The tax law allows a deduction for travel expenses “while away from home in the pursuit of a trade or business” under Section 162(a)(2). But what does “home” mean? For most people, it’s where they live. For tax purposes, it’s often where they work. The Supreme Court’s 1946 decision in Commissioner v. Flowers, 326 U.S. 465, established principles that continue to frustrate taxpayers who maintain separate residences from their place of employment.
The Flowers Case
Flowers was a lawyer who lived in Jackson, Mississippi, but worked as general counsel for a railroad whose main office was in Mobile, Alabama. He spent most of his time in Jackson, where he had an office provided by his former law firm, and traveled frequently to Mobile. The railroad reimbursed none of his travel or living expenses.
Flowers deducted his travel expenses between Jackson and Mobile and his meals and lodging in Mobile. The Supreme Court denied the deduction, holding that the expenses were not incurred “in pursuit of business” because the railroad did not require him to live in Jackson. The Court articulated three conditions for deductibility under Section 162(a)(2):
- The expense must be a reasonable and necessary traveling expense.
- The expense must be incurred “while away from home.”
- The expense must be incurred “in pursuit of business” – meaning business demands, not personal convenience, must necessitate the travel.
Flowers failed the third condition. The railroad gained nothing from his arrangement; it was purely for his personal convenience.
The Definition of “Home”
The Flowers Court did not definitively resolve the meaning of “home” – whether it means the taxpayer’s residence or their principal place of business. The Court said it was “unnecessary to enter into or to decide this conflict” because Flowers failed the “in pursuit of business” test.
But the conflict persisted. The IRS and Tax Court defined “home” as the taxpayer’s principal place of business (the “business headquarters” theory). The Fifth and Second Circuits defined “home” as the taxpayer’s actual residence (the “residence” theory).
The Supreme Court eventually resolved the conflict in Commissioner v. Stidger, 386 U.S. 287 (1967), and United States v. Correll, 389 U.S. 299 (1967), both deferring to the IRS’s administrative interpretation. For most employees, “home” means their principal place of employment. If they choose to live elsewhere, their travel expenses are commuting – not deductible.
Hantzis v. Commissioner – The Married Law Student
A particularly sympathetic case was Hantzis v. Commissioner, 638 F.2d 248 (1st Cir.), cert. denied, 452 U.S. 962 (1981). Catharine Hantzis was a Harvard Law student whose husband taught at Northeastern University in Boston. She found summer employment with a law firm in New York City, rented an apartment there, and traveled back to Boston on weekends. Her husband remained in Boston.
She deducted her travel and living expenses in New York. The First Circuit denied the deduction, applying the “in pursuit of business” test from Flowers. Hantzis had no business connection to Boston (she wasn’t working there, and the Harvard connection was as a student, not a business). Her decision to keep a home in Boston was personal, not business-related.
Judge Keeton concurred, noting that the result could be reached more simply: “When the taxpayer has a business relationship to only one location, no traveling expenses the taxpayer incurs are ‘necessitated by business, as opposed to personal demands,’ regardless of how many residences the taxpayer has, where they are located, or which one is ‘home.’”
The Two-Home Problem
Taxpayers with more than one business location face a different analysis. In Andrews v. Commissioner, 931 F.2d 132 (1st Cir. 1991), the taxpayer operated a swimming pool business in Massachusetts and a horse breeding business in Florida, spending about half the year at each. The court held he had two tax homes – and therefore could deduct expenses while traveling between them, but the expenses incurred at each location (meals, lodging) were personal.
The principle is that a taxpayer can have only one tax home at a time. If they have two legitimate business locations, the tax home is the one that is their “principal place of business” – determined by time spent, income earned, and business activities. Travel expenses between the two are deductible; living expenses at the location that is not the tax home are deductible as travel expenses if the stay is temporary.
The Commuter Problem
The classic commuting rule: expenses of traveling between a taxpayer’s residence and place of work are nondeductible personal expenses. Reg. Section 1.262-1(b)(5). This is true regardless of distance. Even a 100-mile commute is still commuting.
There is an exception for “temporary” work locations. In *Rev. Rul. 99-7*, 1999-1 C.B. 361, the IRS ruled that daily transportation expenses between a taxpayer’s residence and a temporary work location (generally, one expected to last less than one year) are deductible, even if the taxpayer also has a regular place of business. This exception has been litigated extensively, with courts generally requiring that the temporary assignment be truly temporary – not indefinite.
The “Sleep or Rest” Rule
In United States v. Correll, 389 U.S. 299 (1967), the Supreme Court upheld the IRS’s “sleep or rest” rule: a taxpayer is “away from home” for purposes of Section 162(a)(2) only if the trip requires them to stop for sleep or rest. A one-day business trip, no matter how long the drive, does not qualify.
The taxpayer in Correll was a traveling salesman who left home early, ate breakfast and lunch on the road, and returned home for dinner. He deducted his meal costs. The Court affirmed the Commissioner’s rule, noting that it avoided “the wasteful litigation and continuing uncertainty that would inevitably accompany any purely case-by-case approach.”
Justice Douglas dissented, arguing that “overnight injects a time element in testing deductibility, while the statute speaks only in terms of geography.” But the majority deferred to the Commissioner’s reasonable interpretation.
Practical Guidance for Traveling Professionals
For employees, the Tax Cuts and Jobs Act suspended miscellaneous itemized deductions (including unreimbursed employee business expenses) from 2018 through 2025. So even if an employee’s travel expenses would otherwise be deductible, they are not allowed during this period. For self-employed individuals, the deduction remains available above the line (Section 62(a)(1)), but they must satisfy the Flowers test.
Taxpayers with multiple residences must carefully document the business purpose of each location. A home office that constitutes the “principal place of business” under Section 280A(c)(1) can become the taxpayer’s tax home – potentially making travel to other locations deductible. But the IRS scrutinizes such claims closely.
The Flowers test remains the law. Travel expenses are deductible only when the exigencies of business, not personal choice, require the taxpayer to be away from their tax home. For most taxpayers, that means overnight travel required by their employer – not the daily commute, and not a long-distance arrangement made for personal reasons.
Disclaimer: This article provides general information for educational purposes only and does not constitute legal advice. Tax laws, judicial interpretations, and IRS guidance are subject to change at any time through legislation, regulation, or court decision. Readers should consult Alan Goldstein & Associates for advice regarding their specific factual situations.
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