Home office & mileage

[JON]

If your not deducting miles

I think you are costing client money. I have had Schedule C audits involving outside salesmen-without office in home deduction, should have but niether wanted, their mileage records were reviewed, biggest deduction, never was it questioned. If they would have had a principal office available some other place-they would have had a problem, but not in this case. I would have gone over there and thrown the treadmill out of the room if the first trip out of the day would have been gone. We have killed this one and hopefully the first trip and last one home is not material.

[Brad Imsdahl]

Brad,

Thank you for being diplomatic, but that doesn’t solve the issue.

No it doesn't. Some issues cannot be solved unless a court case deals with it. Everyone else seems to think the exclusive use requirement is not necessary for mileage deductions. IRS audit experience seems to support their opinions. Can you offer contrary experience?

[Bees Knees]

No it doesn't. Some issues cannot be solved unless a court case deals with it. Everyone else seems to think the exclusive use requirement is not necessary for mileage deductions. IRS audit experience seems to support their opinions. Can you offer contrary experience?

Audit experience?

My audit experience is every time, the auditors ask me what the rules are. That’s no help. Try calling the IRS with a question. They will give you the wrong answer over the phone 50% of the time.

And as for court cases, except the Walker case, NO court case has ever dealt with the issue outside of considering whether the office in home qualifies for the deduction. And Rev. Rul. 94-47 says the IRS will not follow the Walker case.

So odds are against you if you think you don’t need to have a qualified home office to deduct mileage.

[Scarecrow]

Mr. Knees,

You seem to want to get the last word in. Have you ever tried to win an argument with yourself in front of the mirror?

[Unregistered]

Pubs.

You guys are making this thing to hard, just go by the IRS Pubs.--Pubs. says that you have to have a qualifying office in home in order for the mileage to be deductible.

[skhyatt]

Brad

Wondering what your position is on this subject. In TTB, page 5-13, it seems to be saying that you must have a home office that qualifies as the principal place of business. If I'm reading that correctly.

[Brad Imsdahl]

Wondering what your position is on this subject. In TTB, page 5-13, it seems to be saying that you must have a home office that qualifies as the principal place of business. If I'm reading that correctly.

IRS Pub 587, page 7, says: “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.”

IRS Pub 463, page 15, says: "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."

TTB, page 10-5, says: "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."

My position is to stick close to the wording in the IRS Pubs.

[OldJack]

IRS Pub 587, page 7, says: “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.”

IRS Pub 463, page 15, says: "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."

TTB, page 10-5, says: "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."

My position is to stick close to the wording in the IRS Pubs.

If you look at the forrest rather than the trees you will note that pub 587 subject is "Business Use of Your Home" and not about mileage deduction. Pub 463 subject is "Travel, Entertainment, Gift, and Car Expense". I would think Pub 463 is more applicable to deciding the wording then Pub 587. I still say I will take the mileage if the home office is the principle place of business.

[skhyatt]

More clear

This appears to be one of those areas that needs clarification by the courts?. Maybe it's just me, but I think the wording causes some of the confusion. I mean, if my office in the home IS my principal place of business, but not used exclusively for the business, I can understand how that would prevent taking certain expenses related to the home, such as property tax, mort. interest, etc., but I just don't see how/why this should affect if I can deduct mileage. That just makes no sense to me.

[Bees Knees]

I would think Pub 463 is more applicable to deciding the wording then Pub 587. I still say I will take the mileage if the home office is the principle place of business.

What is the difference between the wording in IRS Pub 463 and Pub 587?

Don't they say the same thing?

[Bees Knees]

This appears to be one of those areas that needs clarification by the courts?

No, this is one of those issues where the obvious wording in the code, regs, and pubs contradicts what many have told their clients over the years, so nobody wants to admit their interpretation has been wrong for so long.

The pubs say if you have a home office that qualifies as your principal place of business, you get to claim mileage.

The revenue ruling says if you have a home office that qualifies as your principal place of business, within the meaning of the code section that defines a principal place of business for purposes of the office in home rules, then you get to claim mileage.

Be honest with yourself. If you just learned how to do taxes, and have never told any client yet whether their mileage qualifies or not, would you argue this issue? Would there be any doubt the ruling says you need to have a qualified home office to claim mileage?

[OldJack]

What is the difference between the wording in IRS Pub 463 and Pub 587?

Don't they say the same thing?

The wording is similar but you have to look under what subject it is being discussed in the case of pub 587 its a qualified home office. In pub 587 the comment is simply supplementing the fact that if you have a "qualified home office" you also can deduct mileage from there.

Pub 463 is similar but is making a flat statement that under the subject of car expense you can deduct mileage if you have an office at home that is your principle place of business and says nothing about the requirements of the office at home deduction.

IRS Pub 587, page 7, says: “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.”

IRS Pub 463, page 15, says: "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."

[Unregistered]

I found it!

Brad,

Thank you for being diplomatic, but that doesn’t solve the issue.

Section 280A(c)(1)(A) is a continuation of the sentence started at Section 280A(c)(1). How can you suggest they are separate?

“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…”

“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—(B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or”

“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—(C) in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer's trade or business.”

All three rules start off with the same beginning sentence. You are picking and choosing portions of the sentence and breaking them into bits and pieces trying to get around a rule. Each sentence is complete. You cannot, for example, say a place to meet clients within the meaning of Section 280A(c)(1)(B) can apply to your dinning room table if you also eat lunch and dinner there. If you just mean a place to meet clients, why would you say “within the meaning of Section 280A(c)(1)(B)” if you don’t care about the exclusive and regular use requirement? That would be silly. If you don’t care about exclusive and regular use when you mention something, why cite the code that includes exclusive and regular use in the same sentence?

I finally found the authoritative reference that deals with this exact issue! Mystery solved! Sorry to those who were arguing the other side, but there's no question with this ruling. It addresses exactly what we've been talking about. Very clear and concise. We can wrap this up.

Hang on a minute. The phone rang. I'll get back to you.

[skhyatt]

Prop. Regs.

Prop. Regs. Section 1.280A-2(b) USE AS
THE TAXPAYER'S PRINCIPAL PLACE OF BUSINESS--

(1) In general. Section 280A(c)(1)(A) provides an
exception to the general rule of section 280A(a) for
any item to the extent that the item is allocable to a
portion of the dwelling unit which is used exclusively
and on a regular basis as the principal place of
business for any trade or business of the taxpayer…

Prop. Regs. Section 1.280A-2(g) Exclusive use requirement--

(1) In general. Paragraph (b), (c), or (d) of this
section may apply to the use of a portion of a dwelling
unit for a taxable year only if there is no use of that
portion of the unit at any time during the taxable year
other than for business purposes.

where did you find these prop. regs.?

[skhyatt]

Where in the code

does it tie the mileage deduction to the home office deduction? Been looking and can't find it. Maybe I'm just too tired.