(e) and 1.262-1(b)(5)). See Green v. Commissioner, 59 T.C. 456 (1972); Fryer v. Commissioner, T.C. M. 1974-77.

So commuting from a residence with no home office to a regular place of work is not deductible.

But commuting from a residence with no home office to a temporary place of work (to meet a client as in the original post) may still be deductible. It looks like revenue ruling 94-47 talks about commuting from residence to a work location outside of the taxpayer's metropolitan area, so it doesn't address the original post (where the work location is just 10 miles away).

My common sense says that the deduction should be allowed because the person could have assigned a 3x5 square foot area of his home as exclusive use for business to circumvent the "qualified" use rule.

There are two rulings: RR 94-47: (3) If a taxpayer's residence is the taxpayer's principal place of business within the meaning of s 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.

and

RR 99-7 (3) If a taxpayer?s residence is the taxpayer?s principal place of business within the meaning of § 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.

Both point to Sec. 280A(c)(1)(A) for the meaning of principal place of business.

If you look at the section and continue to read right below the reference, it gives you the definition of "principal place of business":

For purposes of subparagraph (A), the term ''principal place of business'' includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business.

Congress intentionally changed the law after the Supreme Court decision in Soliman. Exclusive and regular use is only required for the business use deduction of your home. Deducting transportation expense only requires that the home be your principal place of business as defined above. Regular and exclusive use of the space is not required for deducting transportation.

This is why I asked what was meant by "qualifying office" in Tom Healy's reply. As long as you don't have some other fixed location to carry on the admin. or mgt activities to run your business and you perform those activities at your home, your home is your principal place of business.

I believe the test is that the home be the principal place of business (a weaker test than the qualifying office test).

Steve

There's always the overall guideline- if in doubt, deduct.

As I see it, his place of business is his home, so any miles driven to a customer or potential customer site is not a commute.

sometime in the recent past DF2 posted this:

My source for clarification was the IRS. My example was a fisherman whose boat is several miles away at a mooring. The fisherman kept some gear at home where he worked on it, but was not claiming any 8829, Business Use of the Home. I was told that if he got up in the morning, did nothing and got into his car and drove to the pier, that was actually a commute.

However, if he worked at home first, by calling about prices on fish or supplies or did any type of work related to his fishing business, then the drive to the pier was work related. As long as he worked on books or gear or called around for workers when he got back home, then the drive home was deductible.

Based on that, the individual in the OP's question received 'business related' calls at home and made 'business related' calls from home before driving to the clients home and we also know that he works 'out of his house,' then all the travel described is business related and deductible.

I don't see that 'part-time' has any significance.

A smart sole proprietor 'never commutes.'

His home actually has to have an office where he actually works.

It's not just taking calls on occasion - it's regularly and actually doing work from home that counts.

Just so we are all clear... In order for a sole proprietor to deduct mileage on a vehicle from the time one leaves home to transact business, you home has to be your "principal place of business." This is defined in the Internal Revenue Code:

...the term ''principal place of business'' includes a place of business which is used by the taxpayer for the administrative or management activities of any trade or business of the taxpayer if there is no other fixed location of such trade or business where the taxpayer conducts substantial administrative or management activities of such trade or business.

The taxpayer doesn't even have to have an office in the home per se. He can operate his business off a laptop and telephone and move from room to room in the house and still meet the requirement as long as he doesn't have some other fixed location where he is performing a substantial amount of G&A.

There is no need for an office. His tools have to be somewhere and that could even be in the back of his car. I guess another way to look at this is when would you consider his travel work related? Certainly, once he puts the clients equipment in his car, some part of his ride home, his usual place of business, would be deductible.

Again, there is no need for an office at home unless he is trying to claim

8829 expenses. He can sit on the couch or the kitchen table, make & take client calls, call dealers about parts and such and when he gets in the car to complete work related to the those calls, the odometer starts racking up business miles.

This was part-time work and I guess, by definition, that means occasional. If he's making more than $400 gross on this part-time endeavor, he has the right to claim normal business expenses which includes mileage on Sch. C or C-EZ.

>

Is $400 some kind of a threshhold, or was that an example?

The original 400 statement has the 400 confused with a rule about paying SE tax.

There is a rule that if net earnings from Self Employment is under $400, there is no Self Emoployment tax to pay. Stated in a more comoplicated way, $400 is the de minimus amount of net earnings from self employment to avoid paying SE tax.

That 400 corresponds to net schedule C profit of under $434.

But even if taxpayer has gross earnings from self employment of only 300, normal business expensee may still be claimed.

Actually, it should have read if you had *net earnings* from self-employment of at least $400, you need to file a return. Found many places, but in Pub.

17 pg. 9, ln. 3 of Table 1-3.

An even lower limit for net earnings of $108.28 for church employees where the church is qualified to be exempt from self-employment withholdings also requires filing a return.