Moving Expense Time Test Exception

Hubby and I moved from CT to FL in 2000 and want to deduct moving expenses. He is self-employed and intended to work full time as a sub for a cabinet refacing company. He did work for them for several months, but they had a falling out over pay policies and agreed to part company. He found no other work available in his field and finally decided to apply for early S.S. benefits, so will only work part time (if he can even find any work). Bottom line: He will definitely not meet the time test with regard to duration of full time self-employment (39wks/78wks). Pub. 521 speaks to layoff exception for employees,but does not refer to similar situations for self-employed individuals. Have there been any rulings as to self-employed individuals regarding this, where the intention was to work full time, but circumstances not of his fault resulted in no available work? Can we take the deduction and not be likely to have to go through a major hassle later; i.e., is there a previous letter ruling or some such we can cite as precedent along with our return? As spouse, I will not meet the time test either, as I have not been employed full time (I took sick, then could not find a job, and have now decided to work only part time. ALL HELP APPRECIATED!!!

Moving expense

Unfortunately I could find no ruling to help you. In fact the Tax Court has ruled that the deduction is inapplicable in a case such as your husbands.

The ruling was to the effect that although the time-employed requirement is waived when an employee is prevented, for reasons within the control of his employer, from satisfying the 39-week requirement, there is no corresponding waiver of the 78-week requirement for a self-employed individual who relocates his business to a new area before fulfilling the 78-week requirement, even though the relocation may be involuntary, in that it is required to avoid a financial loss. K.W. Reiswig v Commr, 50 TCM 843, Dec. 42,324(M), TC Memo. 1985-434.

Thank you to IOKU for your trouble in researching our problem. It sure doesn't seem fair, but we can't afford to fight it, so guess we'll just be out thousands of dollars. What a darned bummer! But, again, thanks for trying.