• Key point. Commuting between a minister’s home and place of work is a personal expense, and accordingly the cost of commuting is not deductible as a business expense.
The Tax Court affirmed that commuting between one’s home and place of work represents personal rather than business use of a car for which no business expense deduction is allowed. A church hired a pastor whose home was 70 miles from the church. The pastor chose to remain in his home, and commuted to and from work at the church every Sunday and Wednesday. The pastor claimed a business expense deduction for depreciation on the car he used in commuting to and from work. To substantiate this deduction he produced a letter signed by the six officers of the church stating that he was their pastor and containing a schedule of business miles traveled. The pastor claimed that he used his car to travel 12,643 business miles during the year under examination, which he claimed represented 70 percent of the total miles traveled during the year. The IRS disallowed the claimed depreciation deduction, and the Tax Court agreed. It noted that the evidence showed that 11,523 of the 12,643 miles traveled were commuting miles from the pastor’s home to the church, and that “it is well settled that the cost of commuting between one’s residence and regular place of employment is a nondeductible personal expense.” The remaining 1,120 miles were used for business purposes since they represented travel to transport church members to various functions at other churches. Therefore, these miles qualified as business miles, and a depreciation deduction was allowable for the total amount of depreciation for the year multiplied times the “business use percentage” (the percentage of total miles that the car was used for business purposes, or 1,120 divided by 12,643).
The Court also agreed with the decision by the IRS to impose additional penalties upon the pastor for “negligence.” Negligence is “defined as the lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances.” The Court concluded that “the record in this case is replete with examples of [the pastor’s] negligence. [He] claimed deductions for numerous items which in many cases are either nondeductible or lack substantiation. Accordingly, we find that [the pastor is] subject to the addition to tax for negligence for all the years at issue.” Clark v. Commissioner, 67 T.C.M. 2458 (1994).
• Key point. Taxpayers can compute a business expense deduction for the business use of a car using their actual car expenses instead of the standard mileage rate. However, use of this method requires a taxpayer to prove the percentage of total miles that the car was driven for business purposes.
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