Check out IRS Publication 463 at: http://www.irs.gov/publications/p463/ch01.html, and click on the link for Temporary Assignment or Job.

This publication focuses on the temporary assignment lasting for a period of one year or less. Please note that if you decide to remain at your temporary job for any time after July 1st, then the job no longer qualifies as termporary as of the day you make that decision, since the assignment would last for more than one year.

Based on my understanding of the rules, I would say that if you have a signed employment contract that brings you back to where you were living and working prior to the temporary assignment, that should do the trick - even if you won't be starting until August 1st. The signed contract would go a long way to substantiate your intent.

If you get audited, you would need to show the one-year contract for the NY job, the signed and dated contract for the LA job, and your travel dates during the year. I would think the IRS might also want to see documentation of any return trips to LA during your year in NY.

Have a great year in NY.

Zip Code: 01801

Thanks for the helpful reply.

Another related question/twist:
If my spouse's work provides a relocation package that makes it favorable to purchase a home in New York during my one-year fellowship, would we be able to deduct the mortgage interest twice (one for the usual mortgage interest deduction and again for lodging expenses during a temporary job assignment)?

Also, do you think that the actual purchase of a home might mitigate the case of establishing intent of moving back to our original home (Los Angeles) despite having a contract to return to Los Angeles prior to the start of the fellowship?

Thanks again