Internet Based Tax Briefing

HAIG SIMMONS

INTERNET BASED TAX BRIEFING 2

Subject

This is a group decision to determine the tax home for Haig Simmons and whether she can deduct travel, meals and lodging expenses in her assignments in Utah, Nevada and Idaho.

Facts

Haig Simmons is an employee of B&B Restaurants, Inc. Her assignment for the next fourteen months is to set up the general ledger accounting system for three new restaurants in Utah, Nevada, and Idaho and visit them at least once a calendar quarter. B&B is located in Colorado, but Simmons maintains a residence in Orange County, California. Simmons reports back to B&B electronically and does most of her work from hotel rooms.

Taxpayer

The taxpayer is Haig Simmons.

Issue

May Haig Simmons deduct the unreimbursed expenses: lodging, travel, and meal expenses for income tax purposes?

Holding

The group’s determination is that Ms. Haig Simmons tax home is Orange County, California, and her assignments in Utah, Nevada and Idaho are temporary, which allows her to deduct the unreimbursed travel, lodging, and meal expenses (to a limitation of 50%) on Schedule A of her individual tax return. We based our decision on IRC, Section 162(a)(2).

Analysis

For travel expenses to be deductible under section 162(a)(2) of the Code, they must satisfy the following three conditions: (1) they must be ordinary and necessary, (2) they must be incurred while away from home, and (3) they must be incurred in pursuit of a trade or business1. This includes travel expenses incurred while away from home in the pursuit of a trade or business. A tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located.

To determine the tax home of Haig Simmons, we looked at three factors, laid out in Rev Ruling 73-529:

• Whether the taxpayer performs a portion of his business in the vicinity of his claimed...