Soterios and Catharine Hantzis v. Commissioner of Internal Revenue
638 F.2d 248 (1981)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
To deduct travel expenses as being incurred 'while away from home' under 26 U.S.C. § 162(a)(2), a taxpayer must demonstrate that business exigencies, not personal choice, required the maintenance of two separate homes, meaning the taxpayer must have a business connection to both the location of the temporary employment and the location claimed as the primary home.
Facts:
- Catharine Hantzis was a full-time student at Harvard Law School in Cambridge, Massachusetts.
- She lived in a Boston home with her husband, who was a faculty member at Northeastern University.
- After being unable to find summer employment in Boston for 1975, Hantzis accepted a ten-week position as a legal assistant with a law firm in New York City.
- During her employment in New York, her husband remained in their Boston home.
- Hantzis had no business or professional interests in Boston that required her to maintain a home there; her reasons for doing so were personal.
- On their 1975 joint income tax return, Hantzis and her husband deducted $3,204 for her transportation, apartment rental, and meal expenses in New York.
Procedural Posture:
- Catharine Hantzis and her husband filed a joint income tax return for 1975, claiming deductions for her summer employment expenses.
- The Commissioner of Internal Revenue disallowed the deductions.
- Hantzis challenged the Commissioner's determination in the United States Tax Court, a court of first instance for tax disputes.
- The Tax Court held in favor of Hantzis, finding that her employment was temporary and her expenses were therefore deductible.
- The Commissioner of Internal Revenue, as the appellant, appealed the Tax Court's decision to the United States Court of Appeals for the First Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a taxpayer's temporary summer employment in one city, while maintaining a residence in another city for personal reasons, qualify as being 'away from home in the pursuit of a trade or business' under 26 U.S.C. § 162(a)(2), thereby making travel and living expenses deductible?
Opinions:
Majority - Campbell, Circuit Judge
No. A taxpayer's temporary employment does not make their expenses deductible as being 'away from home' when the decision to maintain a separate, primary residence is motivated by personal considerations rather than business necessity. The purpose of § 162(a)(2) is to mitigate the burden on a taxpayer who must maintain two homes due to the exigencies of their trade or business. The court defines 'home' functionally: if the reason for maintaining two residences is personal, the taxpayer’s 'home' for tax purposes is their place of employment, and expenses there are not deductible. Here, Mrs. Hantzis's trade or business did not require her to maintain a home in Boston; that home was maintained for personal reasons related to her husband's life and career. Therefore, her tax 'home' was New York, and her expenses were not incurred 'while away from home.' The temporary employment doctrine does not apply because it is designed for taxpayers who have business ties to both the permanent residence and the temporary work location, which Hantzis did not.
Concurring - Keeton, District Judge
No. While agreeing with the outcome, this opinion argues against creating a functional, non-standard definition of the word 'home.' 'Home' should retain its ordinary meaning as the taxpayer's principal residence. The deduction should be disallowed not because New York was her 'home,' but because the expenses were not incurred 'in the pursuit of a trade or business.' The statute requires that business exigencies, not personal demands, necessitate the travel. Because Hantzis's decision to maintain two residences stemmed from personal interests rather than business requirements, her duplicative expenses were not a necessary cost of her business. Thus, she was not 'away from home in pursuit of business' when incurring the New York living expenses.
Analysis:
This decision significantly clarifies the 'away from home' requirement in tax law, particularly for individuals in temporary employment situations like students. It establishes that the temporary employment doctrine is not an automatic exception; it requires a threshold showing that the taxpayer has a business reason for maintaining the primary residence. The ruling narrows the deductibility of travel expenses for individuals who choose to work temporarily far from a home maintained for personal or family reasons. By tying the definition of a tax 'home' to the underlying business justification for duplicate expenses, the case prevents the deduction from subsidizing personal lifestyle choices.
Unlock the full brief for Soterios and Catharine Hantzis v. Commissioner of Internal Revenue