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Hamlet is the regional manager for a national chain of auto-parts stores and is based in Denver. When the company opens new stores in Wichita, Hamlet is given the task of supervising their initial operation. For three months, he works weekdays in Wichita and returns home on weekends. He spends $410 returning to Denver but would have spent $390 had he stayed in Wichita for the weekend. As to the weekend trips, how much, if any, qualifies as a deduction?

a. $0, since the trips are personal and not work related.
b. $0, since Hamlet's tax home has changed from Denver to Wichita.
c. $390
d. $410
e. None of these choices are correct.

User Asys
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1 Answer

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Final answer:

Hamlet's weekend trips from Wichita to Denver are considered personal expenses, as they are not required by his employer, and therefore do not qualify for a tax deduction. As a regional manager for a national chain opening new stores, his work-related travel expenses would be deductible, but not personal travel. The correct answer to the question is a. $0 since the trips are personal and not work-related.

Step-by-step explanation:

The question asks whether Hamlet, the regional manager for a national chain of auto parts stores, can deduct his weekend travel expenses from Wichita, where he's supervising new company operations, back to his home in Denver. In regard to tax deductions for travel expenses, the IRS allows deductions for travel that are strictly business-related. However, if an employee chooses to travel home on weekends for personal reasons when there's no business necessity, those expenses are typically considered nondeductible personal expenses.

Furthermore, tax rules specify that if an employee is traveling for an assignment that is expected to last more than one year, the travel location can become the new tax home, and travel back to the original home city may not be deductible. Since Hamlet is only working in Wichita for three months, this wouldn't automatically apply. But the key factor here is that Hamlet is choosing to return home for the weekends, which suggests that the expense is for personal benefit rather than for business needs.

Considering this information, the answer would be a. $0, since the trips appear to be personal and not required by the employer or work-related. Without additional context indicating that the weekend trips were a business necessity, Hamlet would not qualify for a deduction on his tax return for these expenses.

User Rok Burgar
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