Gustafson v. Commissioner

3 T.C. 998, 1944 U.S. Tax Ct. LEXIS 104

• Court: United States Tax Court
• Decided: June 13, 1944
• Docket: Docket No. 1769
• Status: Published

Opinions

opinion.

Sternhagen, Judge:

The taxpayer assails a determination of deficiency of $96.20 income tax for 1940 by reason of the disallowance of $2,522 out of $4,368 deducted as traveling expenses. The Commissioner determined that the disallowed amount was personal living ■expenses.

The taxpayer is unmarried and filed his income tax return in Des Moines, Iowa. He was employed as national representative of the Dry Goods Journal, promoting circulation throughout the country. His headquarters are at the corporation’s home office in Des Moines. His home is with his married sister in Greenville, Iowa, where he keeps the things which he does not carry with him on his trips and to which he returns periodically for short week ends. He votes and pays state income tax in Iowa. The corporation does not pay or reimburse him for his expenses, and he bears these expenses himself. In 1940 he traveled the entire fifty-two weeks of the year and spent $2,522 for the year, all in travel outside the State of Iowa. This amount he included in a deduction of $4,368. The Commissioner disallowed the $2,522 and allowed the remaining $1,846 paid for railroad fares, baggage, tips, entertainment, telephone, telegraph, etc.

The statute requires the allowance as deductions of “traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business” (Internal Revenue Code, sec. 23 (a)(1)(A)), and forbids the allowance of any deduction for “Personal, living, or family expenses” (sec. 24 (a) (1)). The Commissioner does not dispute the fact or amount of the expenditure, but relies upon the view that the amount of $2,522 is petitioner’s personal living expense, and that the petitioner has no home and therefore can not be recognized as having incurred traveling expenses while away from home. We think, however, that the evidence adequately shows that the petitioner, although traveling fifty-two weeks of the year, has his home with his sister in Iowa and that his “home office” is in Des Moines, to both of which he returns for home or business reasons, and that his traveling expenses are exactly within the statutory description. Such expenses of a man traveling in the pursuit of his business are of course living expenses, since they are paid for lodging and meals; but it can not be supposed that the statute paradoxically allows the deduction of traveling expenses and at the same time prohibits the deduction because they are personal and living expenses. Eating and sleeping are as necessary and inevitable expenses of pursuing the business as is riding on trains, and it would be quite inconsistent to classify one among the allowable traveling expenses and the other among the nondeductible living expenses.

In Chester D. Griesemer, 10 B. T. A. 386, 389, the taxpayer, who maintained a home in the United States, was sustained in the deduction of traveling expenses incurred on a business trip in Europe. The Board said:

We are convinced that the terms “personal, living or family expenses” referred to in section 215 * * * were intended by the Congress to be applied in the ordinarily accepted sense of those words and not in the broad and sweeping sense in which the respondent is seeking to apply them. Simply because the amounts in question happen to be “living” expenses in a strict sense does not prevent them from being deductible if they are ordinary and necessary and are shown to have been incurred in carrying on his trade or business and are clearly in addition to his living expenses at the usual place of abode which he maintains for his mother and sister. The Congress undoubtedly intended that the taxpayer’s personal expenditures in maintaining his usual place of abode should not be deducted, but that all expenditures made by the taxpayer in addition to those amounts if incurred in carrying.on a trade or business should be deducted in determining net income.

In the present case there were no home expenses, and therefore the traveling expenses were not in addition to his living expenses at home; but that gives no ground for substituting a hypothetical home living expense as a nondeductible amount and limiting the deduction to the artificial excess. The statute expressly provides for the deduction among traveling expenses of the entire amount expended for meals and lodging, and no part of such entire amount may be treated as living expenses, even though, as in the Griesemer case, no actual home living expenses may be included in the deduction.

In Charles E. Dimean, 17 B. T. A. 1088, the claimed deduction was disallowed because the evidence did not establish the location of the taxpayer’s home or the fact that the expanses were incurred in the pursuit of the taxpayer’s trade or business. It was said that the purpose of the statute was to allow deductions for expenses necessarily incident to carrying on one’s trade or business and only including meals and lodging when that trade or business requires the taxpayer to be away from his home or usual place of business, and that it was not intended to allow deduction of such expenses by one who maintained no permanent home, no definite headquarters, and traveled on a roving commission with headquarters wherever he happened to be, This does not fit the present case, in which the taxpayer has established that he had a home and that the expenses in question were paid while traveling in the pursuit of his business. See also Joseph W. Powell, 34 B. T. A. 655, 658; Harry F. Schurer, 3 T. C. 544. The disallowance of the deduction of $2,522 is reversed.

Reviewed by the Court.

Decision will he entered for the petitioner.