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“This is an ordinary and necessary expense clearly deductible
under IRC sections 161 and 162.”5
Respondent argues that the Bethesda apartment was Norman’s
tax home for the 1994 tax year and, therefore, when he was there,
he was not "away from home", so as to allow a deduction pursuant
to section 162(a)(2). Respondent argues that the Bethesda
apartment expenses were personal living expenses provided by
petitioner to Norman and, therefore, additional nondeductible
constructive dividends.
4. Discussion
A corporation may deduct its costs for the travel of its
employees on the business of the corporation. See, e.g., Avon
Mills v. Commissioner, 7 B.T.A. 143, 146 (1927). Among the
conditions that must be satisfied before a deduction for
traveling expenses may be taken under section 162(a)(2) is that
the expense is incurred in pursuit of business. See Commissioner
v. Flowers, 326 U.S. 465, 470 (1946) (interpreting section
23(a)(1)(A) of the 1939 Code, the precursor to section
162(a)(2)). In Flowers, the taxpayer, an employee of a railroad,
resided in Jackson, Mississippi. His principal post of business
was in Mobile, Alabama, and he attempted to deduct as traveling
5 Sec. 161 provides: “In computing taxable income under
section 63, there shall be allowed as deductions the items
specified in this part, subject to the exceptions provided in
part IX (sec. 261 and following, relating to items not
deductible).”
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