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A taxpayer recently failed to persuade the Tax Court that his travel expenses to five temporary work sites should be deductible personal expenses.

Tax Court Nixes Deduction for Travel to Temporary Work Sites

  • 8/1/2012

Tax Court Nixes Deduction for Travel to Temporary Work Sites

A taxpayer recently failed to persuade the Tax Court that his travel expenses to five temporary work sites should be deductible personal expenses. The temporary work sites were not outside the metropolitan area where the taxpayer worked, the court held.

CCH Take Away: The taxpayer had apparently deducted similar commuting costs in previous years. The Tax Court noted that the record revealed very little about prior years, and the IRS is not bound in any given year to allow a deduction permitted for a prior year.

Background

The taxpayer resided in southwestern Ohio and was engaged in construction activities for an employer located in Cincinnati. In 2007, the taxpayer did not report to the employer’s Cincinnati office but traveled to five temporary work sites. The temporary worksites ranged from 74 to 96 miles from the taxpayer’s residence.

On his 2007 return, the taxpayer deducted $23,000 for unreimbursed employee business expenses, largely attributable to commuting from his residence to the five work sites. The IRS disallowed the deduction.

Court’s analysis

Generally, the costs of commuting between a taxpayer’s residence and place of business are nondeductible personal expenses. However, in certain cases, a taxpayer may deduct travel expenses between his or her residence and temporary work locations outside of the metropolitan area where the taxpayer lives and normally works, the court observed.

The court noted that it takes a facts-and-circumstances approach in deciding whether particular travel expenses were incurred in traveling to a work site unusually distant from the area where the taxpayer lives and normally works. The court found that the temporary work sites could not be considered outside of the Cincinnati metropolitan area. The taxpayer had testified that “my main area is Cincinnati ... the Cincinnati metropolitan area.”

The court also found that expenses incurred commuting between a taxpayer’s residence and a place of business may be deductible if the residence is the taxpayer's principal place of business. However, the taxpayer did not claim that his residence was his principal place of business.

As another exception to the general rule of nondeductibility of commuting expenses, travel expenses between a taxpayer's residence and temporary work locations may be deductible if the taxpayer also has one or more regular work locations away from the taxpayer's residence. The court found no evidence to establish that the taxpayer had any regular work location in 2007.

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