*152 Decision will be entered for the respondent.
The petitioner, a member of the Michigan Legislature, maintained a residence in the district which he represented, but he actually spent a majority of his working time in the State capital performing his legislative duties. Held, the petitioner's principal place of business was at the State capital, and consequently, he cannot deduct his expenses for meals and lodging while living there. Held, further, although the petitioner is entitled to deduct the expenses of maintaining his office in his district and his living expenses while there, he has failed to prove that he is entitled to any larger deductions than allowed by the Commissioner.
*175 The Commissioner determined a deficiency in the petitioners' Federal income tax for 1971 of $ 596.86. The issues to be decided are: (1) Whether the petitioner George Montgomery was "away from home" within the meaning of
FINDINGS OF FACT
Some of the facts have been stipulated, and those facts are so found.
The petitioners, *154 George and J. W. Montgomery, husband and wife, had their legal address in Detroit, Mich., at the time of the filing of their petition. They filed their joint Federal income tax return for 1971 with the District Director of Internal Revenue, Detroit, Mich. Mr. Montgomery will sometimes be referred to as the petitioner.
Mr. Montgomery was a member of the Michigan House of Representatives (House) representing a district in the City of Detroit. He was a House majority whip, chairman of the Committee on Taxation, and a member of the education and labor committees. Being a legislator was his sole occupation in 1971. During 1971, he was serving his eighth 2-year term as a representative.
The petitioner's principal duties as a legislator consisted of attending House sessions and committee meetings. The House sessions were always held in Lansing. The committee meetings were normally held there but were infrequently held elsewhere. The petitioner's duties as a legislator also required him to meet with various groups of his constituents in Detroit to discuss their views concerning legislation. Such groups included the Detroit Board of Education and the Planned Parenthood Association.
*155 The House began its 1971 session on January 13 and ended on December 30. During 1971, it was in session for 155 days, of which the petitioner attended 151.
In a typical week, when the House was in session, the petitioner drove the 85 miles from his residence in Detroit to Lansing on Monday afternoon. From Monday evening until Friday afternoon, he attended legislative sessions and committee meetings, returning to Detroit later on Friday. During 1971, he met with various groups of constituents in Detroit on 75 days on weekends. He twice made out-of-State trips for a total of 9 days on legislative business when the House was in recess. He was in Florida for the month of January for personal reasons.
*177 While in Detroit, the petitioner resided in the house which he owned there. The residence was normally unoccupied when the petitioner was away, since Mrs. Montgomery lived in Florida for health reasons and made only occasional visits to Detroit. When in Lansing, he stayed at the Olds Plaza Hotel and ate at various restaurants. In 1971, he spent $ 3,775 for meals, lodging, and incidental living expenses in Lansing. The House reimbursed him for $ 2,695 of these expenses. *156 The petitioner was also reimbursed for his out-of-State trips and mileage between Detroit and Lansing each week, but these amounts were not challenged by the Commissioner.
For 1971, the petitioner filed a City of Detroit income tax return. He paid a tax based on the 2-percent resident rate -- the nonresident rate is 1 percent. For that year, he also filed a City of Lansing income tax return paying the 1/2-percent nonresident rate -- the resident rate is 1 percent.
The petitioner's house in Detroit, consisting of five rooms, was one-half of a duplex. It was purchased in 1947 for $ 11,000 including improvements. It had a useful life of 40 years. The petitioner used parts of two rooms constituting no more than one-fourth of the house as an office for legislative work. All of the office furniture and equipment were fully depreciated. Repairs costing $ 300 were made on the house in 1971, and utilities and insurance for it cost $ 480 for that year.
The petitioner claimed an employee business expense of $ 3,757 2 in 1971 for meals and lodging expenses incurred in Lansing and deducted that amount to the extent it exceeded his reimbursements. He also deducted $ 450 for his home office*157 expenses. The Commissioner disallowed the expenses incurred in Lansing, but allowed $ 2,000 for living expenses incurred in Detroit. He also determined that the petitioner was not entitled to deduct more than $ 240 for home office expenses.
OPINION
We must first decide whether the petitioner is entitled to deduct the living expenses which he incurred during 1971 in Lansing, Mich., while performing his duties as a legislator. Personal living expenses are usually nondeductible. Sec. 262. *178 However,
In
(1) The expense must be a reasonable and necessary traveling expense * * *
(2) The expense must be incurred "while away from home."
