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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