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repaid amount of that year’s gross income. United States v.
Skelly Oil Co., 394 U.S. 678, 682 (1969). Section 1341, however,
requires actual repayment, restoration, or restitution. Chernin
v. United States, 149 F.3d 805, 816 (8th Cir. 1998); Kappel v.
United States, 437 F.2d 1222, 1226 (3d Cir. 1971); Estate of
Smith v. Commissioner, 110 T.C. 12 (1998).
Although the bylaws of Waterfall Farms require the Hubers to
repay amounts for which the corporation is disallowed a
deduction, the Hubers do not claim that they have repaid the
disallowed amounts. Indeed, there is no evidence in the record
to show that they did. Therefore, section 1341 does not apply.
We hold that Waterfall Farms’ payment of the Hubers’ food and
rent constitutes income to the Hubers.
Petitioners argue that the expenses are meals and lodging
expenses excludable under section 119. We have found to the
contrary.
Personal, family, or living expenses are not deductible
except as otherwise expressly permitted. Sec. 262. A taxpayer’s
expenses for his or her own meals and lodging are personal
because they would have been incurred whether or not the taxpayer
had engaged in any business activity. Christey v. United States,
841 F.2d 809, 814 (8th Cir. 1988); Moss v. Commissioner, 80 T.C.
1073, 1078 (1983), affd. 758 F.2d 211 (7th Cir. 1985). In order
for personal living expenses to qualify as a deductible business
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