T.C. Memo. 2002-47
UNITED STATES TAX COURT
LON A. BJORNSTAD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16291-99. Filed February 20, 2002.
Lon A. Bjornstad, pro se.
James E. Schacht, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: Respondent determined deficiencies in
petitioner’s income taxes and additions to tax for the taxable
years 1990, 1992, 1993, 1994, and 1995 as follows:
Addition to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654(a)
1990 $3,151 $157.55 $206.28
1992 3,958 197.90 172.62
1993 4,157 207.85 174.16
1994 3,301 165.05 171.30
1995 2,997 144.00 155.46
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The sole issue1 for our consideration is whether petitioner
was “away from home” so as to be entitled to deduct his travel
expenses under section 162(a)(2).2
FINDINGS OF FACT
At the time the petition was filed, petitioner resided in
Madison, Wisconsin.
Petitioner has primarily earned his living as a musician.
For the taxable years in question, petitioner was a member of a
band called “Dr. Bop and the Headliners” (the band). Generally,
the band played in or began its road trips from Chicago.
However, during his time with the band, petitioner resided with
his parents approximately 10 miles outside of Madison in
Stoughton, Wisconsin. Petitioner lived with his parents because
Chicago was too expensive and he was trying to pay off a prior
Federal tax liability. Petitioner’s parents did not require him
to pay a set amount for rent or living expenses. Instead, he
gave them varying amounts as he was able.
Petitioner traveled to Chicago from Stoughton on Thursday or
1
At trial, petitioner conceded three issues: (1) The
receipt of nonemployee compensation as reported on Forms 1099-
NEC, Non-employee Compensation, (2) the addition to tax for
failure to file returns, and (3) the addition to tax for failure
to pay estimated tax.
2
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure unless otherwise
indicated.
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Friday, depending on whether the band had a Thursday night
engagement. The band played the weekend in Chicago or traveled
to another Midwestern city. Regardless of where the band played
other nights, it played most Sunday nights at Andy’s Night Club
in Chicago. This was a “promotional” engagement through which
the band hoped to receive additional bookings. Petitioner
usually returned to Stoughton on Mondays.
Petitioner traveled by bus between Stoughton and Chicago.
While in Chicago, he stayed in different hotels depending on
availability and paid his own expenses including bus fare, meals,
and hotel rates. When traveling to cities other than Chicago,
the band paid for petitioner’s transportation from Chicago and
his lodging. Petitioner continued to pay for his own meals and
his bus fare between Stoughton and Chicago.
The band paid petitioner compensation for his services in
the amounts of $14,047, $17,262, $18,032, $15,107, and $11,625
during the years 1990, 1992, 1993, 1994, and 1995, respectively.
These amounts did not include reimbursement of the expenses
petitioner incurred when the band played outside of Chicago. The
band sent petitioner a Form 1099-MISC, Miscellaneous Income, each
year which reflected the amount paid as nonemployee compensation.
During 1995, petitioner left the band and was employed by
the city of Madison as a bus driver. For this employment,
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petitioner received $4,639 in 1995. These wages were reported by
the city on a Form W-2, Wage and Tax Statement.
Petitioner failed to file income tax returns for taxable
years 1990, 1992, 1993, 1994, and 1995. On July 15, 1999,
respondent mailed petitioner a notice of deficiency for those
years. The deficiency was based on income from the band for the
taxable years in question and the city of Madison for 1995.
On March 2, 2001, petitioner submitted to respondent’s
counsel a band engagement log, returns, and completed Forms 1040,
U.S. Individual Income Tax Return, reflecting income received
from the band and the city of Madison. The returns also
reflected business expenses on a Schedule C, Profit or Loss From
Business, of $123 per day for the following numbers of days in
Chicago: 102 days in 1990, 97 days in 1992, 98 days in 1993, 101
days in 1994, and 75 days in 1995. Petitioner did not claim
business expense deductions for his meals when the band played in
cities other than Chicago.
OPINION
Section 162 allows deductions for all ordinary and necessary
expenses incurred in carrying on a trade or business. Sec.
162(a). These expenses include traveling expenses (i.e., meals
and lodging) while away from home. Sec. 162(a)(2). However,
section 162 does not allow deductions for personal, living, or
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family expenses. Sec. 262. To qualify under section 162(a)(2),
the expenses must be (1) reasonable and necessary, (2) incurred
while “away from home”, and (3) incurred in pursuit of a trade or
business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946).
In the context of section 162(a)(2), the word “home” does
not have its ordinary and usual meaning. Rather, the word “home”
refers to the taxpayer’s principal place of business or
employment and not his personal residence. Putnam v. United
States, 32 F.3d 911, 916 (5th Cir. 1994); Mitchell v.
