Travel expenses for employee at 2 business locations

taxpayer gets to deduct auto mileage simply by leaving from and returning to the state A office on her trips to state B. In that case, all we're really arguing about here is lodging, meals and local transportation in state B.

Bill, I understand your point(s) completely.... but here is what I was taught (ages ago) when the travel questions were asked:

Q. A person has one regular job with two work locations. One within the metropolitan area and one outside the metropolitan area. Can the person deduct the cost of travel and lodging when outside the metropolitan area?

Answer: No. You can not deduct the cost of commuting to your regular job. A person can have more than one work location for his regular job. You must determine which location is the person's tax home in case this person is assigned temporarily to another location or has to travel on business to a conference or meeting.

Q. A person has one regular job with two work locations and is sent to work at a third location for six months. Can the person deduct the cost of travel and lodging to the third location.

Answer: Yes. The person may deduct the cost of travel away from the tax home and lodging at the temporary location because the person is temporarily away from home.

Q: A person has a regular job in the metropolitan area. The person is sent to work for an indefinite period at a location outside of the metropolitan area. Can the person deduct the travel and lodging at the new location.

A. No. The person's tax home has shifted to the new location. The person is no longer traveling away from home.

Q: In the above example, the person flys home on weekends to be with his family. Can the cost of travel be deducted?

A. No. The cost of travel is a personal expense.

All of the above Qs & As are consistent with the write-up in Chapter 4 of Pub 463.

Reply to
Alan
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Factors used to determine tax home. If you do not have a regular or main place of business or work, use the following three factors to determine where your tax home is.

  1. You perform *part* of your business in the area of your main home and use that home for lodging while doing business in the area.
  2. You have living expenses at your main home *that you duplicate* because your business requires you to be away from that home.
  3. You have not abandoned the area in which both your historical place of lodging and your claimed main home are located; you have a member or members of your family living at your main home; or you often use that home for lodging. (All true)

If you satisfy all three factors, your tax home is the home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts and circumstances. If you satisfy only one factor, you are an itinerant; your tax home is wherever you work and you cannot deduct travel expenses.

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Seems to me she meets all three.

Reply to
Tom C

Just a follow up - from pub 463:

Example 2. Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year you work for the same in Baltimore. In Baltimore, you eat in restaurants and sleep in a rooming house. Your salary is same whether you are in Pittsburgh or Baltimore.

You cannot deduct any of your expenses for meals and lodging in Baltimore, that city is your tax home. You cannot deduct may become indefinite due to changed circumany expenses you have for meals and lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you stay at your family home. You can deduct the cost of your round trip between Baltimore and Pittsburgh. You can also deduct your part of your family?s living expenses for meals and lodging while you are living and working in Pittsburgh.

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Thios seems to follow the fact pattern.

Oddly, according to this, I can deduct her share of *living* expenses when she returns to her home in State A. That's weird, I guess I'd use a calculation like a parsonage calculation to figure out just what those would be.

Now, should I deduct only the living expenses during the 2 days she works in state A, or include the expenses related to the weekend as well?

Reply to
Tom C

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> Based on my reading of that article and other sources, it is my opinion that > state A is the taxpayer's tax home and travel costs to state B are > deductible.>

It is a two pronged test. You didn't read all of Topic 511. Here's the second prong:

Travel expenses paid or incurred in connection with a temporary work assignment away from home are deductible. However, travel expenses paid in connection with an indefinite work assignment are not deductible. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if it is realistically expected that you will work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for less than one year, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes. =============== ...And you missed the fact that the taxpayer is not away from his tax home for longer than 3 days at a time and returns home PLUS actually works at his/her tax home for 2 days before going on the next trip. Thus, it is not ONE trip of indefinent period but an indefinent CYCLE of multiple tri-daily trips, each of which is temporary and thus deductible.

The question of the OP is, "Which location is my tax home?" There is no question here that some expense is permitted as a deduction. The issue is which expenses: Location A's or location B's?

