A taxpayer who travels away from his tax home overnight on business can deduct 50% of meals and 100% of lodging costs. A taxpayer’s “tax home” is located at (1) his regular or principal (if more than one regular) place of business, or (2) if the taxpayer has no regular or principal place of business, his regular place of abode in a real and substantial sense. To be deductible, the absence from home must be “temporary” and not “indefinite.” Code §162(a).
On May 26, 2009, Mr. Snellman moved away from home to work on an intereactive credit card monitoring project. The parties understood that the project would be completed by December 31, 2009, and Mr. Snellman’s employment would end at that time. Due to financial difficulties of the employer, the employment actually ended on November 18, 2009.
Mr. Snellman sought to deduct meals, lodging, and other incidental expenses. The IRS opposed it, claiming that the employment was not temporary, but indefinite.
The Tax Court ruled that since Mr. Snellman was hired for a single project with a scheduled end date of 7 months after hiring, this was temporary and not indefinite. It described indefinite employment as temporary employment that is of substantial, indefinite, or indeterminate duration. The temporary nature of his employment was corroborated by the fact that his apartment lease was scheduled to expire on December 31 and he negotiated an addendum to the lease agreement to allow for termination of the contract on short notice. Based on the write-up of the facts in the opinion, it is not clear why the IRS sought to challenge the employment as indefinite – perhaps there were other facts that supported the IRS’ position.
Note that the temporary employment rule will not apply for absences going over one year.
Roj C. Snellman, et ux., TC Summary Opinion 2014-10
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