Commissioner, 74 T.C. 578, 581 (1980). If a taxpayer has more
than one place of business, his tax “home” is: (1) The place
where he spends more of his time; (2) the place where he engages
in a greater part of business activity; and (3) the place where
he derives a greater proportion of his income. Robertson v.
Commissioner, T.C. Memo. 1997-526 (citing Hoeppner v.
Commissioner, T.C. Memo. 1992-703), affd. 190 F.3d 392 (5th Cir.
1999).
We find that for the taxable years in question, petitioner’s
tax home, or principal place of employment, was Chicago and not
Stoughton, Wisconsin. By petitioner’s own admission, he had only
personal reasons for living in Stoughton as opposed to Chicago.
In a normal week, petitioner spent 3 days a week in Stoughton and
4 days a week in Chicago. On occasion, petitioner spent 3 days
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in Stoughton, traveled to Chicago, met the band, traveled to
another Midwestern city, and spent Sunday night playing at a
nightclub in Chicago.
The band had its base of operations in Chicago. The band
played almost every Sunday night in Chicago at the same venue.
It played the other weekend nights at engagements in the Chicago
area. When the band traveled to another Midwestern city on a
weekend, it did so from Chicago. We also note that when the band
did travel, it paid for petitioner’s travel between Chicago and
the engagement city–-not between Stoughton and Chicago. The band
also paid for petitioner’s hotel room in other Midwestern cities,
but did not pay for petitioner’s hotel room while in Chicago.3
In attempting to show that Chicago was not his tax home,
petitioner contends that because the band played in several
Midwestern cities, he did not receive the greater portion of his
income from his Chicago engagements. While the band did play in
Midwestern cities other than Chicago, the record reflects that
the majority of the band’s engagements was in Chicago venues.
Accordingly, we find that petitioner did not receive the greater
portion of his income from other Midwestern cities. Petitioner’s
tax home was Chicago, and therefore, he is not allowed to deduct
3
Petitioner, for the first time in his posttrial brief,
contends that he worked during the week out of his home in
Stoughton as the band’s road manager at a rate of $50 per
engagement. These facts do not appear in the record and are
untimely raised. See Estate of Horvath v. Commissioner, 59 T.C.
551, 555 (1973).
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expenses of meals and lodging incurred while there, nor to deduct
expenses of travel between Chicago and his residence in
Stoughton.
Petitioner, however, is allowed to claim deductions, insofar
as adequately substantiated, for expenses incurred while playing
with the band in other Midwestern cities. Although the band paid
for his transportation and lodging, petitioner paid for his own
meals. Respondent, however, contends that petitioner did not
substantiate the meal expenses so as to qualify under either
section 1.274-5T(b)(2), Temporary Income Tax Regs., 50 Fed. Reg.
46014 (Nov. 6, 1985), or Rev. Proc. 94-77, section 4.03, 1994-2
C.B. 825, 827.
We agree with respondent for taxable years 1990 and 1992.
The band engagement logs are indecipherable. However, for
taxable years 1993, 1994, and 1995, we find that petitioner met
the meals-only per diem allowance requirements set forth in Rev.
Proc. 94-77, section 4.03, supra. The three band engagement logs
show the number of days and places where the band performed.
This information, in conjunction with petitioner’s
testimony, reflects that petitioner spent the following number of
days in each city for each taxable year:
1993 1994 1995
Indiana
Indianapolis 18 days 7 days 5 days
Bloomington 6 days 4 days 4 days
Terre Haute 6 days 2 days 1 day
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South Bend 6 days 2 days 1 day
Fort Wayne 6 days 2 days 1 day
1993 1994 1995
Illinois
Highland 21 days 18 days 20 days
Wisconsin
Madison 3 days 5 days 2 days
Accordingly, petitioner is entitled to per diem allowances based
on the Federal meals and incidental expenses rate for each city
and taxable year.4 41 C.F.R. ch. 301, pt.7 & app. A (1993); 41
C.F.R. ch. 301, pt.7 & app. A (1994); 41 C.F.R. ch. 301, pt.7 &
app. A (1995).
We have considered all other arguments advanced by the
parties, and to the extent that we have not addressed these
arguments, we consider them irrelevant, moot, or without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
4
The parties should apply the appropriate per diem rate for
each city and taxable year. 41 C.F.R. ch. 301, pt.7 & app. A
(1993); 41 C.F.R. ch. 301, pt. 7 & app. A (1994); 41 C.F.R. ch.
301, pt.7 & app. A (1995).