When Travel Expenses are Business Expenses
Time is the key.

Background. Pastor J is the senior pastor of a church in Town A. He also drives 100 miles to Town B each week to conduct worship services. Are his travel expenses tax-deductible? The answer depends on how long the arrangement lasts. The Tax Court issued a ruling recently that addressed a similar case.

A worker traveled 200 miles each week to perform a temporary job in another town. He returned home each weekend to his family. While the worker was told that the job could be terminated at any time, he ended up working for 27 months. Each year, the worker deducted his travel expenses (mileage, lodging, food) as a business expense. The IRS audited him, and denied the deductions. The worker appealed to the Tax Court.

The court's ruling. The court conceded that a taxpayer can deduct traveling expenses incurred while away from home, if the following 3 conditions are met: (1) The expense must be reasonable and necessary; (2) it must be incurred while away from home; and (3) it must be incurred in the pursuit of a trade or business. The tax code specifies, however, that a taxpayer "shall not be treated as being away from home during any period of employment if such period exceeds 1 year." IRC 162(a). The IRS argued that the worker was not "away from home" while he was working in the other town. The court agreed. It noted that a taxpayer's home generally is

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Posted: April 3, 2000

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