Tax Research Case
Tax Research Case
Travel expense deduction
A551 fall 2012
December 4, 2012
I. Facts
The tax payer, Miss Teecher, is a teacher who teaches Latin American in high school for 4 years. She is 28 years old and single. She plans to have a travel to South America from June 4 to June 11 through the local university. She thinks it is a business travel since it can enhance his teaching abilities. She plans to spend about 2,000USD during the trip. She wants to take 2 days to have sightseeing. Her income is around 40,000USD. She has no plan about the expense yet.
II. Issues
Can she deduct the expense during this trip?
What suggestion do we have to help her deduct as much as possible?
III. Analysis
Travel expenses are among the most common business expense deductions. So first of all, we should determine whether the taxpayer is in titled to deduct her travel expense. Section 162 of the Code provides for the deduction of travel expenses while “away from home” in the pursuit of a trade or business. A similar deduction is allowed for travel expenses connected with income-producing activities not constituting a business. The taxpayer must be away from home before travel expenses are deductible. The “away from-home” test poses two questions: for what period does the taxpayer need to be away from home, and where is the taxpayer’s home for tax purposes? With respect to the first question, the Supreme Court has ruled that the away-from-home test generally requires the taxpayer to be away from home overnight. According to taxpayer’s statement, she will left United States on June 4 and will come back on June 11. So she is obviously away from home overnight. The second aspect of the away-from-home test concerns the determination of the taxpayer’s tax home. The IRS and Tax Court have defined the term tax home to mean the business location of the taxpayer or the general vicinity of the taxpayer’s employment, regardless of the location of the taxpayer’s personal
Travel expense deduction
A551 fall 2012
December 4, 2012
I. Facts
The tax payer, Miss Teecher, is a teacher who teaches Latin American in high school for 4 years. She is 28 years old and single. She plans to have a travel to South America from June 4 to June 11 through the local university. She thinks it is a business travel since it can enhance his teaching abilities. She plans to spend about 2,000USD during the trip. She wants to take 2 days to have sightseeing. Her income is around 40,000USD. She has no plan about the expense yet.
II. Issues
Can she deduct the expense during this trip?
What suggestion do we have to help her deduct as much as possible?
III. Analysis
Travel expenses are among the most common business expense deductions. So first of all, we should determine whether the taxpayer is in titled to deduct her travel expense. Section 162 of the Code provides for the deduction of travel expenses while “away from home” in the pursuit of a trade or business. A similar deduction is allowed for travel expenses connected with income-producing activities not constituting a business. The taxpayer must be away from home before travel expenses are deductible. The “away from-home” test poses two questions: for what period does the taxpayer need to be away from home, and where is the taxpayer’s home for tax purposes? With respect to the first question, the Supreme Court has ruled that the away-from-home test generally requires the taxpayer to be away from home overnight. According to taxpayer’s statement, she will left United States on June 4 and will come back on June 11. So she is obviously away from home overnight. The second aspect of the away-from-home test concerns the determination of the taxpayer’s tax home. The IRS and Tax Court have defined the term tax home to mean the business location of the taxpayer or the general vicinity of the taxpayer’s employment, regardless of the location of the taxpayer’s personal