Tax Home

[equinecpa]

I'm just completing a return for a couple who maintain two residences, one in Dallas and one in Houston.

They have a home they own and live in on weekends/holidays and used to work out of.

In 2006 both their consulting jobs turned into employment. They work approximately 350 miles away from their house so they rent an apartment and fly back to their true home most weekends. Their contracts run for 6 months at a time.

In 2006 I claimed the rent/utilties/airfares as employment expenses. However I'm thinking that they can't claim any of this in 2007 can they since the employment term will now be over a year (their contracts were renewed through to the end of 2007?).

I feel I'm justified in claiming the 2006 expenses as the taxpayer has living expenses at a main home that are duplicated, and the taxpayer has not abandoned his original home. I'm considering their tax home as their principal residence. Is this supported by the above facts?

Thanks

Carolyn

[solomon]

It appears to me you are correct. I am curious, as employees, why they would have contracts with the employer.

[RLymanC]

Travel back to home

I curious about deducting the airfare back home on weekends.

See TTB page 8-11 bottom of first column, last sentence.

The first trip to the temp location is deductabe (mileage or airfare) and the last trip back is also deductabe (mileage or airfare), but the trips back home on the week-ends, don't think so. You can deduct the cost of the lodging and per diem meals at the temp location seven days a week, but not the costs of returning home on week-ends, be it airfare or mileage.

[ChEAr$]

exception

I curious about deducting the airfare back home on weekends.

See TTB page 8-11 bottom of first column, last sentence.

The first trip to the temp location is deductabe (mileage or airfare) and the last trip back is also deductabe (mileage or airfare), but the trips back home on the week-ends, don't think so. You can deduct the cost of the lodging and per diem meals at the temp location seven days a week, but not the costs of returning home on week-ends, be it airfare or mileage.

to this is if the traveling costs back home and return turn out to be less than the
expense of staying on the weekends, then it's deductible.

[New York Enrolled Agent]

I feel I'm justified in claiming the 2006 expenses as the taxpayer has living expenses at a main home that are duplicated, and the taxpayer has not abandoned his original home. I'm considering their tax home as their principal residence. Is this supported by the above facts?

I'm not sure their principal residence is their tax home. I'm pasting a portion of a Tax Court case to illustrate:

[start] This Court's jurisprudence holds that an individual's tax home is generally the location of his or her principal place of employment. See Daly v. Commissioner, 72 T.C. 190 (1979); Kroll v. Commissioner, 49 T.C. 557, 561-562 (1968); cf. Commissioner v. Flowers, 326 U.S. 812 (1946). If an individual does not have a principal place of employment, we generally deem the situs of the individual's permanent residence to be his or her tax home. See Rambo v. Commissioner, 69 T.C. 920 (1978); Dean v. Commissioner, 54 T.C. 663 (1970); Leach v. Commissioner, 12 T.C. 20 (1949). We consider a person who has neither a permanent residence nor a principal place of employment to be an itinerant without a tax home. See Wirth v. Commissioner, 61 T.C. 855, 859 (1974); Hicks v. Commissioner, 47 T.C. 71 (1966). [end]

So the question becomes - do they have a principal place of employment? Even though (in good faith) you felt that 6 months was a temporary assignment, it appears that their employment has become of indefinite rather than temporary duration. Obviously, there is room for controversy here but I don't think it's a slam dunk for their principal residence. As the Tax Court often says - the use of the word "home" in §162(a) is not equivalent to where you live but rather where your principal place of employment is.