Read the case study:

- Albert Camus has been employed as a salesman by Algier Chevrolet at its Milwaukee dealership. In early May, Albert and the general manager of the office had a serious dispute over job procedures. When it became clear that they could not work together, Albert contacted Algier’s CEO about a possible solution. As the general manager planned to retire in five months, it was decided Albert would work at the Green Bay branch during this period. After the manager’s retirement, Camus was to rejoin the Milwaukee office.

Albert’s residence is only a few blocks from the Milwaukee office, but it is 96 miles from the Green Bay worksite. During the next five months, May to October, he made 120 trips driving from his home in Milwaukee to his Green Bay job. His only records of trips are a wall calendar with the workdays circled and the credit card receipts from gasoline purchases. The employee records of the Green Bay dealership, however, support Albert’s on-the-job presence.

After the five-month assignment ended and the general manager retired, Albert requested a transfer back to the Milwaukee office. The CEO turned it down because he said Albert was no longer needed in Milwaukee. Apparently his job position in Milwaukee had been eliminated in his absence. However the CEO offered to make the Green Bay position permanent. Hurt and disgusted, Camus accepted a position with a competing Milwaukee car dealership.

On his Federal income tax return, Albert claimed a deduction for employee transportation expenses, computed as follows: 120 trips X 192 round-trip mileage X automatic mileage rate for the year. The IRS disallowed the deduction on two grounds. First, Albert’s job status in Green Bay was permanent, not temporary. Thus his tax home had changed from Milwaukee to Green Bay. So his transportation expenses became nondeductible commuting expenses. Second, even if his transportation was warranted, the expenses were not properly substantiated, precluding any tax deduction.

Albert Camus has come to you for advice. Can he be allowed a deduction for his transportation expenses?

Prepare a tax file memorandum with the following items:

• Determine the facts

• Identify the issues

• Locate applicable authorities

• Evaluate theses authorities

• Analyze the facts in terms of applicable authorities

• Communicate conclusions and recommendations to others.