                  T.C. Summary Opinion 2007-212



                      UNITED STATES TAX COURT



            MICHAEL L. AND ANN BURSKI, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14505-04S.                Filed December 17, 2007.



     Michael L. and Ann Burski, pro se.

     Michele A. Yates, for respondent.



     DAWSON, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any



     1
      Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
taxable years in issue. All Rule references are to the Tax Court
Rules of Practice and Procedure.
                                -2-

other court, and this opinion shall not be treated as precedent

for any other case.

     The trial was conducted by Special Trial Judge Carleton D.

Powell, who died after the case was submitted.   The parties have

declined the opportunity for a new trial or for supplementation

of the record and have expressly consented to the reassignment of

the case for opinion and decision.

     Respondent determined deficiencies in petitioners’ Federal

income taxes of $10,755 for 2001 and $5,546 for 2002.   Following

concessions,2 we must decide whether petitioners may deduct

travel expenses under section 162(a)(2).3   This requires that we

decide whether Michael L. Burski (petitioner) was “away from

home” when he incurred the expenses.

                            Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.




     2
      Respondent concedes that, for the taxable years 2001 and
2002, Michael L. Burski (petitioner) was an independent
contractor. Petitioner concedes that income he received from the
Institute for Defense Analyses is included in gross receipts
reported on Schedule C, Profit or Loss From Business (Sole
Proprietorship), and that his Schedule C income is subject to
self-employment tax. Petitioners concede that they had
additional capital gain of $5,000 and dividends of $83 in 2002.
     3
      The only other issues remaining are computational.
                                -3-

A.   Petitioners’ Income-Producing Activities and Their 2001 and
     2002 Income Tax Returns

     Petitioners resided in Lancaster, Pennsylvania, when they

filed the petition.   Ann Burski (Mrs. Burski) works in Lancaster,

Pennsylvania, as a self-employed property manager.   Petitioner

retired from the Air Force in 1987 and receives a pension and

other retirement benefits.

     When petitioner retired from the Air Force, he started a

business.   He later moved to Lancaster to work for International

Signal and Control.   Since then, petitioners have continuously

maintained their personal residence in Lancaster.

     In 1989, petitioner began working as a consultant for

several different companies and Government agencies, including

the Institute for Defense Analyses (IDA).   Petitioner contracted

with IDA to provide services part time as a military

consultant/analyst.   IDA has its headquarters in Alexandria,

Virginia, and does not have an office or facility in or around

Lancaster, Pennsylvania.   IDA paid petitioner at an hourly rate

for the hours he worked and reimbursed him for all of his

expenses relating to his trips between Lancaster and Alexandria.

     Over a period of 16 years, petitioner consulted with IDA on

a series of specialized projects that frequently required him to

work with classified information accessible only in the

Washington, D.C., metropolitan area.   IDA provided petitioner

with work space and support staff in Alexandria throughout the
                                 -4-

entire working relationship.    Petitioner performed some of his

work for IDA from his home in Pennsylvania, where he was able to

connect through his laptop computer to IDA’s computer network to

access nonsecure information.

     Over the years, petitioner steadily increased the hours he

worked for IDA.   He eventually stopped accepting consulting work

for other companies and Government agencies and, since 1995, has

worked exclusively for IDA.    By 1995, petitioner was working more

than 1,000 hours in each 6-month period.      Because of the number

of hours petitioner worked for IDA, IDA was prohibited from

paying petitioner for the expenses he incurred for his trips

between Lancaster and Alexandria.      In 1995, IDA began treating

petitioner as an employee; IDA treated petitioner’s compensation

as wages, paid the employer’s portion of the employment taxes,

and issued petitioner Forms W-2, Wage and Tax Statement, instead

of Forms 1099-MISC, Miscellaneous Income.      IDA also stopped

reimbursing him for the expenses he incurred for his trips

between Lancaster and Alexandria.

