Regular Work Away from Home

Technical topics regarding tax preparation.
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A client is assigned by his employer to work at a particular remote location on an intermittent basis. Although the assignment is not initially expected to last longer than one year, the client's assignment is extended multiple times and the period of time during which he continues to return to the remote work location ends up exceeding one year. Although he continues to return to the same general area for a period of time that exceeds one year, he spends no more than 25% of his time in that location and spends the remaining 75% of his time working from home or traveling to other locations for his employer, who maintains no permanent office for him.

Question 1: Can the work at the remote location where the client spends 25% of his time be considered temporary even if the client returns to the same location for a period exceeding 1 year?

In Chief Counsel Advice 200026025, the IRS opines that in order to restart the clock on the one-year temporary work location requirement, there would need to be a break in service of more than 3 weeks, but that only a break of 7 months or more would be considered long enough to be certain to restart the clock on the 1-year period of employment. In this case, my client may have some breaks that exceed 3 weeks, but likely nothing that is even close to 7 months. CCA 200026025 also states that if an employee is assigned intermittently to work at a single location over a period that exceeds a year, but is expected to spend no more than 35 days per year at that location, the assignment is considered temporary. Since my client spent as much as 25% of the year at this particular location on an intermittent basis, his time there does exceed 35 days. CCA 200026025 goes on to give an example in which an employee who manages 5 projects for her employer over an 18-month period and is required to visit 2 of the 5 projects every week of the year and concludes that those two project sites are not temporary work locations.

The latter example from the CCA cited above seems overly conservative, especially since the employee in the example had a regular office location at the employer's headquarters. In McClellan, T.C. Memo 2014-257, taxpayers who rented a shared apartment in NYC near a major client for $1,000/month and spent only 20% of their time at their home on Mississippi were nonetheless allowed to consider Mississippi their tax home and deduct their NYC living expenses. This was allowed despite the fact that the court denied a home office deduction for the Mississippi home.

Question 2: In the event that the work in the remote location where the client spends as much as 25% of his time cannot be considered temporary, could travel deductions nonetheless be allowed on the basis that the remote location is 1 of 2 or more regular work locations and that the principal place of business is near his home?

Under Revenue Ruling 99-7, a home office that qualifies as a principal place of business under IRC 280A(c)(1)(A) is required in order for the deduction of transportation between the home and another regular work location to be allowed. As Brian and tb_in_sf have previously indicated, the flush language of IRC 280A does not seem to require that an area be exclusively used for business in order for it to be considered a principal place of business, but merely that the area must be both exclusively used and the principal place of business (or 1 of 2 other alternatives, irrelevant here) in order for the home office deduction to be allowed. However, Bogue (T.C. Memo 2011-164) does take the position that the use as a principal place of business must be exclusive in order for commuting mileage to be deductible and so coincides with Revenue Ruling 99-7.

Assuming his home office does qualify as exclusively used as a principal place of business, does that negate the 1-year rule and render all travel to the second regular work location deductible?
 

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