Tax Court Allows Mileage for Portion of First and Last Trip of Day to Delivery Driver

The IRS asserted a general rule that the first and last trip of the day involving a taxpayer’s nonbusiness related home had to be nondeductible commuting in the case of Freeman v. Commissioner, TC Memo 2009-213. However, given the unique facts of this case, the Tax Court found otherwise, granting Mr. Freeman a deduction for all mileage except for the extra mileage involved on his trip back home.

Mr. Freeman delivered auto parts as a courier in a loop through Maryland and Delaware. Each day he would leave his house and travel to the warehouse in Baltimore, a trip of 98 miles from his home. He would then begin his rounds, ending each day at his final dropoff In Harrington, DE about 12 miles from his home. He would drive home and then begin again the next day, going back to the warehouse.

Mr. Freeman was required to return to the warehouse to drop off the cash he had collected, the invoices and return auto parts he had collected on his trip. To get to the Baltimore warehouse Mr Freeman had to drive by the very location in Harrington where had ended his trip the night before. The Tax Court noted that had he drove the round trip instead of “detouring” home, he would have driven 24 miles less than he actually did each day.

There is no issue that mileage from the time he arrived in Baltimore until he arrived at his last stop in Harrington would be deductible business mileage, assuming Mr. Freeman could substantiate it. But the IRS contended that his first 98 mile trip from his home to the Baltimore warehouse and his final 12 mile trip from Harrington to his home were entirely nondeductible personal commuting mileage.

The Tax Court disagreed, noting that Mr. Freeman was required to deliver the invoices, cash and parts he had collected at the locations he visited through Harrington each day to the Baltimore warehouse, making any mileage incurred in the Harrington to Baltimore trip deductible. The Tax Court treated as nondeductible mileage only the extra mileage from his “side trip” home for the evening, thus reducing his daily mileage by 24 miles rather than the 110 miles the IRS wanted to dock him.

The case illustrates that sometimes it’s important to understand the concepts behind the law rather than simply mechanically apply a “rule” about items such as commuting. While there aren’t likely to be many taxpayers whose facts are close enough to Mr. Freeman’s to allow a deduction in this case, there will likely be some and we need to be sure we don’t limit our analysis by attempting to reduce such items to purely mechanical rules.

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