Vehicle Expenses and Office in Home

Summary

Cross References
– Rev. Rul. 99-7
– Haag, T.C. Summary Opinion 2016-29

In general, the cost of commuting from home to a taxpayer’s job is a nondeductible personal expense. There are several exceptions to this rule:
– The taxpayer commutes from home to a temporary work location (one expected to last one year or less) and the taxpayer has one or more regular work locations.
– The taxpayer commutes from home to a temporary work location that is outside of the taxpayer’s tax home area (out of town travel).
– The taxpayer’s home qualifies as a principal place of business and the taxpayer travels between home to another work location in the same trade or business.

The taxpayers (married filing joint) in this court case were both electricians and members of the International Brotherhood of Electrical Workers. Both taxpayers were employees who worked short-term work assignments at various job locations. None of their employers provided permanent office space for administrative work.

The taxpayers maintained a 60 square foot office in their basement of their home which included a desk, a desktop computer, and filing cabinets. The filing cabinets held both personal and work-related documents. The office was used both for personal and workrelated purposes, including checking work-related emails, maintaining tax-related documents, and preparing their personal income tax returns.

The taxpayers claimed that their vehicle expenses for mileage between their home and their temporary work sites were deductible because they maintained an office in home. Revenue Ruling 99-7 states in part: “If an office in the taxpayer’s residence satisfies the principal place of business requirements of IRC section 280A(c)(1)(A), then the residence is considered a business location and the daily transportation expenses incurred in going between the residence and other work locations in the same trade or business are ordinary and necessary business expenses.”

IRC section 280A(c)(1) states that a principal place of business includes a place of business which is used by the taxpayer for the administrative or management activities of the business if there is no other fixed location for the business where the taxpayer conducts substantial administrative or management activities.