Home office & mileage

[jainen]

Satisfied?

Satisfied? You bet! You prove our point. You see, you are reading that sentence backwards. It does not say you must have a qualifying home office to deduct your mileage. It does say even if you have a qualifying home office, you can not deduct mileage unless the home office is your principal place of business.

Remember that a qualified home office does not have to be the principal place of business if it is a separate structure or you meet clients there. In that case you could deduct the office expense, but you still couldn't take mileage because, as you quote, it is not the principal place of business.

The same distinction works when it is not a qualified home office but is the principal place of business. That last element is the key.

[Bees Knees]

Wrong.

IRS Pub 587, page 3 says

"Your home office will qualify as your principal place of business
if you meet the following requirements.

• You use it exclusively and regularly for administrative or management activities of your trade or business.

• You have no other fixed location where you conduct substantial administrative or management activities of your trade or business."

The context of our discussion has to do with people who do not qualify for an office in home because they use it for other stuff too. Even though their home office may be their only business location, the mileage deduction is not allowed because they do not pass the "exclusive use" requirment that is tied into the definition of a principal place of business.

[Unregistered]

Sorry, but your reliance on the IRS pubs is not a determining factor. IRS pubs have NO use as authority for taking a position on tax returns.

The Tax Court has frequently noted that taxpayers who rely on IRS publications do so at their own peril. This is a snip from a regular TC case (Miller 114 TC 184 (2000))

"Unfortunately, the fact that an IRS publication is unclear or inaccurate does not help the taxpayer. Well-established precedent confirms that taxpayers rely on such publications at their peril. Administrative guidance contained in IRS publications is not binding on the Government, nor can it change the plain meaning of tax statutes. [citations omitted]. The authoritative sources of Federal tax law are the statutes, regulations, and judicial decisions; they do not include informal IRS publications."

Revenue Rulings do have some authority (though not as great as the 3 noted above). It appears to many of us that the language of Rev Ruling 99-7 supports the position that mileage does not require an exclusive use of the home office but rather must simply be the principal place of business. While anyone may argue against that position, using the pubs as the definitive word doesn't cut it.

NY Enrolled Agent

[Unregistered]

EA from NJ

Sorry, but your reliance on the IRS pubs is not a determining factor. IRS pubs have NO use as authority for taking a position on tax returns.

You’re making a big thing out of nothing. Congress never intended individual taxpayer to hire someone to do his or her tax return. That is one reason the IRS publishes so many Publication on how to fill out your tax return. If must people just read and follow the instruction in the Publications and fill out there return, they should have no problem with the IRS.

[skhyatt]

Hope I'm understanding

the context of this thread. I didn't think I had a problem with the mileage deduction. Quoting from the Master Tax Guide, "Travel from a Home Office. Individuals who use their homes as their principal place of business are permitted to deduct transportation expenses between their homes and another work location in the same trade or business (Rev. Rul. 99-7). This rule applies regardless of whether the work location is temporary or regular and regardless of the distance." Paragraph 945 Travel from a Home Office.

[Bees Knees]

Sorry, but your reliance on the IRS pubs is not a determining factor. IRS pubs have NO use as authority for taking a position on tax returns.

I agree IRS Pubs have next to no authority on tax issues, other than to reveal the IRS position taken on an issue. Apparently the IRS seems to think you need to have a qualified home office exclusively used for business to take mileage from home to another location.

Let us know how your court battles turn out.

[Armando Beaujolais]

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?

"If you are a CPA, you qualify to represent taxpayers before the IRS."

Using the same logic, you have to conclude that EAs do not qualify to represent taxpayers before the IRS.

The quote from Pub 587 is inclusive. Just because the wording includes certain people doesn't mean it automatically excludes others.

[Bees Knees]

The quote from Pub 587 is inclusive. Just because the wording includes certain people doesn't mean it automatically excludes others.

???

Then what was the point? Those with qualified home offices get the mileage deduction...Oh, by the way, so does everyone else....

[jainen]

primary place of business

>>Those with qualified home offices get the mileage deduction<<

No, that's not true. None of these quotes says that. Not a single one. They all say "home office," not "qualified home office." A "qualified home office" is not necessarily the primary place of business, such as when it is a separate structure. You can only deduct mileage in situations where it IS the primary place of business. You can even deduct mileage where your home office is not a "qualifying home office," as long as it is the primary place of business.

"Qualified home office" is required to deduct the office. Mileage is a separate issue--you can only take it from the primary place of business, a home office even if it is not a "qualified home office."

[skhyatt]

Didn't think

I was told by an IRS person, that unless a self-employed TP meets the test to claim a home office deduction, then the first trip out of the driveway to say, client A is considered commuting miles. Then, after that, from client A to B, C, D, etc. would be deductible, but then from D back home would be commuting again. So, if I work out of my home exclusively, and the area I work in gets some personal use also, then I wouldn't meet the exclusive use test and I wouldn't be able to claim a home office, and again as I described regarding the miles. But, if I could claim the "home office" deduction, then, from the first trip out of the driveway, would be deductible. I didn't think it was that complicated. I always thought if a TP was self-employed and worked from home exclusively, regardless of claiming any "home office" expenses, then all miles were deductible.

I believe the IRS person was wrong. From what I've read, I would agree with jainen. I think that last paragraph from your last post puts it clearly.

[Bees Knees]

A "qualified home office" is not necessarily the primary place of business, such as when it is a separate structure. You can only deduct mileage in situations where it IS the primary place of business.

If a separate structure qualified for the home office deduction but it was not your primary place of business, mileage would still be deductible since traveling to and from your separate structure would be considered miles to a secondary work location away from your primary place of business.

Any scenario you can think of, mileage from a qualified home office to another work location in the same line of work will always be deductible since you are either traveling to or from your primary work, or a secondary work location.

You can even deduct mileage where your home office is not a "qualifying home office," as long as it is the primary place of business.

Every court case I have looked at so far has considered the mileage issue based on the home office qualifying as a principal place of business. In each case, if it passed the primary palce of business test, it qualified for the home office deduction.

[skhyatt]

Bees

I just read through Revenue Ruling 99-7. It says in part:
"(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."

Doesn't that support the position that it doesn't have to be a "qualifying home", but just the principal place of business?

[Unregistered]

Ho

Doesn't that support the position that it doesn't have to be a "qualifying home", but just the principal place of business?

280A(c)(1)(A),

Exceptions for certain business or rental use; limitation on deductions for such use
(1) Certain business use
Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis—
(A) as the principal place of business for any trade or business of the taxpayer,

In order to be a qualifying home, it must be exclusively used for your business.

[Unregistered]

confused

Still confused by all this. So is it "qualifying home" for purposes of claiming certain deductions related to the home, such as Mortgage interest, property taxes, etc. or does that also apply to taking a mileage deduction?

[Bees Knees]

I just read through Revenue Ruling 99-7. It says in part:
"(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."

Doesn't that support the position that it doesn't have to be a "qualifying home", but just the principal place of business?

No, it supports the position that it has to be a qualified home office. Section 280A(c)(1)(A) is part of the home office deduction requirements.

Section 280A(a) says no deduction is allowed for a dwelling unit used by the taxpayer as a residence.

Section 280A(c)(1)(A) is an exception to that rule. If you meet the rule at Section 280A(c)(1)(A), then you get to deduct office in home expenses.

Clearly, Revenue Ruling 99-7 is saying if you meet the requirements needed in order to deduct office in home expenses under the principal place of business test, then your mileage from home to another work location is deductible.