     During 2001, petitioner rented an apartment in Washington,

D.C., where he stayed when he was working in Alexandria.      During

2002, petitioner stayed in hotels when he was working in

Alexandria.

     Petitioners timely filed their Federal income tax returns

for 2001 and 2002.   IDA issued petitioner Forms W-2 reporting
                                  -5-

that IDA paid him compensation of $92,166 in 2001 and $85,918 in

2002.    Petitioner reported his compensation from IDA as wages,

salaries, tips, etc. on line 7 of the returns but claimed

deductions for expenses he incurred in the course of performing

services for IDA on Schedules C, Profit or Loss From Business

(Sole Proprietorship).    On the Schedules C, petitioner reported

no gross receipts and claimed deductions for the following

expenses:

               Expense                    2001       2002

        Car and truck                    $4,830     $3,362
        Depreciation                        518      5,913
        Insurance                           527        871
        Legal and professional              104         85
        Office expenses                      57         75
        Repairs and maintenance           1,446        -0-
        Supplies                            324        152
        Travel                           23,532      4,385
        Meals and entertainment           3,103      3,810
        Utilities                           785      1,334
        Other expenses                      407        785


B.   Notice of Deficiency and Concessions by the Parties

     In the notice of deficiency, respondent treated petitioner

as an employee of IDA consistent with his reporting the

compensation from IDA as wages, salaries, tips, etc. on the

returns.    Respondent disallowed all deductions petitioner claimed

on Schedules C, explaining that deductions for these amount were

not allowed because petitioner had not established that he

incurred, or if he incurred, paid these amounts for ordinary and
                                -6-

necessary business purposes and that any amount qualifies as a

business expense as specified under the provisions of the

Internal Revenue Code.   Respondent, however, allowed petitioners

to deduct the following expenses as unreimbursed employee

expenses on Schedules A, Itemized Deductions:

            Expense                       2001       2002

     Depreciation                         $518        -0-
     Insurance                             527       $827
     Legal and professional                104         85
     Office expenses                        57         75
     Supplies                              324        152
     Utilities                             -0-      1,334
     Other expenses                        407        785


     Respondent did not allow petitioners any deduction for the

following expenses:

            Expense                      2001       2002

     Car and truck                      $4,830     $3,362
     Depreciation                          -0-      5,913
     Insurance                             -0-         44
     Repairs and maintenance             1,446        -0-
     Travel                             23,532      4,385
     Meals and entertainment             3,103      3,810
     Utilities                             785        -0-


     Petitioners timely filed a petition in this Court seeking

redetermination of the deficiencies.

     Petitioners concede that they are not entitled to deduct the

$1,446 claimed for repairs and maintenance expenses in 2001.
                                 -7-

     Respondent concedes that petitioners are entitled to deduct

the $44 insurance expense disallowed for 2002.

     Respondent concedes that Mrs. Burski is entitled to deduct

$3,139 of the depreciation disallowed for 2002.    The remaining

$2,774 of depreciation disallowed for 2002 is depreciation

petitioner claimed for using his car in driving between Lancaster

and Alexandria.   The disallowed car and truck expenses were

petitioner’s costs of driving between Lancaster and Alexandria,

including gas, car repairs, insurance, registration, inspection,

washing, and oil changes.    The disallowed travel expenses and

utilities were the rent and utilities expenses petitioner paid

for his Washington, D.C., apartment in 2001 and the costs of his

hotel rooms where he stayed when he worked in Alexandria in 2002.

The disallowed meals and entertainment expenses are the costs of

meals and entertainment petitioner incurred when he stayed in

Alexandria.

                             Discussion

     We must decide whether petitioner may deduct the travel

expenses he incurred during 2001 and 2002 while working in

Alexandria away from his personal residence in Lancaster.

     A taxpayer may not deduct personal, living, or family

expenses.   Sec. 262(a).   An individual may deduct all ordinary

and necessary expenses paid or incurred during the taxable year

in carrying on a trade or business.    See sec. 162(a).   Services
                                    -8-

performed by an employee constitute a trade or business for

purposes of section 162(a).4      O’Malley v. Commissioner, 91 T.C.

