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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12007
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My question is: what is an example of a regulation (CFR or

Customer Question

My question is: what is an example of a regulation (CFR or IRS code) or a legal determination that can be used as precedent to justify tax deducting a temporary housing cost for my stay in a remote work location?
The conditions:
1) I am an airline pilot who lives in Texas but commutes to New York City where I sit 'reserve'. The airline requires me to be there for 18 or so days out of the month "on call". This is my primary full time job.
2) I run two other LLCs. One is a graphic arts business and the other is an aviation consulting business. Both are incorporated in Texas. I mostly work with clients in Texas but I can also work remotely using the Internet for 99% of the work. I currently deduct a home office in my Texas residence.
3) I work in on my LLCs in Texas and while I'm on the road and I would like to offset the cost of airline imposed housing (they require me to stay within 1 hour of JFK airport while on 'reserve'. The choice of housing is primarily influenced by airline availability requirements but the LLCs force me to find a place that has fast Internet access.
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
It's probably easiest to start with the concept of "tax home."
This is the basis for all "business travel" deductions which is what you're talking about here.
The tax home concept permeates the code (sometimes as specific terminology and sometimes simply as a logical basis, even though it's not always CALLED tax home in the code). We see it in "business travel," "moving expense" deductions, "medical travel," and others areas as well.
Also, it's probably good to "get out there"/establish that permanent (100%) deduction for a second abode/living space/lodging is never deductible ... meaning that the cost is deductible only for nights when you are either (1) "traveling for business" or (2) on a "temporary assignment"
So if you do pay for a permanent establishment you (1) Need to establish your tax home and (2) deduct only the cost of that for the days that you are away FROM your tax home.
Here are some selections from IRS Publication 463, that can serve as a foundation for this analysis:
"Deductible travel expenses while away from home include, but are not limited to the costs of:
Travel by airplane, train, bus or car between your home and your business destination. (If you are provided with a ticket or you are riding free as a res
Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another.
Meals and lodging.
Tips you pay for services related to any of these expenses.
Dry cleaning and laundry.
Business calls while on your business trip (This includes business communications by fax machine or other communication devices).
Other similar ordinary and necessary expenses related to your business travel (These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer).
Shipping of baggage, and sample or display material between your regular and temporary work locations."
Now, here's the part about temporary vs permanent:
"You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you cannot deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you will work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes."
Finally, here's the information regarding "tax home."
"You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away."
Also ...
"Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home."
And finally, an excellent (a rare event, in my opinion, when it comes to IRS explanations) example:
"For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend.
You may not deduct any of your travel, meals or lodging in Milwaukee because that is your tax home.
Your travel on weekends to your family home in Chicago is not for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located."
You'll see this in the code here: (26 U.S. Code § 162)
And this is all covered in IRS Publication 463.
Finally, they have a very readable one page "tax topic" on this.
Be looking at this and I'll see if I can be find the "Tax Topic" on business travel.
And ... let me know what questions you have...
Expert:  Lane replied 2 years ago.
Here we go:
Again a (surprisingly) easy to read IRS concise coverage of business travel:
Be glad to work through this with you.
The initial hurdles in maximizing your deductions in my opinion are the following:
(1) 18 days per month potentially making NYC your tax home (and this is a scenario that plays out disappointingly for MANY ... Over the years I have come to undersrtand that this is by design ... an IRS "gotcha," if you will. (Designed to minimize deductions and maximize tax revenue)
(2) Charcterizing the NYC time as a temporary assignment.
The Home office deduction helps to "pin down" Texas as your Tax home, so it may be possible to document things such that you an deduct the NYC costs (while you're there) as business travel...Documentation will be critical.
But as you've already discovered you are almost perfectly on the proverbial fence here, in many areas.
Let me know your thoughts after reading the tax topic and my trying to distill the information for you in my first post ... and we can go from there...
Customer: replied 2 years ago.
I had previously read the CFR and Publication 463 but unfortunately I am no closer to a definitive answer. The problem is that every IRS publication is designed to be interpreted under the assumption of having a single occupation. In my case, my primary bread winner job is airline pilot with my domicile being JFK. JFK is verified to be my tax home. However, I do perform work while I stay overnight in NYC so I need to know if part of my NYC lodging is deductible under one or both of my LLCs or as a personal business expense."You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away. " (per )In my case, since my tax home is NYC, when I come "home" it is still away from my "tax home" so shouldn't my mortgage and all related expenses be deductible then? What if I am already tax deducting my "home office" in Texas?What I need is a tax court case where someone had similar circumstances. The rules appear to overlap and this can be very expensive for me if they decide to interpret their rules in a way favorable to collecting more taxes.
Expert:  Lane replied 2 years ago.
I agree.
Your case is VERY much like the Chicago/Milwaukee example in TT 511.
... where the taxpayer could not not deduct any of the travel, meals or lodging in Milwaukee because that was the tax home BUT ALSO travel on weekends back to the family home in Chicago wasn't for work , so not deductible EITHER.
The task here is to know the rules... take a bottom-up approach, and BUILD a case for the deductions you take.
Remember Congress makes the statute law here, and yes it IS written in such a ways as only to deal with a much simpler situation.
The what IRS has done (who only administers the law) is to interpret the law in such a way as to enhance revenue for the service.
I'm so sorry, but to tell you that this is any more black and white than that would be a disservice.
I almost wonder if the 18 days per month is done by design, to make THAT your tax home. (sounds like a conspiracy to me :0) ).
I think part of the answer is in characterizing the time in NY as a temporary work assignment so that you can write off ALL of the days that you are there and then still take everything that is reasonable and customary (IRC 162) for your other businesses ... WHICH would include the home office deduction WHICH supports that this is your tax home.
Let me see what I can find in terms of case law, revenue rulings and private letter rulings. That's where the specifics you're looking for will come from, not the statute law.
Can imagine that there has not been a tax court case, a federal district court case of a SCOTUS case where this is dealt with for Pilots such as your self (or something analogous).
Check back here if you would.
Expert:  Lane replied 2 years ago.
First, there's an awful lot we haven't talked about.
e.g., what's reimburse by your employer and the special per diem rates for transportation workers (Pilots).
Airline pilots and flight attendants qualify for the tax write-offs associated with working as a transportation worker. Specifically, airline pilots and flight attendants qualify for a higher meal expense allowance than the general public does. The higher meal allowance for transportation workers is described and calculated on IRS Form 2106.
If your employer reimbursements were NOT included in box 1 of your W-2, you may claim any excess per diem rates for your travel expenses as a job related expense on Schedule A. You will need to enter your tax-free employer reimbursements in order to calculate your allowable expenses.
If your employer reimbursements were included in box 1 of your W-2, you may claim all of your per diem travel expenses as a job related expense. In this case, you will not need to know your employer reimbursements in order to calculate your allowable expenses.
(Just wanted to get that piece out there)