Section 162(a)(2) of the Internal Revenue Code allows a deduction for the ordinary and necessary expenses incurred in a trade or business, including travel expenses while away from the individual’s tax home.
Generally, the taxpayer’s tax home is the principal place of activity for the business. However, Section 162(h) provides a special election for state legislators who attend legislative sessions away from the area of their residence. This election allows a state legislator to designate his or her personal residence as his or her home with respect to the trade or business of being a legislator. This means that when the legislator is at the state capitol, he or she will be traveling away from home and incur deductible expenses.
The election is only available to legislators whose place of residence is more than 50 miles from the state capitol.
By making the election, the legislator is deemed to have expended for living expenses on each legislative day, the greater of the amount generally allowable:
-
For the day to employees of the legislator’s state per diem while away from home, to the extent the amount does not exceed 110 percent of the amount described in (2), or
-
To employees of the executive branch of the Federal government for per diem in that area while traveling away from home in the United States.
A “legislative day” includes any day the legislature is in session. This includes any day when the members are expected to attend, regardless of whether the electing legislator actually does attend. A legislative day also includes any day the legislature is not in session but the physical presence of the electing legislator is formally recorded at a meeting of a committee of the legislature.
The legislature is considered “in session” when it is not in session for a period of 4 days or less.
“Living expenses” include expenses for lodging, meals, laundry, and other incidental expenses but does not include expenses for travel fares, local transportation, or telephone calls.
No deduction is allowed for any expenses for which the legislator receives reimbursement.
A legislator makes the election by attaching a statement to the legislator income tax return (or amended return) for the taxable year for which the election is effective. The information required on this statement is stated in the proposed regulations.
The IRS issued proposed regulations on March 28, 2008, to incorporate these rules into final regulations. To see the regulations and the procedures for submitting comments, see the Federal Register announcement.
For more information on rules for deducting travel expenses, see Publication 463.
|