352, 363-364 (1988).

       In general, expenses incurred for a taxpayer’s daily meals

and lodging and for commuting between the taxpayer’s residence

and the taxpayer’s place of business are nondeductible personal

expenses.       Sec. 262(a); see, e.g., United States v. Correll, 389

U.S. 299 (1967); Commissioner v. Flowers, 326 U.S. 465, 472-473

(1946); Barry v. Commissioner, 54 T.C. 1210, 1214 (1970), affd.

per curiam 435 F.2d 1290 (1st Cir. 1970); see also secs.

1.162-2(e), 1.262-1(b)(5), Income Tax Regs.      By contrast,

traveling expenses, including amounts expended for meals and

lodging, may be deducted if they are incurred while away from

home5 in the pursuit of a trade or business.      Secs. 162(a)(2),

262.       To deduct a travel expense, the taxpayer must show that (1)

he or she was away from home when he or she incurred the expense,

(2) the expense is reasonable and necessary, and (3) the expense

was incurred in pursuit of a trade or business.       Commissioner v.

Flowers, supra at 470.


       4
      An employee is allowed to deduct unreimbursed employee
expenses as miscellaneous itemized deductions on Schedule A,
subject to the 2-percent limitation under sec. 67.
       5
      For a taxpayer to be considered “away from home” within the
meaning of sec. 162(a)(2), the taxpayer must be on a trip that
requires the taxpayer to stop for sleep or a substantial period
of rest. United States v. Correll, 389 U.S. 299 (1967);
Strohmaier v. Commissioner, 113 T.C. 106, 115 (1999).
                                -9-

     For income tax purposes, the term “home” in section

162(a)(2) means a taxpayer’s principal place of business and not

where the taxpayer’s personal residence is located, if different

from the principal place of business.     Barone v. Commissioner, 85

T.C. 462, 465 (1985), affd. without published opinion 807 F.2d

177 (9th Cir. 1986);   Mitchell v. Commissioner, 74 T.C. 578, 581

(1980); Daly v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662

F.2d 253 (4th Cir. 1981); Kroll v. Commissioner, 49 T.C. 557,

561-562 (1968).   An exception to the rule exists when a taxpayer

accepts work away from the taxpayer’s personal residence and the

work is temporary rather than indefinite.     Peurifoy v.

Commissioner, 358 U.S. 59, 60 (1958).    Under this exception, a

taxpayer’s tax home becomes the vicinity of the taxpayer’s

primary personal residence in a real and substantial sense.       Id.;

see Deamer v. Commissioner, T.C. Memo. 1984-63, affd. 752 F.2d

337 (8th Cir. 1985); Rohr v. Commissioner, T.C. Memo. 1982-117.

     Work is temporary if it is foreseeable that the work will be

terminated within a short period.     Mitchell v. Commissioner,

supra at 581.   Conversely, work is indefinite if the prospects

are that the work will continue for an indefinite or

substantially long period.   Wright v. Hartsell, 305 F.2d 221, 224

(9th Cir. 1962); Harvey v. Commissioner, 283 F.2d 491, 495 (9th

Cir. 1960), revg. 32 T.C. 1368 (1959).    Work that starts as

temporary can later become indefinite, in which case the location
                               -10-

of the taxpayer’s work becomes his or her tax home.       Chimento v.

Commissioner, 52 T.C. 1067, 1073 (1969), affd. 438 F.2d 643 (3d

Cir. 1971); Kroll v. Commissioner, supra at 562.    The taxpayer

will not be treated as being temporarily away from home during

any period of work if such period lasts more than 1 year.      Sec.

162(a).

     It is presumed that a taxpayer will generally choose to live

near his or her principal place of business.    See Frederick v.

