Temporary vs. not temporary travel expenses.

• Author: Currie, David R.

Sec. 162(a) allows a deduction for all ordinary and necessary expenses paid or incurred in carrying on any trade or business during the tax year; these expenses include travel, transportation, meals, lodging and related expenses. Sec. 262, however, provides that personal, living or family expenses are not deductible.

Due to litigation in this area and a lack of clarity in the Service's own rulings, the IRS issued Rev. Rul. 99-7 to provide further guidance. This ruling renders Rev. Ruls. 190 and 59-371 obsolete. It modifies and supersedes Rev. Ruls. 90-23 and 94-47, and distinguishes Rev. Rul. 93-86. In Rev. Rul. 99-7, the Service stated it will not follow Charles Walker, 101 TC 537 (1993).

If a taxpayer travels away from home to a "temporary" work location, the travel expenses are fully deductible. This has a major effect on the deductibility of travel costs (airfare, lodging, meals, etc.) and transportation costs (primarily automobile).

A taxpayer's costs of commuting between his residence and place of business or employment generally are nondeductible personal expenses (Regs. Secs. 1.162-2(e) and 1.262-1 (b) (5)). However, the costs of going between one business location and another generally are deductible under Sec. 162(a).

For purposes of determining the deductibility of travel-away-from-home expenses under Sec. 162(a)(2), Rev. Rul. 93-86 defined "home" as the "taxpayer's regular or principal (if more than one regular) place of business." When there are two job locations, the taxpayer's principal place of business is his "tax home."

Sec. 280A(c)(1)(A) provides that a taxpayer may deduct expenses for the portion of his personal residence used on a regular basis as his principal place of business. In Edwin R. Curphey, 73 TC 766 (1980), the Tax Court held that daily transportation expenses incurred in a rental business by a dermatologist in going between an office in his residence and other work locations (the rental units) were deductible when the home office was his principal place of business (see also John Gosling, TC Memo 1999-148, and Valerie Jean Genck, TC Memo 1998-105).

In Walker, the taxpayer was a self-employed logger who used his residence as his "regular place of business"; his various job sites were "temporary work locations," according to the Tax Court. The Service has not appealed this decision, but would appear to lose under Sec. 280A(c)(1)(A).

Temporary Work Location

This definition particularly affects construction...