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The cost of commuting between a taxpayer's residence and place of business is generally a nondeductible personal expense, even if business phone calls are made or a conference call is held during the commute. The Supreme Court said in Flowers, 1 that the core reason why commuting expenses are not deductible is that a taxpayer makes a personal choice about where to live. However, in Rev. Rul. 99-7,2 the IRS recognized three exceptions to the general rule that commuting expenses are non de due tibie:
1. Expenses for transportation between the taxpayer's residence and a temporary work location outside the metropolitan area where the taxpayer lives and normally works are deductible ("temporary distant workplace exception").
2. If the taxpayer has one or more "regular work locations away from the taxpayer's residence," expenses for transportation between the taxpayer's residence and a temporary work location are deductible ("regular work location exception").
3. Expenses for transportation between the taxpayer's residence (if the residence serves as the taxpayer's principal place of business) and a regular or temporary work location are deductible ("home office exception").
The taxpayer has the burden of proving that he is entitled to one of these exceptions in order to be able to deduct any commuting costs.
Rev. Rul. 99-7 deals only with "daily" transportation expenses, i.e., - transportation expenses incurred in going from the residence to a work location, and back to the residence, within one day. It does not deal with overnight travel expenses. The tax treatment of overnight travel expenses is governed by Section 162(a)(2), and involves an analysis of the taxpayer's "tax home."
Temporary distant workplace exception
A taxpayer generally may not deduct daily transportation expenses incurred in commuting between his residence and work location. However, a taxpayer whose work consists of many temporary worksites might not always have a choice about the location of those worksites. Although the taxpayer's choices about where to live and where to "normally work" are personal, and it is assumed that he will live near his place of employment, it is unreasonable to expect that he will move to a distant location for a temporary job. The taxpayer's choice to take a temporary job at a remote location is, therefore, dictated by business needs more...