United States, 603 F.2d 1292, 1295 (8th Cir. 1979).       The purpose

of the deduction for expenses incurred away from home is to

alleviate the burden on the taxpayer whose business needs require

him or her to maintain two homes and therefore incur duplicate

living expenses.   Kroll v. Commissioner, supra at 562.      Where the

taxpayer maintains two residences for his own convenience,

however, such cost would be considered personal and not

deductible.   Sec. 262; Commissioner v. Flowers, supra at 474.

     The requirement that the travel expense be incurred in the

pursuit of a trade or business means that the “exigencies of

business rather than the personal conveniences and necessities of

the traveler must be the motivating factors.”     Commissioner v.

Flowers, supra at 474.   Thus, the taxpayer must have some

business justification to maintain the first residence, beyond

purely personal reasons, to be entitled to deduct expenses

incurred while temporarily away from that home.     Id.    Where a
                                -11-

taxpayer has no business connections with the area of primary

residence, there is no compelling reason to maintain that

residence and incur substantial, continuous, and duplicative

expenses elsewhere.    See Henderson v. Commissioner, 143 F.3d 497,

499 (9th Cir. 1998), affg. T.C. Memo. 1995-559; Deamer v.

Commissioner, supra.    In that situation, the expenses incurred

while temporarily away from that residence are not deductible.

Bochner v. Commissioner, 67 T.C. 824, 828 (1977); Tucker v.

Commissioner, 55 T.C. 783, 787 (1971).

     Respondent asserts that, in 2001 and 2002, petitioner’s

employment with IDA was indefinite, not temporary, and his tax

home was Alexandria.   Respondent concludes, therefore, that

petitioner is not entitled to deduct expenses incurred in driving

between Lancaster and Alexandria or for meals and lodging

expenses incurred while staying in Alexandria.

     Petitioner contends that respondent made no determination in

the notice of deficiency that Alexandria was his tax home and did

not raise the issue until a few days before the trial.

Petitioners do not explicitly contend that respondent’s argument

is new matter on which respondent bears the burden of proof.

See, e.g., Shea v. Commissioner, 112 T.C. 183 (1999).    Rather,

petitioners appear to argue that respondent should be precluded

from asserting that Alexandria was petitioner’s tax home because

respondent’s delay in relying upon petitioner’s tax home is
                                -12-

unfair and prejudicial to petitioners.    Nevertheless, because

petitioners represented themselves in these proceedings without

benefit of counsel and because we conclude petitioners implicitly

alleged that respondent’s tax home argument was new matter, we

shall address both arguments.

     Respondent discussed petitioner’s status as an employee and

the location of his tax home in the trial memorandum respondent

submitted before the trial.    Before the trial, respondent

conceded that petitioner was an independent contractor, and the

only issue remaining to be tried was the location of petitioner’s

tax home.    Petitioner was on notice before the trial that

respondent was contending that Alexandria was petitioner’s tax

home.    The tax home issue was tried by consent of the parties and

is properly before the Court.    See Rule 41(b).   Petitioners were

not prejudiced by respondent’s argument that petitioner’s tax

home was in Alexandria.

     If the location of petitioner’s tax home is “new matter”

within the meaning of Rule 142(a),6 respondent must bear the

burden of proof.    A new theory that is presented to sustain an


     6
        Rule 142 provides in part:

          (a) General: (1) The burden of proof shall be
     upon the petitioner, except as otherwise provided by
     statute or determined by the Court; and except that, in
     respect of any new matter, increases in deficiency, and
     affirmative defenses, pleaded in the answer, it shall
     be upon the respondent. As to affirmative defenses,
     see Rule 39.
                                -13-

adjustment made in the notice of deficiency is treated as new

matter when it either alters the original deficiency or requires

the presentation of different evidence.     Wayne Bolt & Nut Co. v.

Commissioner, 93 T.C. 500, 507 (1989).     A new theory that merely

clarifies or develops the original determination is not new

matter.    Id.

