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Tax Research Essay example

Decent Essays

Facts
Charley Long, a truck driver, works for a seafood company in Mobile, Alabama. Charley helps to deliver fresh seafood to customers from Mobile with the company’s truck. Charley leaves Mobile every weekday at 4:00pm and arrives his last stop at 12:00 midnight. It’s up to Charley whether to drive straight back or spend a night along the road as Charley’s company doesn’t reimburse any his lodging and food expense. Charley sometimes sleeps in his cab in which is equipped with sleeping facilities, having one meal on his way. Occasionally, Charley stays in motels during which he will eat two meals. The IRS disallowed all his expenses generated in his trips, as IRS believes that his expenses are personal expenses.

Issues
1, Are …show more content…

There are two requirements for taxpayers to qualifies their expense as travel expenses deduction: First, the purpose of the trip must be connected with a trade or be employment related; Second, the taxpayer must be away from his tax home overnight or for a sufficient duration to require sleep or rest before returning home.

Clearly, in Charley’s case, Charley’s travel expenses are related to Charley’s employment and incurred in pursuit of a trade, as his job is to deliver goods to customers for his company. However, whether Charley travels “ away from home” overnight or whether these travel expenses are necessary needs more consideration. It is critical for Charley to justify the expenses he generated is reasonably incurred in the travels away from home overnight. In this case, Charley’s regular duty involves driving at least 10 hours back and forth as one way from Mobile, his tax home, is around 5 hours. Charley is required to leaves Mobile at 4:00 pm and arrives at his last stop around 12:00 midnight. Literally, Charley needs to “sleep or rest” on his way back, which is less than 24 hours. Relating to the “sleep or rest” rule, IRS and the Supreme Court of the United States have slightly different interpretations in applications. IRS adopted the “sleep or rest rule”, which was first articulated by the by the Court of Appeals for

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