@NCperson
You have to meet the first test for the home office deduction, but not the second test. The home has to be your principal place of business, at least for the significant administrative portion of your business. If you lose the home office deduction because you do not use that portion of your home exclusively as a home office, but your home is still your principal place of business, you can deduct transportation expenses to other places of business.
In the two examples I constructed, I tried to create a distinction between somebody whose principal place of business was at an office versus somebody whose principal place of business was at home, at least for the significant administrative duties, but might work at the same remote location for a long stretch. I don’t know this taxpayer‘s situation, so I was trying to cover several options.
This is from publication 587 on the home office deduction.
Principal Place of Business
You can have more than one business location, including your home, for a single trade or business. To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. To determine whether your home is your principal place of business, you must consider:
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The relative importance of the activities performed at each place where you conduct business, and
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The amount of time spent at each place where you conduct business.
Your home office will qualify as your principal place of business if you meet the following requirements.
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You use it exclusively and regularly for administrative or management activities of your trade or business.
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You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
From publication 463,
Office in the home.
If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. (See Pub. 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business.)
I read this mean that as long as you only perform substantial administrative and management duties in your home, then your home can be your principal place of business. If you do not set aside an exclusive area of your home, you won’t be able to take the home office deduction, but the home can still be your principal place of business for transportation expenses.