(3) The expense must be incurred in pursuit of business. This means that there must be a direct connection between the expenditure and the carrying on of the trade or business of the taxpayer or of his employer. Moreover, such an expenditure must be necessary or appropriate*159 to the development and pursuit of the business or trade.
In this case, the outcome depends upon whether the petitioner was away from home while incurring the expenses in Lansing.
A situation analogous to this case first came before this Court almost 40 years ago.
In 1946, legislation was proposed specifically to reverse our holding in Lindsay as it applied to Members of Congress. S. 2177, 79th Cong., 2d Sess. 79-80 (May 31, 1946). However, Congress did not adopt the proposal at that time; instead, it provided its members with a tax-free living expense allowance. Sec. 601(b), Legislative Reorganization*160 Act of 1946, ch. 753, 60 Stat. 812, *179 850. Later, Congress passed legislation which provided that the place of residence of a Member of Congress in his State or district was his home for taxable years beginning after December 31, 1952; but the allowable deduction for living expenses was limited to $ 3,000. Act of July 9, 1952, ch. 598, 66 Stat. 464, 467; Act of Aug. 1, 1953, ch. 304, 67 Stat. 318, 322;
This Court has consistently held that a taxpayer should be expected to make his home in the vicinity of his permanent business or employment and that only the expenses of traveling from a home so situated are deductible as a business expense under
The view of this Court has also been followed by other courts. In
when a taxpayer has two places of business or employment at a considerable distance from one another, his designation of one as his abode, if different from the place where he spends more of his time, engages in greater business activity, and derives a*162 greater proportion of his income, is not dispositive of the question which location is his home for the purpose of deducting traveling expenses. * * *
Thus, the court rejected the taxpayer's subjective concept of "home" and applied an objective test. It held that since most of his work was performed at the Michigan job, he was not away from home while there.
*180 In
Under out interpretation of "home" as used in
In recognizing that the petitioner had duties to be carried on in Detroit, the Commissioner has allowed him to deduct his transportation expenses for 37 round trips between Detroit and Lansing and allowed him $ 2,000 for living expenses incurred in Detroit. These allowances are consistent with our conclusion that Lansing was the petitioner's principal place of *164 employment, but that he did have business duties to perform in Detroit. See
The petitioner argues that the decisions of the Second Circuit in
In Six, entertainer Ethel Merman sought to deduct her living expenses in New York City where she was working, because her personal residence was in Colorado. While the court did reject the principal place of business test for determining "home," the court remanded the case to the trial court, saying:
The key inquiry which must be made then is whether, under all the circumstances, Miss Merman's residence in New York during 1959 may be viewed as temporary in nature or as sufficiently indefinite to expect that a reasonable person in her position would pull up stakes and make her permanent residence in New York. * * * [
The same factors would be considered under our definition of "home" in determining whether her employment*166 in New York was merely temporary. See
The petitioner also argues that Detroit was his home because he was required to maintain his domicile and actually reside there as a condition of his employment.
Sec. 7. Each senator and representative must be a citizen of the United States, at least 21 years of age, and an elector of the district he represents. The removal of his domicile from the district shall be deemed a vacation of the office. * * *
Furthermore, since this case arose in the Sixth Circuit, we must be guided by the law of that circuit. See
Finally, the petitioner argues that his "home" is in Detroit because under the income tax laws of the Cities of Lansing and Detroit, he was treated as a resident of Detroit. Such fact is clearly irrelevant to our determination of his "home" for purposes of
The second issue we must decide is whether the petitioner has shown that he is entitled to deduct an amount in excess of $ 240 for his office in his home. He apparently based his claimed deduction on the fair rental value of the space used as an office. However, since the petitioner owned his own home, he actually paid no rent.
Deductions are matters of legislative grace; taxpayers have no inherent*169 right to them.
In some situations, home office expenses may be deductible as business expenses. See
Decision will be entered for the respondent.
Footnotes
1. All statutory references are to the Internal Revenue Code of 1954, as in effect for the year at issue, unless otherwise indicated.↩
2. This is less than his actual expenses incurred in Lansing. The difference is apparently due to a mathematical error.↩
3. (a) In General. -- There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including --
* * *
(2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; * * *↩