Allowable Mileage Splinter Posting

[AuditorTurnedGood]

The other mileage thread got me thinking, so, here's a situation I am struggling with on my own books and records. Wondered if anyone had any ideas, and thought it might bring up some lively debate.

I have my tax and accounting practice, which brings in about 1/3-1/2 my income for the year. My home office is my primary place of business, so I already write off mileage to and from client sites. (S-Corp Accountable Plan Reimbursement).

I also work as a W-2 employee for 2 other firms, which comprise the other 2/3-1/2 of my income. Both are a 70 mile round trip from my home office. I currently treat that mileage as non-deductible commuting. I treat mileage from them to a client as deductible, as well as mileage from a client to the W-2 jobs.

Question is, which of these sets of mileage truely represents commuting? My struggle is which of the activities - the S-Corp accounting practice, or the 2 W-2 jobs, represents my primary job. Thoughts?

ATG

[MLINDER42]

Mileage

I am a bit more aggressive I have a home office for tax and representation about 1/3 of income I run a storefront tax office( 1/2 income on W-2) go daily during tax season 2 days a month off season.Have another W-2 for 5% of income SS rest of income.I take all mileage to go to clients or other jobs.I work @ home every morning before leaving to do other work.

[AuditorTurnedGood]

That is

what I am considering, especially since the amount of income from the practice will grow to over half of my total over the next few years, making it my main job for sure. I figured it out yesterday, and after the 2% floor, I would be looking at an additional 7K deduction for 2106 expense back and forth to the W2 jobs.

[JohnH]

I'm with MLINDER on this. You should take the position that you do some work at your home office every day before going to any other income source, whether it's an S-corp client or a W-2 employer,. Surely you check email and maybe read or post on this forum or others every day before doing anything else - right? As long as your postion is defensible, what's the downside to taking an aggressive approach to this matter?

[AuditorTurnedGood]

My wife's reaction if I get audited an overturned. If I was single, I'd do it in a heartbeat, but as a married man, I take a more measured approach to it. Wanted to get some feedback first - thanks!

[JohnH]

Tell her to trust your judgement. After all, you have an excellent tax advisor (yourself).

Unless you want to audit yourself in advance, there's a small amount of risk understood when the deduction falls in a grey area.

[AuditorTurnedGood]

After pounding the code into the ground, I decided we're taking the deductions for the W2 mileage this year as a 2106 expense, though I'm not amending 2008's returns to take the same thing - pigs get fed, hogs get slaughtered. My wife is happy it relates to a pretty hefty tax reduction, without killing our AGI (we're planning to purchase a house in a year or two, and will need a good, steady AGI for a few years to prove income). Thanks for all the input everyone!

ATG

[Kram BergGold]

My understanding

My understanding of the law is a home office only allows you to claim mileage from home to xxx and xxx to home for that Schedule C business. So home to W-2 job is commuting and not deductible. Schedule C client to W-2 would be deductible on 2106. W-2 to client would be deductible on Schedule C. There is no requirement that you work in home office before heading out to xxx connected to the Schedule C activity for mileage to be deductible.

[travis bickle]

i agree with

My understanding of the law is a home office only allows you to claim mileage from home to xxx and xxx to home for that Schedule C business. So home to W-2 job is commuting and not deductible. Schedule C client to W-2 would be deductible on 2106. W-2 to client would be deductible on Schedule C. There is no requirement that you work in home office before heading out to xxx connected to the Schedule C activity for mileage to be deductible.

KB here.

When you deduct mileage on a 2106, you are stating that you are deducting mileage that pertains to that job [and the same analogy for Sch C]. So I do not see how one can claim mileage from home to office as a 2106 expense.

[AuditorTurnedGood]

It all hinges on principal place of business. If I had a regular W2, 9-5 job, that would be my principle place of business, so I would be able to deduct mileage to a second job (or to my clients) and from my second job and clients to my W2 job.

Since my home office is my principle place of business, as parced out partially in Rev Rul. 99-7 and a few court decisions, the mileage from that home office to my W-2 employers can be deducted, as the W2 employers are considered my "2nd job".


ATG

[Kram BergGold]

Rr 99-7

I just read RR 99-7. For driving from home office to any location to be deductible under the home office exception to the commuting rules, the driving has to be in the same activity. I don't think a W-2 job is the same activity as a Schedule C business.

[AuditorTurnedGood]

Well, two factors here. I am an S-Corp, which means I am a W2 of that company as well (which uses an accountable plan for mileage driven to clients). The W2 jobs I have are preparing taxes, and doing tax policy analysis, which are both things I do in my practice. I would think that the activity of being a tax preparer and accountant would include all 3 things. Maybe I'm reaching a bit too much here?

ATG

[AuditorTurnedGood]

I now see the error in my logic

Thanks for the shove in the right direction, Kram Gold Berg. Re-reading the rev proc, it sounds like I would take the mileage all within the S-Corp under the accountable plan, and not on 2106. This is, of course, assuming my home is my principle place of business, and that my two other W2 jobs are within the same trade or business. More to ponder. Thanks for making me think!!

ATG

[Kram BergGold]

What!

How can you take mileage driving to a W-2 job on the S corp return when the W-2 jobs have nothing to do with the S-Corp? That concept is way beyond a reach.

[AuditorTurnedGood]

I'm telling you

there is a deduction in here someplace - I can feel it. Whether it goes on 2106 or teh S-Corp is the question. I think it depends on the answer to the following:

1. If my practice is my main job, the location of which is my home, then the mileage to the W2 jobs is considered mileage to a "second" job and is deductible, on 2106 I think.

2. If the practice and W2 positions are in the same "trade or business" I might be able to stick the entire thing on the S-corp's return, though the more I think about this the less I like it.

Anyone know how to request a Private Letter Ruling? I used to know, back in school. Thanks everyone!

ATG