Daniel M. Gray - Page 11

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          Employee Business Expense Deductions                                        
               Section 162(a) allows a deduction for all ordinary and                 
          necessary expenses paid or incurred in carrying on a trade or               
          business.  Section 162(a)(2) allows a taxpayer to deduct                    
          traveling expenses, including amounts expended for meals and                
          lodging, if such expenses are:  (1) Ordinary and necessary, (2)             
          incurred while away from home, and (3) incurred in the pursuit of           
          a trade or business.  Commissioner v. Flowers, 326 U.S. 465, 470            
          (1946).  Services performed by an employee constitute a trade or            
          business for this purpose.  O’Malley v. Commissioner, 91 T.C.               
          352, 363-364 (1988).                                                        
               For purposes of section 162, generally “home” (or tax home)            
          means the vicinity of the taxpayer’s principal place of business            
          or employment.  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).  A taxpayer’s residence, when different           
          from the vicinity of his principal place of employment, may be              
          treated as his tax home if the taxpayer’s employment is                     
          “temporary” rather than “indefinite”.  Peurifoy v. Commissioner,            
          358 U.S. 59, 60 (1958).                                                     
               A taxpayer must have a tax home from which to be away from             
          to be entitled to a deduction under section 162(a)(2).  Henderson           
          v. Commissioner, T.C. Memo. 1995-559, affd. 143 F.3d 497 (9th               
          Cir. 1998).  A taxpayer without a tax home is deemed to have                






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Last modified: May 25, 2011