Tax home?

[ChEAr$]

Not open to debate

The tax home is where he has established his family abode. He only bought the 2nd home as a place to stay when he is working in the area instead of paying hotel expenses, and doesn't intend to move his family there.

Based on the information provided. And a little reasearch in TTB p. 8-11 "Tax Home" where it says, "If there is no regular or main place of business because of the nature of work, then consider the following to determine the tax home" ....(refer to the 3 factors)... he only needs to meet two of the 3).
My knee jerk reaction was confirmed.

Hope it helps. Open to debate!
MAW

Consider those three factors and I'd say he wins on ALL three. The business is
headquartered at his house, whether or not he takes a deduction for office in home.
It is THE main place of business, regardless of percentage of time spent in other
locations.

Now if he were an employee versus self employed, dyne would be correct as an IRS
examiner to deny the deduction.

[Jesse]

No time to research but it doesn't seem right to claim as a home office his original home just because that is where is family is and that seems to be the reason for his commute.

He bought a new home to avoid the cost of the motel and as a drywall installer I'm guessing he is storing some tools and what not here as well. If he has this new residence that he is staying in vs. a motel is he doing more administrative work at this home vs. the home his family resides in?

As his employees and subs are allowed to stay at this new home I take it this is were he is meeting them as well as clients? It just feels like this new home is his tax home and the home with wife and kids is like a second home.

[AJsTax]

4 hours

4 hours distance, not 40 miles??
I do not care if he does have an office in his family home, he does not do the main bulk of his business there, so not deductible, His tax home is the area of the second home. Having a home there is not a factor, the tax home means the metro area he does his main work.
Even if he lived out of a motel the entire time, the area where he received his majority work is the tax home if he is there for more than a year.
I believe that if you read the regs and the examples there is really very little grey area here.

[Gretel]

What an interesting post. I think we don't know enough to really make a judgment call. If he drives home every weekend and does all admin work from his main (family) home, then this main home is his main place of business, but we don't know this.

Thirty, twenty years ago the home office rules didn't allow to have a qualified OIH for admin tasks. Of course it was easy then to disallow it plus mileage altogether.

[travis bickle]

Concur with

AJs Tax.

The individual clearly spends the most work time at the distant locale, and it is not a temporary job.

[dyne]

AJStax and Travis Bickle are correct, NO doubt about it!

[LindaK]

I will disagree with due respect to all who have replied. His tax home is the metro area where the majority of his income is earned. That would be the area 4 hours away from his family home. Obviously it is not a temporary job location since he bought a house there. the expenses of the house are on Sch A as residence. meal expenses must be on the job and for the convenience of the employer. None of the milage from the work home to the family home are deductible and the only milage in the work area is the milage from one job site to another or to get supplies etc. To the first site every day is commuting miles unless he has and office/shop that he goes to first.

1 - If we take this position, then the work he does do in the 'family' home area would incur deductible mileage, correct?

2 - They are remodeling to create an office in the family home. The wife does bookkeeping, but I imagine a lot of the client communication is done via cell phone. I believe some of the suppliers are also in the home area. Are these factors to consider?

3 - You mention a 'metro area', but we are talking about South Dakota. How large is a metro area?

I really appreciate each of you taking the time to consider this and reply.

[Gene V]

Not all is loss

AJStax and Travis Bickle are correct, NO doubt about it!

I agree--if this is his tax home--then he can take deduction when he returns to the
family home.
From Pub. 463

Example 2. Your family home is in Pitts-
burgh, where you work 12 weeks a year. The
rest of the year you work for the same employer
in Baltimore. In Baltimore, you eat in restaurants
and sleep in a rooming house. Your salary is the
same whether you are in Pittsburgh or Balti-
more. Because
you spend most of your working
time and earn most of your salary in Baltimore,
that city is your tax home. You cannot deduct
any 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 roundtrip 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 work-
ing in Pittsburgh.

[dyne]

Gretal has it backwards: Years ago IRS was required to allow a reasonable amount for business mileage
meaning we had to attempt to reconstruct or allow a portion of the amount claimed at the
same time leaning upon the taxpayer whose inexactitude was of his own making. So, it was
much more difficult for IRS to disallow claimed business mileage years ago. My next door neighbor
happened to be an outside salesman and he kept good records. I knew from him that 14,000 business miles
(or whatever it was) was sufficient, so when I audited (now called examined) an outside salesman
who was claiming three or four times this amount, I knew he was exaggerating. It was
very rare that I would disallow the entire deduction. I only disallowed the entire deduction
perhaps 3 or 4 times during my entire career. NOW, if the taxpayer does not have a log book or other good record of the mileage or expense, IRS can and WILL disallow the entire deduction. I enjoyed the discussion. Best wishes.

[erchess]

Figured out where I went wrong

The entire area is not one tax home for him because he does not return to one place for sleeping and eating regardless of where he works. I am therefore now in agreement with those who said that his main tax home is the area four hours away by car from his main residence.

The example cited of a person traveling between tax home and residence involved an employee. I don't know whether the rule at this point is the same for a self employed person. It would certainly be beneficial to the taxpayer to be able to deduct mileage in the area of his residence without the rule about commuting, to be able to deduct mileage between the two areas, and to be able to deduct his share of the food and other expenses of the home as business expenses.

I do know that when he drives away from the remote home but in that general area he is commuting until his first business related stop and from his last business related stop until back home but in between he is naturally running up business mileage. His meals in the main tax home are normally personal unless he is doing business entertaining or eating at a work location because of a business need. He would deduct the expenses of his personal part of the second home on Sch A and the expenses of the remainder as a home office. Naturally the "regularly and exclusively" would apply so that for example if there is a kitchen or a bathroom that he uses for personal purposes but also allows business associates to use then that room is considered a personal use room.

[David1980]

The example cited of a person traveling between tax home and residence involved an employee. I don't know whether the rule at this point is the same for a self employed person.

The commuting versus business miles issue is the same for employees as self employeed. You just end up with deductions more often on self employeed as they dont' have the 2% haircut. (Though certainly there are people who think being self employeed automatically makes every mile driven, usually the taxpayer...)

[Larmil]

Somehow this thread reminds me of a (yellow?) submarine. I AM getting tired!

[Kram BergGold]

What I would do

His tax home at this time is the house 4 hours away from his family (75% of his work is there). I would have him claim home office (now all work driving is deductible) . Then if he takes any trips to the family residence that are primarily for work (more than 1/2 the day there he is working) I would deduct this drive. Any trips that are primality for seing his family are not deductible. Meals are never deductible unless it is a business meal (a work discussion is happening).

[Gretel]

Meals are never deductible unless it is a business meal (a work discussion is happening).

Why wouldn't the per diem for meals be allowed if he is staying overnight away from his tax home?

[dyne]

He is NOT staying away from his tax home (the place 4 hours away) to perform
work, but only to be with his family. His Tax Home or post of duty is the house 4 hours
away.