                  T.C. Summary Opinion 2001-22



                     UNITED STATES TAX COURT



         CLARKE D. AND JOANNE S. BITTNER, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15428-99S.                     Filed March 7, 2001.



     Clarke D. and Joanne S. Bittner, pro se.

     Linda Love Vines, for respondent.



     WOLFE, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the years in issue.
                               - 2 -

     Respondent determined deficiencies in petitioners’ Federal

income taxes for 1993, 1994, and 1995 of $1,808, $2,632, and

$2,308, respectively.   The sole issue for decision is whether

petitioners are entitled to deductions for rent expense claimed

on their 1993, 1994, and 1995 Federal income tax returns.1     We

hold that petitioners are not entitled to these deductions.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioners resided in

Dallas, Pennsylvania, when the petition in this case was filed.

     Petitioners jointly own a home in Dallas, Pennsylvania.

During 1993, 1994, and 1995 petitioners also maintained an

apartment in New York City.   During these years, petitioner

Joanne S. Bittner (Mrs. Bittner) was employed as an operating

nurse by St. Luke’s/Roosevelt Hospital (the hospital) in New York

City.   The hospital is located at West 59th Street.   As a full-

time employee of the hospital, Mrs. Bittner was entitled to rent

an apartment at 515 West 59th Street (the New York City

apartment) from St. Luke’s/Roosevelt Staff Housing.    Mrs. Bittner

executed a lease with St. Luke’s/Roosevelt Staff Housing to rent

the New York City apartment month to month on February 1, 1990.

The month-to-month lease ended in July 1999.   During the years in


1
     Petitioners’ liability for self-employment taxes and
corresponding deductions are computational adjustments that
depend on the resolution of this issue.
                               - 3 -
issue, the rent charged for the apartment was $620 per month.

Mrs. Bittner paid the rent through biweekly payroll deductions.

     Petitioner Clarke D. Bittner (Mr. Bittner) is an actor.     Mr.

Bittner contends that during the years in issue he needed to

maintain an apartment in New York City for use in his acting

career.   Mr. Bittner also contends that he sublet the New York

City apartment from his wife during these years.   Mr. Bittner

further alleges that he paid rent to his wife by giving her

promissory notes and that he paid the notes by depositing his

revenue from his acting career into a joint checking account that

he and Mrs. Bittner maintained.   Mr. Bittner has not alleged that

his acting career required him to maintain a home in Dallas.

     During the years in issue, petitioners generally occupied

the New York City apartment on those days when Mrs. Bittner

worked at the hospital and when Mr. Bittner’s acting career

required him to be in New York.   During the weekends, petitioners

normally returned to their residence in Dallas.

     On their 1993, 1994, and 1995 Federal income tax returns,

petitioners claimed deductions for rent of $5,580, $7,550, and

$5,580, respectively.   Petitioners contend that Mr. Bittner paid

rent to his wife for use of the apartment in New York while he

was traveling away from home in pursuit of his acting career.

Petitioners contend that their tax home was in Dallas during

these years.   Respondent argues that petitioners are not entitled
                               - 4 -
to the claimed deductions for rent because petitioners’ tax home

for 1993, 1994, and 1995 was New York City and not Dallas, so

that, even if the intra family rent concept were accepted, Mr.

Bittner made no rent payments to his wife for expenses incurred

while he was away from home.

     Generally, a taxpayer may not deduct personal expenses.      See

sec. 262.   However, section 162(a) allows a deduction for the

ordinary and necessary expenses paid or incurred during the

taxable year in carrying on a trade or business.   Specifically,

section 162(a) allows a deduction for traveling expenses,

including amounts for meals and lodging, if the expenses are:

(1) