                          T.C. Memo. 1999-283



                        UNITED STATES TAX COURT



    THOMAS J. MITCHELL AND JANICE M. MITCHELL, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



       Docket No. 14056-98.                 Filed August 25, 1999.



       Arthur G. Jaros, Jr., for petitioners.

       William I. Miller, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION


       LARO, Judge:   Petitioners petitioned the Court to

redetermine Federal income tax deficiencies of $13,517 for 1994

and $14,407 for 1995 and accuracy-related penalties of $2,703 for

1994 and $2,881 for 1995 for substantial understatement of income

tax.    Following concessions, we must decide whether petitioners
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may deduct the traveling expenses at issue.    We hold they may.1

Unless otherwise indicated, section references are to the

Internal Revenue Code in effect for the subject years.    Rule

references are to the Tax Court Rules of Practice and Procedure.

References to petitioner in the singular are to Thomas J.

Mitchell.

                        FINDINGS OF FACT

     Some of the facts have been stipulated.    The stipulation of

facts and the exhibits submitted therewith are incorporated

herein by this reference.   Petitioners resided in Lockport,

Illinois, when their petition was filed.    They were husband and

wife during the relevant years, and they filed joint Federal

income tax returns for those years.

     Petitioner was born in December 1933, and he has worked and

lived in the Chicago, Illinois, area for most of his life.     After

living outside of the Chicago area for a brief period of time

before 1990, he moved in 1990 back to the Chicago area, settling

in a suburb called Orland Park, Illinois.     While living in Orland

Park, he began to consult as an independent contractor for a

printing company in New York, New York.    He worked out of his

home, using a room that he had set up as his business office.



     1
       Our holding on this issue also means that petitioners are
not liable for the accuracy-related penalties in dispute, all of
which relate solely to the traveling expenses.
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That room had a dedicated phone line, a fax machine, an answering

machine, a desk, and file cabinets.

     American Collegiate Network (ACN) is a magazine publisher

based in Los Angeles, California.    ACN hired Scott Schmidt in

1991 to be its publisher, and it retained petitioner for 4 months

primarily to advise Mr. Schmidt and it on ACN's printing process.

After the 4 months were over, ACN retained petitioner for another

"short period of time" to advise it and Mr. Schmidt on a new

concept for its magazine.

     Mr. Schmidt was abruptly fired in 1992, and ACN hired Gayle

Sweetland as its new publisher.   Ms. Sweetland had no experience

as a magazine publisher, and ACN retained petitioner on an as

needed basis to advise her and it for a period of time of not

more than 1 year.   During 1992, petitioner, while in California,

advised Ms. Sweetland on the intricacies of publishing, and he

advised ACN on its printing process.     He also, from his home in

Orland Park, advised ACN on the circulation of its magazine.

Petitioner worked for ACN in California for approximately 130

days in 1992.   Approximately 42 days were spent at ACN's print

shop in Riverside, California, and the remaining days were spent

70 miles away at ACN's offices in Century City, California.

     In early 1993, ACN retained petitioner to perform a

marketing study from his house in Orland Park and to continue

advising it on an as needed basis.     The study would take less

than 1 year, and, while working on it, petitioner also traveled
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to Riverside to advise ACN on its printing process, and he

advised ACN on its magazine's circulation from his home in Orland

Park.   Also during that time, petitioner trained an ACN employee

in Century City to supervise the printing and circulation of

ACN's magazine.   Petitioner worked for ACN in California for

approximately 130 days during 1993.

     Petitioner expected his engagement with ACN to stop after he

had completed the marketing study, and, when the study was over,

he confirmed with Ms. Sweetland that his work for ACN was at or

near its end.   A few months later, in early 1994, Ms. Sweetland

was diagnosed with breast cancer, and ACN retained petitioner to

advise it on its operations on an as needed basis while Ms.

Sweetland was undergoing medical treatment.    During 1994,

petitioner substituted for Ms. Sweetland at meetings in Century

City, and he advised ACN on the circulation of ACN's magazine

from his home in Orland Park.   He was in California for 155 days

during 1994, and he worked for ACN on each of those days; he

worked 123 days in Century City and 32 days in Riverside.     He

worked for ACN in Orland Park for 70 days in 1994.

     At the end of 1994, when it appeared that Ms. Sweetland's

medical treatment was completed successfully, ACN and petitioner

agreed that petitioner's work for ACN in California was complete

and that any more consulting services required by him could be

provided by phone from his Orland Park home.    A few months later,

Ms. Sweetland’s cancer metastasized, and ACN asked petitioner to
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resume helping it in California on an as needed basis.

Petitioner accepted.   In the middle of 1995, ACN changed its

print shop to one in Stillwater, Oklahoma, and petitioner

traveled to Stillwater to advise ACN on its printing process.

Petitioner was in California for 113 days during 1995, and he

worked for ACN on each of those days.     He worked in Riverside on

18 days and in Century City on 95 days.       He worked for ACN on 90

days while in Orland Park and on 21 days while in Stillwater.

     Ms. Sweetland died in 1996.   Three days later, ACN told

petitioner that his services in Century City were no longer

needed.   ACN told petitioner that it wanted him to continue

advising it on its printing process.

     During 1994 and 1995, petitioner traveled between Orland

Park and California about 14 times (all between January to May or

July to November), and he rented a small one-bedroom apartment in

Century City in which he placed minimal furnishings.      Petitioner

deducted his travel and apartment expenses on his 1994 and 1995

tax returns.   Respondent disallowed the following expenses

(referred hereinafter as traveling expenses):

                                       1994       1995

     Apartment                     $14,950     $15,705
     Travel                         14,050      15,251
     Meals and entertainment         4,805       5,260
     Utilities                       1,015       1,243
     Insurance                         717       1,110
       Total                        35,537      38,569
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Following concessions, the traveling expenses at issue are as

follows:

                                        1994     1995

     Apartment                    $14,950      $15,705
     Travel                        14,050       12,501
     Meals and entertainment        4,805        3,360
     Utilities                      1,015        1,243

All of the disputed expenses for travel and for meals and

entertainment relate to petitioner's travel between Orland Park

and California.   The cost of the apartment was less than the

amount that petitioner would have had to pay had he stayed in a

hotel room during his time in California.

     Throughout all of the relevant years, petitioner was

registered to vote in Illinois, he registered his car in

Illinois, and he maintained his only checking account in

Illinois.   Petitioner's only connection to California was that he

performed services there.

     During the relevant years, ACN did not restrict petitioner

from providing additional consulting services to other companies,

and it did not give him an office at its Century City location.

Petitioner offered his consulting services to other prospective

clients during those years.

                               OPINION

     We must decide whether petitioners may deduct the traveling

expenses in dispute.   Petitioners contend that they may because

petitioner was away from his tax home in Orland Park while
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temporarily working in Century City and Riverside.    Respondent

contends that they may not because petitioner's tax home was

Century City.   Petitioners bear the burden of proving that

petitioner's tax home was not in Century City.   See rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933); Daly v.

Commissioner, 72 T.C. 190, 197 (1979), affd. 662 F.2d 253 (4th

Cir. 1981).

     A taxpayer ordinarily may not deduct a personal expense.

See sec. 262.   A taxpayer may deduct an expense, however, to the

extent that it is: (1) A reasonable traveling expense (e.g.,

lodging, transportation, fares, and food), (2) incurred while

away from home, and (3) an ordinary and necessary expense

incurred in pursuit of a trade or business.    See sec. 162(a)(2);

Commissioner v. Flowers, 326 U.S. 465, 470 (1946).    The purpose

behind this deduction is to alleviate the burden falling upon a

taxpayer whose business requires that he or she incur duplicate

living expenses.   See Tucker v. Commissioner, 55 T.C. 783, 786

(1971); Kroll v. Commissioner, 49 T.C. 557, 562 (1968).     Whether

the taxpayer satisfies the three conditions necessary for this

deduction is purely a question of fact.   See Commissioner v.

Flowers, supra at 470; see also Wills v. Commissioner, 411 F.2d

537, 540 (9th Cir. 1969), affg. 48 T.C. 308 (1967).

