Home office & mileage

[KJ Judd]

Can you have deductible business mileage from your home office if you do not qualify for exclusive use of home office? Client is salesperson. Company doesn't even have office in state, so client does all administrative tasks out of his home. He meets the "convenience of his employer" test. So can he deduct his mileage to first meeting of the day?

What if home is "principal place of business" (in this case I'm not sure since he does his most important duties by meeting customers at their office) but still not exclusive?

He uses his car exclusively for business. So if he can't deduct all his mileage, we're going to need to figure out a reasonable way for determining his "commuting" mileage to first customer.

[OldJack]

There are some tax preparers that say the mileage from home is tied to a qualified office in the home. I disagree and contend that business mileage is business mileage from his principal place of work (home) and I take the deduction regardless of the home office deduction. However, I doubt he can get by on audit that his personal owned passenger car is 100% business unless it is a special vehicle.

[rosieea]

I agree with Old Jack. Some of my colleagues disagree, but I believe that a principal place of business does not have to be a qualified home office.

[KJ Judd]

Thank you! That has been my opinion as well, but I know it is a grayer area & wanted others input.

[Unregistered]

Disagree

I disagree; I believe your home office would have to qualify in order for you to take the mileage deduction.
Quote from Pub. 587 TIP If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade of business.
That tells me that you would have to have a qualifying home office in order to take any mileage deduction.

[Bees Knees]

This dates back to a 1990 tax court case [Walker, 101 TC 537] where the tax court said the taxpayer could deduct commuting costs from home to various temporary job sites even though his home did not qualify as a regular place of business for the office in home rules. He had a shop at his home to repair his equipment, but his actual job was at the various job sites. Back in those days, office-in-home rules said you actually had to earn your income in the home office to qualify.

The IRS responded with Revenue Ruling 94-47 to the Walker decision by requiring that taxpayers using the home office rules to qualify for deductible commuting expenses must have a “qualified home office.”

Of course now it is much easier to qualify for office in home. Still, Rev. Rul. 94-47 is the most current rule on the subject. I don’t know of any court cases since to contradict the Revenue Ruling.

[jainen]

It says home office

It says home office, not qualifying home office. In my opinion it is not necessary to meet all the requirements for a deductible home office. Hoever, in my opinion the home office must be the principal place of business, so the salesman in the original post would not be able to deduct commute mileage from his home.

[Unregistered]

Rev Ruling 99-7

Bees Knees

Rev Ruling 99-7 has modified (in one situation) and superseded the remainder of Rev Ruling 94-47. It contains the following passage

(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

I concur with those who say you can have deductible mileage without the exclusive use test. Note the passage directs you to §280A(c)(1)(A) and not to the general subsection §280A(c). The exclusive requirement precedes subpart (1) in code §280A(c). It appears the Rev Ruling is only requiring a principal place of business as the test for deductibility.

NY Enrolled Agent

[Bees Knees]

Rev Ruling 99-7 modified Rev Ruling 94-47 because Congress enacted the new rules saying a Qualified Home Office no longer needs to be the principal place of business. The Taxpayer Relief Act of 1997 made a new provision for administrative use of a home office. Prior to this, the home office had to be the principle place of business. Now, it can qualify for the home office deduction even though it is not the principle place of business, as long as it is being used for administrative use and there is no other place to do the administrative things. It still has to be exclusively used.

The only reason for the modification of Rev Ruling 94-47 was to make the code sections mentioned in the ruling conform to the new law. It said nothing about expanding the scope of the ruling to now all of a sudden include non-qualified home offices.

And if that was somehow the intent of Rev Ruling 99-7, then why did the IRS not also modify the language in Pub 587?

[Armando Beaujolais]

Rev Ruling 99-7 modified Rev Ruling 94-47 because Congress enacted the new rules saying a Qualified Home Office no longer needs to be the principal place of business. The Taxpayer Relief Act of 1997 made a new provision for administrative use of a home office. Prior to this, the home office had to be the principle place of business. Now, it can qualify for the home office deduction even though it is not the principle place of business, as long as it is being used for administrative use and there is no other place to do the administrative things. It still has to be exclusively used.

The only reason for the modification of Rev Ruling 94-47 was to make the code sections mentioned in the ruling conform to the new law. It said nothing about expanding the scope of the ruling to now all of a sudden include non-qualified home offices.

And if that was somehow the intent of Rev Ruling 99-7, then why did the IRS not also modify the language in Pub 587?

I disagree. You're saying that if you have a home office that would qualify for business use of the home except you use your computer 1% for personal use, that would throw out the mileage because it's no longer exclusive use.

If the rule was that you have to qualify for a home office in order to claim mileage from home, they'd say it directly. They wouldn't beat around the bush.

[Unregistered]

I concur with those who say you can have deductible mileage without the exclusive use test. Note the passage directs you to §280A(c)(1)(A) and not to the general subsection §280A(c). The exclusive requirement precedes subpart (1) in code §280A(c). It appears the Rev Ruling is only requiring a principal place of business as the test for deductibility.

NY Enrolled Agent

Precisely the point I've used while discussing this issue on other boards.

[Bees Knees]

If the rule was that you have to qualify for a home office in order to claim mileage from home, they'd say it directly. They wouldn't beat around the bush.

IRS Pub 587, page 7, “If your home office qualifies as your principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business.”

There. They came right out and said it. Satisfied?

[Bees Knees]

IRS Pub 463, page 15, "Office in the home. If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business."

[Bees Knees]

TTB, page 10-5, "If an office in the home qualifies as a principle place of business, daily transportation costs between home and another work location in the same trade or business is deductible."

[Bees Knees]

For some reason, the word "qualifies" is used in each publication.