Business mileage

[oceanlovin'ea]

Massage therapist rented an office for her work. Actually worked in a chiropractors office for a few months and did some in-home massages. Then she opened office in May and was a sole proprietor until middle of August. (Don't people know what it does to accounting to change entities in the middle of a month!)

Then she incorporated her business. Now is a s corporation.

Since she has an office, her drive to the office every day is not business miles.But any time she goes to the bank or to get supplies, etc, she has business miles. But if she leaves her home in the morning and on the way to the office she stops at the post office and picks up her mail, doesn't that change the circumstances? Doesn't she get to count some of the mileage as business? Where does the business miles take over?

Would the circumstances be different when she was sole prop and when she became corp? Corporation will reimburse her for mileage each month. We will set it up to do that.

I know this is a simple question, just can't think at the moment.

Thanks.

[Bees Knees]

Look at the chart on page 10-2 of TTB.

If the taxpayer has a regular main job away from home, then mileage from home to a temporary work location is deductible, and then mileage from that temporary work location to the regular main job is deductible.

I would say any location for work, such as the post office, office supply store, customer location, etc. is a temporary work location.

[Jiggers]

Business Mileage or Commuting????

Look at the chart on page 10-2 of TTB.

If the taxpayer has a regular main job away from home, then mileage from home to a temporary work location is deductible, and then mileage from that temporary work location to the regular main job is deductible.

I would say any location for work, such as the post office, office supply store, customer location, etc. is a temporary work location.

Looking at this chart, then my mileage to the post office on the way to my office from my home is fully deductible and not commuting. Or my mileage to a client on the way to my office from my home is fully deductible and not commuting. Or if I stop at the donut shop on the way to my office from my home to buy donuts for the office staff is fully deductible and not commuting. Or if I stop at Wal-Mart or Supermarket on the way to my office to buy supplies for my office is fully deductible and not commuting.

Great! You learn something everyday. Thanks TTB and Bees Knees!

[solomon]

Don't

count on that liberal view standing on an audit.

[Black Bart]

Fine-tuning it

...my mileage to the post office on the way to my office from my home is fully deductible and not commuting...if I stop at Wal-Mart or Supermarket on the way to my office to buy supplies for my office is fully deductible...

Jiggers -- I'm not so sure that Sol isn't right about this. If I'm reading it right, you're saying that turning off at the post office on the way to your office transforms the entire trip from non-deductible commuting expense to deductible business expense. I'm not so sure that IRS would look at it like that. I kinda think they'd be more apt to say you drove an extra 100 feet or so getting on and on the highway and those few feet are deductible, but the balance of that trip still remains commuting in nature.

This is a fine distinction, of course, and, in the real world, most of our clients will simply say "I drove 10,000 miles last year" (never mind 100 feet or so), but as tax people and accountants, we like to fiddle with the details and too, IRS has been known to go to court over less.

[Greenbriar]

Agree re audit

I think an IRS audit would allow legitimate business mileage, for supplies, post office, see a client etc. on the way to work. over and above your normal commute to the primary work location. What if you don't go to the office that day but drive to see clients? I'd say that's all deductible.

[Jiggers]

Just following TTB

The reason that I was questioning Bees Knees is that he is referencing TheTaxBook, 10-2. The chart there does show that these would be ductible business miles.

I guess the real answer is the definition of "Temporary Work Location".

Not that I am going to do that, but I do deduct my milege from my home to out of town seminars or out of town trips for supplies (nearest Sam's/Office Depot/etc. is about 40 miles one-way).

Trips from my office to anywhere business related is deductible, including the trip to the post office on the way home at 5:00 (though I only deduct the mileage to the post office and not the balance of the trip home).

I am just looking for wisdom from this great board!

[Bees Knees]

All interesting theories, but are they the rules? Why the need to make up your own rules?

The fact is, the chart on page 10-2 in TTB is identical to the chart on page 14 of IRS Pub 463. The Pub says:

Temporary work location. If you have one or
more regular work locations away from your
home and you commute to a temporary work
location in the same trade or business, you can
deduct the expenses of the daily round-trip
transportation between your home and the temporary
location, regardless of distance.

Later, the pub also says:

Two places of work. If you work at two places
in one day, whether or not for the same employer,
you can deduct the expense of getting
from one workplace to the other. However, if for
some personal reason you do not go directly
from one location to the other, you cannot deduct
more than the amount it would have cost
you to go directly from the first location to the second.

So lets put these two rules together. Round-trip commuting to a temporary work location is deductible if you have a regular place of business. Is the post office a temporary work location? It is if you need to mail a client’s return to him. Is the office supply store a temporary work location? It is if you need to buy supplies for your business.

So if you have a regular work location, then anytime you go to the post office or the office supply store, the round trip mileage is deductible.

Now lets look at rule two. It says if you have two places of work, any job to job mileage during the same day is deductible. Is the post office a work location? It is if you need to mail a client’s return to him. Is the office supply store a temporary work location? It is if you need to buy supplies for your business.

So if you have a regular work location, then anytime you go to the post office or the office supply store, the mileage between those locations and your regular work location are deductible.

