Taxing Lessons Case Summaries

Case — Location of Tax Home and Deductibility of Travel Expenses

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TL Case Summ


Can expenses incurred while away from home be deducted when an employee accepts a change in job location without knowing how long the job at that location will last or where the next location will be?


Taxpayer Says:  Vehicle, meals and transportation expenses are deductible because they were incurred while away from home in the pursuit of a trade or business.

Internal Revenue Service Says: There was no business reason to maintain a home in a location away from the place of employment, so taxpayer was not ‘away from home’ and expenses are not deductible.


From Internal Revenue Code Sections 162(a)(2), 262(a):  A taxpayer may deduct reasonable and necessary travel expenses such as those for vehicles, meals, and lodging incurred while away from home in the pursuit of a trade or business. The word “home” for purposes of section 162(a)(2) has a special meaning. It generally refers to the area of a taxpayer’s principal place of employment, not the taxpayer’s personal residence. (Daly v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662 F.2d 253 (4th Cir. 1981); Kroll v. Commissioner, supra at 561-562.)

There is an exception to the general rule that a taxpayer’s tax home is his or her principal place of employment. The taxpayer’s tax home may be the taxpayer’s personal residence if the taxpayer’s employment away from home is temporary. Peurifoy v. Commissioner, 358 U.S. 59, 60 (1958). On the other hand, the exception does not apply and the taxpayer’s tax home remains the principal place of employment if the employment away from home is indefinite. Kroll v. Commissioner, supra at 562.

From Internal Revenue Code Section 262: The duplicate costs are not deductible where the taxpayer maintains two homes for personal reasons.

From Commissioner v. Flowers, 326 U.S. 465, 470 (1946): A taxpayer must show that he or she was away from home when he or she incurred the expense, that the expense is reasonable and necessary, and that the expense was incurred in pursuit of a trade or business.

From Kroll v. Commissioner, 49 T.C. 557, 562 (1968): The purpose of the deduction for expenses incurred away from home is to alleviate the burden on the taxpayer whose business needs require him or her to maintain two homes and therefore incur duplicate living expenses.


The taxpayer, a mechanic for an airline, was shifted from city to city within the US due to job layoffs. The location and duration of each change was uncertain. The taxpayer maintained a residence in the city of Minneapolis, hoping to move back.

The question is whether the decision to not move the family residence while the taxpayer worked somewhere else was attributable to personal choice rather than to requirements of the taxpayer’s trade or business.


Make your selection, then see “The Court’s Decision” below for a full explanation

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HL Carpenter, an experienced investor and a CPA, specializes in reader friendly articles on taxes and investing for individuals and small businesses, and publishes two newsletters: Taxing Lessons and Top Drawer Ink. Visit and

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Sorry, wrong answer :(
Right answer!
For the IRS. No deduction. After the initial layoff, the taxpayer’s business ties to the area where the personal residence was located ceased. There was no business reason for the taxpayer to maintain a home away from the place of employment. The residence was kept for personal reasons.