The Tax Home Doctrine: Fifty-Five Years of Confusion

Provisions of the Internal Revenue Code have always allowed taxpayers to deduct business expenses from their gross income before a personal income tax is imposed. Under certain circumstances, traveling expenses, such as amounts expended by taxpayers for travel fares, meals, and lodging, are deductible as business expenses. The United States Supreme Court has held that a taxpayer's traveling expenses must meet three conditions to be deductible under this section: the traveling expenses must be reasonable and necessary, directly related to the pursuit of business, and incurred while away from home. The third condition poses the most problems for taxpayers, the Internal Revenue Service, and the courts. Problems arise because the word "home" is the subject of differing interpretations. While some courts give "home" its ordinary meaning—principal place of residence—the Internal Revenue Service and many other courts have adopted the tax home doctrine, which interprets "home" as used in section 162(a)(2) to mean place of employment. The legislative history of section 162(a)(2) reveals the legislative intent concerning the traveling expense language: "home" means principal place of residence. Despite this legislative purpose to give "home" its ordinary meaning, rulings by the Tax Court, the Internal Revenue Service, and the courts of appeals have, instead, applied the tax home doctrine. As a result, the doctrine promotes litigation, wastes time, and fosters uncertainty. Its use causes increased administrative complexity and draws attention from the more important requirement that traveling expenses must be necessitated by the exigencies of business rather than the personal desires of the taxpayer. This Comment recommends that Congress or the Supreme Court should expressly reject the tax home doctrine and clearly indicate that the word "home" means principal place of residence. Abandonment of the doctrine would eliminate these unnecessary problems and would bring needed uniformity and certainty to the traveling expense deduction area of the tax laws.