That's why my first reply asked if there were a significant difference between the expenses of the two locations. If they are roughly equal in the amount of expense, the question is moot: Just pick one, and if upon audit, it's not the one the IRS agrees on, there will be no significant adjustment when substituting the expenses of the other location.

Location A may be the taxpayer's RESIDENCE, but it's possible that location B may be his/her tax home.

Reply to
D. Stussy

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> Based on my reading of that article and other sources, it is my>> opinion that state A is the taxpayer's tax home and travel costs to>> state B are deductible.>>

I have never seen anyone using your definition of indefinite period to mean it relates to trips.

I have only observed the definition to mean whether or not the job assigned to you to perform at at a location is for an indefinite period of time or for a period that will exceed one year (I always forget if it is one year or more or greater than a year.).

I higher someone and tell them the job entails working at location A for

2 days a week and at location B for 3 days a week. Neither work location is temporary. That's the job!. Now... if location A and location B are in the same city, the potential employee might say, okay I'll accept that job. The cost to travel from his home to location A and from his home to location B is commuting (he drives to work) and not deductible.

On the other hand, I tell him that location B is in another city and that we will not reimburse him for his travel and living expenses in the other city. However, his compensation will reflect an extra kicker to help defray those costs. He takes the job (it pays well), and incurs travel expenses, meals and lodging expenses at location B.

The first thing to determine is where is the person's tax home. We need to know that in order to later determine when he may or may not be traveling away from "home." Keeping it simple, let's say it is in location A where he maintains his residence and spends 4 days and 4 nights a week plus holidays and vacation. His cost to drive to location A is commuting. His cost to get to location B is commuting because that is one of his regular job locations to last indefinitely. The fact that the distance to B is much longer than it is when location B was in the same city is not relevant. His cost incurred living at location B is personal and not deductible.

Let's reverse it and make Location B his tax home and keep location A as his residence. His cost to drive to work with a rental car in location B is commuting to work. His lodging and other expenses are personal. His cost to get to location A, where he sleeps at his residence, is commuting because he is not traveling away from his home on a business trip or to a job that is expected to last for less than a year.

All of this is different than if I hired the guy to work at location A in city W, where he lives, and two months later I tell him that he needs to work at location B in City X for 2 or 3 days a week for the next 6 months. Then.... if he is not reimbursed, he gets to deduct the cost of getting to and from City X and his living costs in City X.

Reply to
Alan

But it makes more sense, at least to me. Under your definition the employee would have one tax home on, say, Mondays, Wednesdays and Fridays, but a different tax home on Tuesdays and Thursdays of the same week. I don't think that's a reasonable interpretation.

But normally an indefinite assignment is continuous. If it's not, I don't think that rule should apply.

___ Stu

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Reply to
Stuart A. Bronstein

No... the employee has one tax home. Typically, it is the location where he spends the most time, but the facts may show it is the other location.

What everyone else is "effectively" saying is that any time you travel away from your tax home and your employer does not reimburse you, you can deduct your expenses on Schedule A. What I am saying is that you can take the deduction as long as you are not commuting to your job. As I said in my last post.... If I tell my New York City employee the terms of his job require that he work Monday & Tuesday in Manhattan and on Wednesday thru Friday at our office in Annapolis, MD and that it is not temporary, it is permanent or is going to last for as long as we need him in Annapolis, and we will not reimburse him, and he accepts these terms, then he is commuting to work from his tax home. His tax home may or may not shift to Annapolis. That is a matter of all the facts. If it does shift to Annapolis, then he is commuting to the office in Annapolis and he is commuting to his office in Manhattan. He is not traveling away from his tax home on business for a short time. This is identical to the scenario where I tell him to work Mon. & Tues. at 590 Madison Ave. and Wed., Thur. & Fri. at One Broadway. He is still commuting to work in Manhattan.

This is different then if I tell my 5 day a week Manhattan employee that I need him in Annapolis 3 days a week for the next six months. Then... he gets to deduct the travel expenses if I don't reimburse him.

