I'm trying to figure out the rules on deduction of car expenses as a business expense. I'm looking at IRS publication 463.
Suppose that I work from home, but do not qualify for a business use of home deduction. As I understand it, this means I cannot deduct trips from home to another work location (e.g., going to a client's home or office to do work there). The publication seems to say this, by referring to the publication about "business use of home", but I'm not 100% sure I'm right in equating the eligibility for deduction for business use of home vs just having your home be your "principal place of business". In other words, it seems that if my home is my main work location in the ordinary-language sense (i.e., I have no other office), but there is no part of it exclusively designated for business use, then not only can I not deduct business use of the home, I also cannot deduct travel from there to a workplace. Is this correct, or is it ever possible to deduct travel to/from a home workplace that does not qualify for its own home-office deduction?
Specifically, what I'm wondering is whether it is possible for a home to qualify as a "principal place of business" for purposes of deducting car expenses but not for the home office deduction. The main sticking point is the "exclusively" part of the "regularly and exclusively" criterion. It would seem that having no part of your home that is exclusively used for business not only disqualifies you from the home office deduction but also from the deductions for travel from your home, and I'm wondering if that is the correct interpretation.
Supposing I'm right about the above, there is another related issue. The publication says that, if you work in multiple locations, you can deduct trips from one work location to another, but "if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second." What is not clear to me is what exactly is deductible if there are significant time gaps (within a single day) between trips to different clients.
Suppose I go from my home to client A. I finish work there at noon. I have an appointment with client B, but not until 3pm. As I understand it, if I drive to some unrelated location and hang out for a while, then go to client B, I can deduct what it would have cost me to go to directly from A to B.
However, what if after finishing with client A, I drive home, then later drive to client B? Does driving home in the middle mean that the trips home and to client B are now nondeductible (because they are from my nonqualifying home office), so I can't even deduct what it would have cost me to go directly from A to B? The publication says:
Example 3: You have no regular office, and you do not have an office in your home. In this case, the location of your first business contact inside the metropolitan area is considered your office. Transportation expenses between your home and this first contact are nondeductible commuting expenses. Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another.
This seems to assume that the only trips you make are from home to first client, between clients, and from last client to home, possibly with some stops at other locations for "personal reasons". I can't figure out from this what the rules are if you make multiple trips between home and different clients in the same day. Also, it's not clear whether stopoffs between clients would really be "personal reasons", since the appointment times are often set by the client, so it's not as if the delay between A and B was just because I felt like it; there was never the option of going directly from A to B.
If going home does make the expense nondeductible, this would seem to create a perverse incentive for people to do their darnedest to go anywhere but home during gaps in their schedule. If I had a gap like that described above, I could save on my taxes by going to the park or a hamburger stand instead of going home between A and B. I realize that strange loopholes like this do exist in the tax code, but I'm wondering if this is really one of them.