     The parties dispute only the situs of petitioner's tax home;

thus, we limit our inquiry to that question.   The U.S. Supreme

Court has held that a taxpayer may not deduct the expenses of
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traveling to and living at his place of employment unless the

traveling is required by the exigencies of his employment, rather

than by his "personal conveniences and necessities".

Commissioner v. Flowers, supra at 474.    There, the taxpayer's

principal place of employment was Mobile, Alabama, and the

taxpayer traveled to Mobile from his home in Jackson,

Mississippi, whenever his work required him to be in Mobile.       The

Court found that this travel was not required by the exigencies

of his employment, but resulted from his personal choice to live

in Jackson.   Since his principal employment was in Mobile, he

could reasonably have been expected to move there, which would

have made this travel unnecessary.

     The principles articulated in Flowers have subsequently been

applied in other cases.    From these cases, we understand that a

taxpayer's principal place of business generally is his or her

tax home, although his or her residence is in another city or is

not in the same area as the place of employment.    See Mitchell v.

Commissioner, 74 T.C. 578, 581 (1980); Kroll v. Commissioner,

supra at 561-562.    The rule is different, however, where a

taxpayer's employment in another area is temporary as opposed to

indefinite.   See Peurifoy v. Commissioner, 358 U.S. 59 (1958);

Horton v. Commissioner, 86 T.C. 589, 593 (1986).    A taxpayer's

tax home is his or her residence if the employment is temporary;

the taxpayer's presence at the other location is considered to be

away from home.     See Kroll v. Commissioner, supra at 562.   A
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taxpayer's tax home is the location of his or her employment if

the employment is indefinite or permanent; the taxpayer's

presence at a second location is not considered away from home.

See id. at 562.   Employment is temporary if it is foreseeable

that the employment will be terminated within a short period of

time.   See Mitchell v. Commissioner, supra at 581.   Employment

that starts as temporary can later become indefinite, see

Chimento v. Commissioner, 52 T.C. 1067, 1073 (1969), affd. 438

F.2d 643 (3d Cir. 1971), and, when that occurs, the location of

the taxpayer's employment becomes his or her home, see Kroll v.

Commissioner, supra at 562.   A "taxpayer shall not be treated as

being temporarily away from home during any period of employment

if such period exceeds 1 year."   Sec. 162(a).

     We find from the facts at hand that petitioner's tax home

during 1994 and 1995 was in Orland Park.   He lived in Orland Park

during those years, and his consulting practice was based in that

city.   His travel to Century City was dictated by the exigencies

of his work for his client, ACN, and not from his personal choice

to live in Century City.   He spent more time working during each

of the subject years in Orland Park than he did in Century City,

or, for that matter, in California as a whole.   His only

connection to Century City was the fact that he provided services

there on an as needed basis, and he was able to, and did,

actively seek other engagements that he would perform from his

office in Orland Park.
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       Nor was petitioner's tenure in Century City indefinite; it

was temporary.    Although respondent notes correctly that

petitioner's work in and around Century City occurred in at least

5 different years, and that section 162(a) provides that a

"taxpayer * * * [is not] temporarily away from home during any

period of employment * * * [that] exceeds 1 year", we conclude

that petitioner's work for ACN in California did not exceed the

1-year period referred to in the statute.    Petitioner's work for

ACN was on again and off again throughout the relevant years,

with ACN continually renewing his engagement with it because of

unexpected happenings.    Moreover, petitioner's travel to ACN's

offices in Century City and to the printing plants in Riverside

and Stillwater was incident to the fact that his employment was

based in Orland Park and that he was providing his consulting

services out of Orland Park.    Merely because an independent

contractor may return to the same general location in more than 1

year does not mean, as respondent asks us to hold, that the

independent contractor is employed in that general location on an

indefinite basis.    This is especially true here where petitioner

was not restricted to working solely for ACN and actually sought

other engagements for which he could provide his consulting

services contemporaneously with the services which he provided to

ACN.

       We hold that petitioner's tax home was in Orland Park and,

accordingly, that petitioners are entitled to deduct all of the
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traveling expenses in issue.   In so holding, we have considered

all arguments made by the parties and, to the extent not

discussed above, find them to be irrelevant or without merit.

     To reflect concessions by the parties,

                                    Decision will be entered

                                under Rule 155.