Reply to
Alan

I have never seen anyone using your definition of indefinite period to mean it relates to trips. =========== And prior to 2003, I would not believe that "temporary" could mean 12 years (with regard to the life of a "temporary regulation" especially since Congress statutorily defined it as 3 years maximum), yet the Tax Court disagreed with me. [I had argued that a temporary regulation was to be disregarded as naturally expired.]

Every week, the taxpayer visits both locations. As [at least] one of those locations is his tax home, there is NO trip away from home longer than a week, and thus a deduction is permitted since there is no continuous indefinite period away from home. I see 52 trips away from home, one per week, each lasting a maximum of 3 days, with the taxpayer returning to his tax home [and working at least 2 days there before leaving again]. Remember that I have not committed to state which locality, A or B, is the tax home.

Definitions for travel: Temporary - less than 1 year. Indefinite - 1-2 years. Permanent - 2+ years. This is my understanding of the litigation history of the issue. As there is a litigation history, I don't care what the IRS says as it's the Tax Court's decisions that matter (as a higher authority). ================ I have only observed the definition to mean whether or not the job assigned to you to perform at at a location is for an indefinite period of time or for a period that will exceed one year (I always forget if it is one year or more or greater than a year.).

================Right, and as there's no CONTINUOUS period of indefinite duration away from home, such doesn't apply here. ================ I higher someone and tell them the job entails working at location A for

2 days a week and at location B for 3 days a week. Neither work location is temporary. That's the job!. Now... if location A and location B are in the same city, the potential employee might say, okay I'll accept that job. The cost to travel from his home to location A and from his home to location B is commuting (he drives to work) and not deductible.

================And that's consistent as a "tax home" can be a locality, thus the taxpayer is considered itinerate over that locality.

However, we have separate localities in separate states here, at one FINITE location per locality in a FINITE and small set of localities. Thus the taxpayer is not a transient and therefore has a tax home he/she can be away from.

How large is a locality? Well, per U.S. OPM (for government employees), a 40 mile radius, and for moving expenses purposes, it once was 35 miles but is now

50 miles. Regardless, the government recognizes that localities have a finite maximum size and any travel outside of that area by a non-transient taxpayer is travel away from home. ================ [...] The first thing to determine is where is the person's tax home. We need to know that in order to later determine when he may or may not be traveling away from "home." Keeping it simple, let's say it is in location A where he maintains his residence and spends 4 days and 4 nights a week plus holidays and vacation. His cost to drive to location A is commuting. His cost to get to location B is commuting because that is one of his regular job locations to last indefinitely. The fact that the distance to B is much longer than it is when location B was in the same city is not relevant. His cost incurred living at location B is personal and not deductible.

Let's reverse it and make Location B his tax home and keep location A as his residence. His cost to drive to work with a rental car in location B is commuting to work. His lodging and other expenses are personal. His cost to get to location A, where he sleeps at his residence, is commuting because he is not traveling away from his home on a business trip or to a job that is expected to last for less than a year.

All of this is different than if I hired the guy to work at location A in city W, where he lives, and two months later I tell him that he needs to work at location B in City X for 2 or 3 days a week for the next 6 months. Then.... if he is not reimbursed, he gets to deduct the cost of getting to and from City X and his living costs in City X. ================= For the determination of whether there is a deduction present for travel, one doesn't need to identify which location is the tax home if all locations exceed the required distance from each other and the taxpayer is not transient. To compute that deduction, one does need to identify which location is the tax home.

Personally, I suspect that location B (which incurs hotel charges) is actually the taxpayer's tax home because more days (and thus hours, thus more income) is earned there. However, you appear to be arguing that this taxpayer is transient and therefore has no tax home to be away from. I disagree.

Reply to
D. Stussy

This is different then if I tell my 5 day a week Manhattan employee that I need him in Annapolis 3 days a week for the next six months. Then... he gets to deduct the travel expenses if I don't reimburse him. ================== I would disagree with this: If his tax home shifted to Annapolis, then his trips in Manhattan are no longer commuting and are thus deductible because this is travel from his residence to a location OTHER than in the proximity of his tax home.

