Academic journal article Journal of Accountancy

A House Is Not Necessarily a (Tax) Home

Academic journal article Journal of Accountancy

A House Is Not Necessarily a (Tax) Home

Article excerpt

To deduct temporary lodging and travel expenses, a taxpayer must show that they relate to travel away from his or her "tax home" (the geographical area of the taxpayer's principal place of business) and that the employment was completed within one year.

IRC section 162(a) provides that a taxpayer will not be considered temporarily away from home during any employment (or assignment) that exceeds one year. (For more, see "Defining the Temporary Workplace," JofA, May99, page 117.)

The IRS issued further guidance in revenue ruling 93-86, which said that assignments characterized at the outset as indefinite were not considered temporary regardless of the length of time required to complete them. As long as the one-year limit yeas not exceeded, the initial characterization of the length of the assignment determined whether or not the expenses were deductible.

In Thomas J. Mitchell and Janice M. Mitchell v. Commissioner (TC Memo 1999-283), a Los Angeles publisher retained a self-employed publishing consultant working out of his home. The publisher first engaged Mitchell in 1991 for an assignment expected to last four months. However, due to unexpected events at the publishing company (mostly personnel turnover), Mitchell's services were retained for a series of separate assignments, each lasting less than one year, until the assignments ended in 1996.

During 1994 and 1995, the years in question, Mitchell spent 155 days and 113 days, respectively, in California. He also rented an apartment near the publisher's office because it was cheaper than staying in a hotel. …

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