Taxation Example Question Essay
In the example for research question #2, the IRS was correct in disallowing the travel expenses due to the first key factor that Al traveled to and from his home in Milwaukee and never moved his residency to Green Bay, therefore deeming any travel expenses incurred as unallowable.“The position of the IRS is that the tax home is the business location, post, or station of the taxpayer.
Thus, travel expenses are not deductible if a taxpayer is reassigned for an indefinite period and does not move his or her place of residence to the new location” (Hoffman, Jr. et al. pg.9-8) A second key factor which also involved his commute to work, Al did not meet the away from home requirement, because at the end of each day, he returned to his home in Milwaukee. The commute to and from his reassigned job site would not be considered as a reasonable amount of time away from home and therefore deeming the travel expenses unallowable.“A taxpayer’s costs of commuting between the taxpayer’s residence and the taxpayer’s place of business or employment generally are nondeductible personal expenses under §§ 1.
162-2(e) and 1.262-1(b)(5) of the Income Tax Regulations.” (IRS.gov)A third key factor is that the commute to and from the Green Bay office was not a requirement for Al to do in order to maintain his job. This was a mutual decision between him and the CEO that he (Al) came up with to be reassigned in order to be happy in his place of employment. Because the commute was not required, any travel expense incurred was not allowable.
Basically the only argument that Al may have here is that he was not notified that the position has become a permanent job change until his request to be sent back to Milwaukee was denied, which is the fault of the employer who originally agreed to move Al on a temporary basis, if this argument is allowed as evidence to make all the deduction justified, there still is the matter of substantial evidence of each and every commute during the temporary relocation period.In the matter of Substantial Evidence that Al was indeed traveling to and from Milwaukee to Green Bay, substantial evidence would be considered if Al had a daily log of his commute to and from Milwaukee, the amount of mileage it took to get there. Because he only had a calendar on his wall of the dates in which he drove to Green Bay, as well as the employee logs, there are only one out of three major requirements needed for reimbursement.ReferencesHoffman, Jr. et. al., William H.
. Deductions-Employee and self employed related expenses. 2006. USA: Thompson, Southwestern, 2006. Print.IRS, “Sect.
162 Trade or Business Expense.” IRS.gov. 17 OCT 2008. Internal Revenue Service.
4 Aug 2009, http://www.irs.gov/pub/irs-drop/rr-99-7.pdf.