Discussion Archives:Business Miles and home office

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Discussion Forum Index --> Consumer Questions --> Business Miles and home office


Dave 75 (talk|edits) said:

6 January 2007
I have a Partnership LLC with my Home as my office location.

I travel from my home office to my client office 20 miles away EVERYDAY and perform consulting services (Computer programming) at Location X who is the client of my customer Y from whom I get my 1099 payment.

I have two questions

1) Are these 40 miles every day - business miles and can I deduct these? 2) Can I also use home office deductions since I do Accounting, Marketing from at home office and I also some time work out of my home (Telecommute)



Thanks

Solomon (talk|edits) said:

6 January 2007
Is your wife the other partner and do you live in a community property state?

Dave 75 (talk|edits) said:

6 January 2007
Yes; My wife is the other partner. I live in GA. What do you mean by community property state?

Dave 75 (talk|edits) said:

6 January 2007
Did a Goggle. Looks like GEORGIA is NOT a community property state

Solomon (talk|edits) said:

6 January 2007
You will be filing Form 1065 for the Partnership which will include two K-1's - one for you and one for your wife. A home office is not deducted on the 1065. You will use a worksheet in Publication 587 to compute your expenses for the home office. Assuming your home is your principal place of business, the home office is okay and I would say your mileage as well. Perhaps someone else has another take on the mileage.

Rosalydia (talk|edits) said:

7 January 2007
Where is the principal place of business?

Solomon (talk|edits) said:

7 January 2007
Dave75 - see Sec. 280A(c)(1) regarding a principal place of business. In essence, in your case, you need to perform administrative or management activities at home and you have no other location to perform those functions. Based upon what you say, I would think you qualify but read the code citation to satisfy yourself.

Drpcpa (talk|edits) said:

8 January 2007
As for the mileage, if this was a tempory location, you may be ok. If this is the only location you ever go to, its commuting mileage.

Solomon (talk|edits) said:

8 January 2007
Drp - I disagree. See Rev. Rul. 99-7 in (3) of the "HOLDING" section. Given this person has a principal place of business at home within the meaning of Sec. 280A(c)(1), temporary does not apply.

Taxref (talk|edits) said:

8 January 2007
I agree with Solomon. With a qualified home office, your commute in the morning is from your bedroom to your office. Miles driven from, and back to, the home office are deductible.

Jdugancpa (talk|edits) said:

8 January 2007
I think the issue at hand is whether Dave75 is doing any "substantial" administrative or management functions from his home office. If he is working full-time for XYZ as a "consultant" (i.e. a contract employee) and there really are no "subtantial" admin/mgt activities to be performed, I agree with Drpcpa that the trip is a nondeductible commute. However, Dave mentions that he does marketing and accounting, which probably indicates he is working for more than one client, which means he is not really a contract employee but is in fact truly and independent contractor, and so his home office deduction is probably more secure. And if his home office deduction is solid then the trip is business travel, not commute.

Sandysea (talk|edits) said:

8 January 2007
I would be careful however if the gross receipts you pick up on your business are only from the 1099. This then would give a red flag to commuting....

Jdugancpa (talk|edits) said:

8 January 2007
I don't follow. Maybe he does 4 different jobs each year at $25k per crack, average. Each of the 4 clients will be obligated to submit a 1099 for his services but that will not mean he is not self-employed. In fact, he may be truly self-employed even only having one client, depending on the situation.

Sandysea (talk|edits) said:

8 January 2007
Yes Jdugan, but I think a red flag would follow if his total receipts for his business only include the 1099 income and no other income at all. If the 1099 provider has one single address then it is only my opinion that I would be careful not to recognize this as commuting. I would keep a travel log to make sure that I was driving to different sites...Maybe I am paranoid, but would want to keep it all arms length :)

Solomon (talk|edits) said:

9 January 2007
Sandy - read the above cited revenue ruling regarding commuting or the lack thereof.

Drpcpa (talk|edits) said:

9 January 2007
If your doing the "accounting and marketing" at home because its more convenient for you, your not going to qualify for the mileage deduction, if you have a place at the client office that allows you to do the administrative functions. The home office only qualifies as a principal place of business if there is no other location to conduct business. You need to look at how much time your putting in between the locations, because the home office only qualifies as a principle place of business if you conduct "substantial" activities there. I would assume if your traveling 40 miles to/from work every day, that your probably putting in a good amount of time there (40 hours?). Is the time at home substantial?

Rosalydia (talk|edits) said:

9 January 2007
(3) If a taxpayer's residence is the taxpayer's principal place of business within the meaning of ยง 280A(c)(1)(A), the taxpayer may deduct daily transportation expenses incurred in going between the residence and another work location in the same trade or business, regardless of whether the other work location is regular or temporary and regardless of the distance.


In addition to the comment just made by Drpcpa, the home office must be the principal place of business for the same trade or business that gives rise to the transportation.

JR1 (talk|edits) said:

January 9, 2007
This thread is still going? There is no debate. He has one principal place of business--his home. Period. Just as Rosa and Solomon and others have noted. Move on. The mileage is biz mileage.

Drpcpa (talk|edits) said:

9 January 2007
There is a debate in the fact that having a home office doesn't automatically qualify it as a principle place of business under Sec 280A(c)(1)(A). The rule change a few years ago allows a home office as long as the space is used exclusively for an office, but that doesn't make it a principle place of business. Before the law change, they were basically the same thing, but not now. The question is whether Dave 75 does "substantial" administrative duties. If all Dave is doing at home is recording his income in his checkbook, he is a long way from doing "substantial" administrative duties. His office may qualify as a home office, but not as a qualified place of business. And that is the determining factor in whether or not he is allowed business mileage.

Dave 75 (talk|edits) said:

5 February 2007
There is only one 1099 for the year 2006 since I performed the work only at one location. My main work at home is Invoicing, accounting. Once or twice week, I do telecommute and work at home. I have an exclusive office at home 200sq.feet, that i use only for my business work. (Invoice, telecommute etc.

So based on reading the above posts, can I deduct the to and fro mlies as business miles? I drove appx 6000 miles. will this raise a red flag since i have only one 1099? I never thought this could be so complicated. Thanks for your help

Kevinh5 (talk|edits) said:

5 February 2007
to and fro where?

Dave 75 (talk|edits) said:

5 February 2007
from my home office to client site

Home office = where I do accounting, invoice/administration, and once a week telecommute work Client site : where I go every day to perfrom computer consulting.

I get 1099 not from my client, but from my customer (3rd party) who has a contract with the client to supply consulting services

Thanks

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