Reply to
D. Stussy

That's because LA would have been his tax home. He couldn't deduct expenses in Minnesota, because he wasn't there for business.

Seth

Reply to
Seth

All I can say to you is that you seem to want to use a set of definitions that were superseded by Revenue Ruling 99-7, the ruling that has been followed by the tax court and appellate courts consistently since it was published.

You can find the ruling at legalbitstream.com.

Here is a discussion of an 8th Circuit decision and its relationship to Rev. Ruling 99-7.

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________ Alan taxtopics.net

Reply to
Alan

Mr. Jordan, the tax payer, did not work for the same employer in Minnesota, where he lived, as he worked for in Alaska, to which location he commuted. Therefore, his facts are not the same as the facts in the OP. That makes the case largely irrelevant to this discussion.

Reply to
Bill Brown

It's the discussion of the law that is relevant.

Reply to
Alan

Right. Working for the same employer means that going to different cities is for the convenience of the employer. Going to the city that's not the taxpayer's tax home is, as a result, not commuting, and is deductible.

___ Stu

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Reply to
Stuart A. Bronstein

Law only applies with respect to facts. When the facts are different, the law may be different as well.

___ Stu

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Reply to
Stuart A. Bronstein

You can find the ruling at legalbitstream.com.

Here is a discussion of an 8th Circuit decision and its relationship to Rev. Ruling 99-7.

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I see nothing in the Court decision that applies to the situation brought up by the OP. The first situation in that document talks about a person who has multiple locations in the same locality. The second talks about a commute out of state with NO work location in the proximity of the taxpayer's residence. Neither of those are the same.

2) I reside in 9th Circuit territory, not the 8th, so I do not have to acquiesce to the decision as precedent in my region of the country.

Show me a ruling where a non-transient taxpayer is considered to have TWO regular places of business for the SAME employer where those two locations are not in the same locality (or metropolitan area; i.e. not within 40 miles of each other), and then maybe I'll withdraw my position.

Reply to
D. Stussy

Exactly.

Reply to
Bill Brown

Excellent analysis. Thanks, Bill.

___ Stu

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Reply to
Stuart A. Bronstein

Please read it... it specifically identifies that trips from your residence to your regular work locations (It actually uses the plural) is not deductible. Only trips to a temporary work location are deductible. It says that you can not deduct the cost of going from your residence to a work location. It is commuting unless you pass any one of

3 tests: Test 3 is not relevant here because it deals with section 280 (the residence is the main place of business). Test 2 deals with one OR MORE regular work locations. Here are the two exceptions:

However, such expenses are deductible under the circumstances described in paragraph (1), (2), or (3) below. (1) A taxpayer may deduct daily transportation expenses incurred in going between the taxpayer?s residence and a temporary work location outside the metropolitan area where the taxpayer lives and normally works. However, unless paragraph (2) or (3) below applies, daily transportation expenses incurred in going between the taxpayer?s residence and a temporary work location within that metropolitan area are nondeductible commuting expenses. (2) If a taxpayer has one or more regular work locations away from the taxpayer?s residence, the taxpayer may deduct daily transportation expenses incurred in going between the taxpayer?s residence and a temporary work location in the same trade or business, regardless of the distance. (The Service will continue not to follow the Walker decision.)

Reply to
Alan

I did. Rev Rule 99-7 does not include a specific example of the OP's situation. That is, the Rev Rul does not provide an example in which a taxpayer works at one location near his tax home and another location outside the metropolitan area of his tax home at the same time.

The question returns to whether the work in state B is a series of definite term assignments of one week each or one long indefinite assignment. A number of us have stated we believe a series of definite short-term assignments are occurring and the related transportation, lodging and meal costs are deductible. You believe the other option is correct.

Unless someone comes up with a SPECIFIC example that matches the OP's situation, we will continue to disagree.

Reply to
Bill Brown

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