A taxpayer (Realtor, Broker, or Real Estate Professional) who is temporarily assigned to a job location away from his principal place of business (i.e., away from his tax home) can deduct his travel expenses while working at that temporary job location. On the other hand, a taxpayer (Realtor, Broker, or Real Estate Professional) who is indefinitely assigned to such a job location cannot deduct travel expenses. Such a taxpayer (Realtor, Broker, or Real Estate Professional) must include any living expenses reimbursed by his employer in gross income (Peurifoy v. Commissioner, 358 U.S. 59 (1958)).
An assignment is temporary if it is realistically expected to last, and does in fact last, one year or less (Snellman v. Commissioner, Tax Court Summary 2014-10). An assignment is indefinite if it is realistically expected to last more than one year, whether or not it actually lasts more than one year (Code Section 162(a); Albert v. Commissioner, 13 Tax Court 129 (1949); Revenue Ruling 75-432).
However, an assignment that is realistically expected to last one year or less may be treated as an indefinite assignment if the facts and circumstances indicate it is not temporary. In addition, an assignment that is initially temporary may become indefinite due to changed circumstances. A job taken for a probationary period is also treated as indefinite (Norwood v. Commissioner, 66 Tax Court 467 (1976); Bark v. Commissioner, 6 Tax Court 851; Revenue Ruls. 93-86, 83-82, 73-578, 60-189).
A federal employee is treated as being temporarily away from home during any period the employee is certified by the Attorney General as traveling on behalf of the United States in temporary duty status to investigate or prosecute a federal crime. Accordingly, such an employee may deduct travel expenses even if the assignment lasts more than one year (Code Section 162(a)).
A taxpayer (Realtor, Broker, or Real Estate Professional) on a temporary assignment who travels back to his family home on off days cannot deduct the cost of meals and lodging while at his family home. However, he can deduct the expenses incurred in traveling between his temporary job location and his family home. He can also deduct the cost of the hotel room at the work location if he keeps the hotel room during his visit home. The total of these deductions is limited to the amount it would have cost the taxpayer (Realtor, Broker, or Real Estate Professional) if he had stayed at his temporary job location instead of returning home (IRS Pub. 463, Travel, Entertainment, Gift, and Car Expenses).
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
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Palm Desert, CA 92260
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(Updated 03/15/2021 08:05)