      In the notice of deficiency, respondent treated petitioner

as an employee of IDA consistent with his reporting the

compensation from IDA as wages, salaries, tips, etc. on the

returns.    Consequently, respondent disallowed all deductions

petitioner claimed on Schedule C for each year but allowed

petitioner to deduct some of the items as unreimbursed employee

expenses on Schedule A.    The notice of deficiency explained that

deductions were not allowed on Schedule C because petitioner had

not established that he incurred, or if he incurred, paid the

amounts for ordinary and necessary business purposes and that any

amount qualifies as a business expense as specified under the

provisions of the Internal Revenue Code.

      The notice of deficiency raised two issues that are relevant

here.   The first is whether petitioner was an independent

contractor entitled to fully deduct allowable expenses on

Schedule C or an employee of IDA entitled to deduct the expense

on Schedule A, subject to the 2-percent limitation under section

67.   The second is whether any of the travel expenses for which
                              -14-

respondent did not allow any deduction were incurred for ordinary

and necessary business purposes in the course of petitioner’s

carrying on a trade or business as either an independent

contractor or an employee of IDA.

     Although section 162(a) is not mentioned in the notice, its

provisions are implicit in respondent’s explanation that

petitioner failed to establish that he incurred or paid the

disallowed amounts for ordinary and necessary business purposes

and that any amount qualifies as a business expense as specified

under the provisions of the Internal Revenue Code.    The notice

alerted petitioner to respondent’s challenge to the bona fides of

the disallowed amounts as travel expenses.    The factual bases and

rationale required to establish that the amounts petitioner paid

for driving between Lancaster and Alexandria and for lodging and

meals while working in Alexandria were ordinary and necessary

business expenses incurred in his business of providing services

to IDA as an independent contractor are identical to the factual

bases and rationale necessary to establish that they were

ordinary and necessary business expenses incurred in the business

of providing services to IDA as an employee.    In either case

petitioner must show that (1) he    was away from home when he

incurred the expense, (2) the expense is reasonable and

necessary, and (3) the expense was incurred in pursuit of a trade
                                -15-

or business.    Commissioner v. Flowers, 326 U.S. at 470.    The

issue of the location of petitioner’s tax home is not new matter

under Rule 142(a).

     Moreover, regardless of who bears the burden of proof, the

record establishes that petitioner’s tax home for the years at

issue was in Alexandria.    Beginning in 1995, petitioner worked

exclusively for IDA on a series of specialized projects that

frequently required petitioner to work with classified

information accessible only in the Washington, D.C., metropolitan

area.   IDA provided petitioner with work space and support staff

in Alexandria throughout the entire working relationship.     Most

of the time petitioner conducted his activities for IDA in

Alexandria.    Often he could only perform his services in

Alexandria, e.g., when he needed access to classified

information.    Although petitioner performed some of his work for

IDA from his home in Lancaster, he could access nonsecure

information only through his connection to IDA’s computer

network.   The record is devoid of any evidence that business

exigencies ever required him to perform any of his services for

IDA in Lancaster.    Petitioner worked for IDA for 16 years and

exclusively for IDA beginning in 1995.    Petitioner’s relationship

with IDA was indefinite and not temporary, and he had only

personal reasons for maintaining his residence in Lancaster.
                                -16-

Petitioner’s tax home for the years at issue was Alexandria,

Virginia.

     The car and truck expenses and any claimed depreciation for

using his car were petitioner’s personal expenses for driving

between his residence in Lancaster and his work in Alexandria.

The travel expenses and utilities were for his lodging when he

stayed in Alexandria, and the meals and entertainment expenses

were his costs of meals and entertainment incurred when he stayed

in Alexandria.    Petitioner did not incur the disallowed expenses

while away from his tax home in the course of his trade or

business.

     We hold that petitioners are not entitled to deduct the

disputed items.

     To reflect the foregoing and the parties’ concessions,


                                            Decision will be entered

                                       under Rule 155.
