Mileage

[Earl]

New client coming today. Is self-employed doing remodeling. No office. He says that he did not keep books - just receipts. Says truck used strictly for business so no log was kept in the past.
My thinking is no mileage from home to job site and back. However, if home used for administrative purposes could possibly justify mileage from home to job site. What would be considered
enough administrative duties to justify a home office? If just goes to site, gives bid, collects when finished would there be any administrative duties done at home. Not sure what past preparers did
and just want to be sure when I meet with him.

[Kram BergGold]

My view

In my opinion to get mileage from home to first stop and last stop to home the taxpayer must claim a home office. This space can be as small as the size of a desk and chair in the corner of a room. If client says he does not have a dedicated space for work then he has non deductible commuting.

[oceanlovin'ea]

Someone is balancing checkbook, paying bills, ordering supplies, etc. Maybe his wife helps him. But no one can run any kind of business without having somewhere to do some paperwork. Where does he keep the receipts? It might not be a big space or clean space but there is probably a space.

Linda, EA

[Gretel]

I, too, believe that he must have a space to do admin work, even if bookkeeping is outsourced he needs to do bids and job related stuff. I am pretty sure that the rules for claiming home office for the purpose of claiming mileage are more lenient than for the purpose of claiming expenses for OIH on the tax return. The all exclusive use rule does not apply. Some years back there was a post on this, and as far as I can remember Bees explained this very nicely.

[MAMalody]

I must have missed it, however, I do not recall the exclusive use test being set aside for office in the home.

[ChEAr$]

There is a difference between "office in the home" and the home being the focal point of work.
If there is an office in the home , it IS by default the focal point of work.

But one can have the latter and still deduct mileage, rather truck expenses in this case, if that is where he stores
equipment that he must haul to the job.

If he were simply driving a POV to the job site and carrying just himself and used others' tools on the job, it would be commuting, and no deduction. But someone in the home improvement business has to lug his equipment to the job site.

[ddoshan]

I concur ... no office in the home as principal place of business no mileage from home to 1st job site.

[smithtax]

Agree with MAMalody & ddoshan

Rev Rul 99-7

If an office in the taxpayer's residence satisfies the principal place of business requirements of § 280A(c)(1)(A), then the residence is considered a business location for purposes of Rev. Rul. 90--23 or Rev. Rul. 94--47. In these circumstances, the daily transportation expenses incurred in going between the residence and other work locations in the same trade or business are ordinary and necessary business expenses (deductible under § 162(a)). See Curphey; see also Wisconsin Psychiatric Services v. Commissioner, 76 T.C. 839 (1981). In contrast, if an office in the taxpayer's residence does not satisfy the principal place of business requirements of § 280A(c)(1)(A), then the business activity there (if any) is not sufficient to overcome the inherently personal nature of the residence and the daily transportation expenses incurred in going between the residence and regular work locations. In these circumstances, the residence is not considered a business location for purposes of Rev. Rul. 90--23 or Rev. Rul. 94--47, and the daily transportation expenses incurred in going between the residence and regular work locations are personal expenses (nondeductible under §§ 1.162--2(e) and 1.262--1(b)(5)). See Green v. Commissioner, 59 T.C. 456 (1972); Fryer v. Commissioner, T.C. M. 1974--77.



Code Sec. 280A. Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.

(a) General rule

Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence.

(b) Exception for interest, taxes, casualty losses, etc.

Subsection (a) shall not apply to any deduction allowable to the taxpayer without regard to its connection with his trade or business (or with his income-producing activity).

(c) 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,

[Gretel]

I am lost with the disagreement. If TP does his adminstrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

[ddoshan]

In order for a home office to be considered the taxpayers principal place of business they must meet certain requirements which consist of regular and exclusive use area to conduct management activities. Must meet the regular and exclusive use test or no principal place of business thus no mileage from home to 1st job and or from last job back home. Any mileage from 1st job or appt. to the next site would be ok.

[mactoolsix]

From recent O-I-H CPE class

I am lost with the disagreement. If TP does his administrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

I must agree with Gretel on this. There is quite a distinction between O-I-H and a Principal Place of Business. Notes from a recent class on this subject:

O-I-H Qualification Tests
1. The office area must be used exclusively in a taxpayer’s trade or business on a regular and continuing basis.
2. One of the following must also apply.
The home office must be:
a. Used for storing inventory (or product samples) for a wholesale or retail business for which the taxpayer’s home is the only fixed location of the business.
b. Used as a licensed day care center (excepts exclusive use test)
c. A separate structure not attached to the taxpayer’s home but used for business
d. A place where the taxpayer meets with customers, patients, or clients (not just phone calls)
e. The principal place of business for any trade or business of the taxpayer


Principal Place of Business - A home office qualifies as a principal place of business if:
A. The office is used on an exclusive and regular basis for administrative or management activities of any trade or business of the taxpayer, and
B. There is no fixed location of the business where the taxpayer conducts substantial administrative or management activities of the business.

Mike

[smithtax]

Semantics

It appears that's where we're lost.

Whether OIH or Principal Place of Business, either must conform to IRC §280A(c)(1)(A) regarding regularity and exclusivity in order to claim mileage.

The only difference between OIH and Principal Place of Business is the deduction of otherwise personal expenses relating to the residence.

[New York Enrolled Agent]

I am lost with the disagreement. If TP does his adminstrative work from his home than this home is deemed to be his principle place of business. Hence, mileage is allowable. The exclusive use test does not apply for mileage, only the test of being the principle place of business. I stand by this.

Gabriele

Without taking a stand on this issue, let me suggest you read a fairly recent Tax Court case Bogue TCM 2011-164. It discussess the 3 exceptions listed in Rev Ruling 99-7 and I like the judge's use of naming the three exceptions. He called the first exception the home office exception.

I'm going to paste one small piece.

Petitioner has the burden of proof on the home office exception, yet he has failed to produce testimony or documentary evidence that he used his home office exclusively for business purposes. Accordingly, we conclude that petitioner has not shown that his residence was his principal place of business. Consequently, we hold that petitioner is not entitled to deduct his commuting expenses under the first exception.

[ddoshan]

Concur ... no mileage. I think it is pretty clear.

[oceanlovin'ea]

What address is on his business cards and quotes and invoices? It wouldn't be his truck. It would be his home.

For 2013 and future years, tell the man that he needs a desk area where he does such paperwork. It needs to be used for his business needs only. Then for future tax returns, his mileage would count.

Linda, EA