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are substantiated by the employee, and (3) the employee returns any
amounts in excess of expenses. Sec. 1.62-2(d)-(f), Income Tax
Regs. The matter herein concerns only the first prong; namely,
whether the reimbursed expenses have a business connection and
would otherwise be deductible.
Section 162(a) allows as a deduction ordinary and necessary
expenses incurred during the taxable year in carrying on a trade or
business. Such expenses include traveling expenses (including
meals and lodging) while away from home in the pursuit of a trade
or business. Sec. 162(a)(2). Generally, for Federal tax purposes
a taxpayer's home under section 162(a)(2) is his principal place of
business. Mitchell v. Commissioner, 74 T.C. 578, 581 (1980); Daly
v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662 F.2d 253 (4th
Cir. 1981); Kroll v. Commissioner, 49 T.C. 557, 561-562 (1968). If
a taxpayer maintains two businesses, this Court has determined the
taxpayer's home from three objective factors: (1) The place where
he spends more of his time; (2) the place where he engages in
greater business activity; and (3) the place where he derives a
greater proportion of his income. Hoeppner v. Commissioner, T.C.
Memo. 1992-703; see also Gardin v. Commissioner, 64 T.C. 1079
(1975); Montgomery v. Commissioner, 64 T.C. 175 (1975), affd. 532
F.2d 1088 (6th Cir. 1976).
Exclusions and deductions from income are a matter of
legislative grace and are narrowly construed. INDOPCO, Inc. v.
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