Why the need to argue with the IRS auditor? Pull out Pub 463, show him or her the rules on page 14 and ask: What part of temporary work location miles and job to job miles do you not understand?

[Bees Knees]

By the way, if you don't like me calling the post office or the office supply store a temporary work location, then you have no basis of ever deducting mileage to those places. The reason you can deduct mileage for a round trip to the post office for business is because of the temporary work location rule. Period. There is no other rule out there that would allow you to deduct such a trip.

[Gene V]

By the way, if you don't like me calling the post office or the office supply store a temporary work location, then you have no basis of ever deducting mileage to those places. The reason you can deduct mileage for a round trip to the post office for business is because of the temporary work location rule. Period. There is no other rule out there that would allow you to deduct such a trip.

My basis for deduction these miles is call Local transportation expenses.
Local transportation expenses include the ordinary and necessary costs of all of the following.
*Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home.
*Visiting clients or customers.
*Going to the supply store or Post office (you have to read the small print on this one)

Pub.334 page 31

[Jiggers]

Bees Knees, thanks!

Bees, thanks for the further information. That is what I was looking for, something in the IRS Pubs. Though we know that the IRS Pubs can be ignored by the IRS.

I had an audit a couple of years ago on a rancher. I deducted 75% business mileage for the farm vehicle. The auditor insisted on a log before allowing the expense. I said that none was needed, and flashed the IRS Pub on farmers that specifically state this, saying 75% was allowed. No change on that portion of the audit! I was prepared for that question and had my publication handy when the issue came up.

Thanks again, Bees. Sometimes we preparers quote some tax law we "remember" from some seminar or something we said. I just like to have something tied into the IRS!

[Bees Knees]

My basis for deduction these miles is call Local transportation expenses.
Local transportation expenses include the ordinary and necessary costs of all of the following.
*Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home.
*Visiting clients or customers.
*Going to the supply store or Post office (you have to read the small print on this one)

Pub.334 page 31

All of those either fall into the job to job category or the temporary work location category.

Actually, both IRS Pub 463 and Pub 334 are interpreting the rules from Revenue Ruling 90-23 and Revenue Ruling 94-47 which describe the temporary work location and job to job mileage rules.

Rev. Rul. 94-47 concludes as follows:

HOLDING

In general, daily transportation expenses incurred in going between a taxpayer's residence and a work location are nondeductible commuting expenses. However, such expenses are deductible under the circumstances described in paragraph (1), (2), or (3) below.

(1) A taxpayer may deduct daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location outside the metropolitan area where the taxpayer lives and normally works. However, unless paragraph (2) or (3) below applies, daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location within that metropolitan area are nondeductible commuting expenses.

(2) If a taxpayer has one or more regular work locations away from the taxpayer's residence, the taxpayer may deduct daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location in the same trade or business, regardless of the distance.

(3) If a taxpayer's residence is the taxpayer's principal place of business within the meaning of s 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.

[New York Enrolled Agent]

Bees wrote: "Actually, both IRS Pub 463 and Pub 334 are interpreting the rules from Revenue Ruling 90-23 and Revenue Ruling 94-47 which describe the temporary work location and job to job mileage rules."

For the record - Both of those Revenue Rulings have been modified by Rev Ruling 99-7. Not sure if any of the holdings were changed in whole or in part, but RR 99-7 should be the current cite in addressing transportation expenses.

I agree with Solomon. Be careful using a "daily" trip to the post office to establish miles!!!
Is the post office a "temporary location" as envisioned by Rev Ruling 99-7?

[solomon]

Agree

with Black Bart. Had a friend that lost on an audit because of the very post office instance cited by him.

[Bees Knees]

Rev. Rul. 99-7 concludes:

HOLDING

In general, daily transportation expenses incurred in going between a taxpayer's residence and a work location are nondeductible commuting expenses. However, such expenses are deductible under the circumstances described in paragraph (1), (2), or (3) below.

(1) A taxpayer may deduct daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location outside the metropolitan area where the taxpayer lives and normally works. However, unless paragraph (2) or (3) below applies, daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location within that metropolitan area are nondeductible commuting expenses.

(2) If a taxpayer has one or more regular work locations away from the taxpayer's residence, the taxpayer may deduct daily transportation expenses incurred in going between the taxpayer's residence and a temporary work location in the same trade or business, regardless of the distance. (The Service will continue not to follow the Walker decision.)

(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.

For purposes of paragraphs (1), (2), and (3), the following rules apply in determining whether a work location is temporary. If employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary in the absence of facts and circumstances indicating otherwise. If employment at a work location is realistically expected to last for more than 1 year or there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually exceeds 1 year. If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to exceed 1 year, that employment will be treated as temporary (in the absence of facts and circumstances indicating otherwise) until the date that the taxpayer's realistic expectation changes, and will be treated as not temporary after that date.

The determination that a taxpayer's residence is the taxpayer's principal place of business within the meaning of § 280A(c)(1)(A) is not necessarily determinative of whether the residence is the taxpayer's tax home for other purposes, including the travel-away-from-home deduction under § 162(a)(2).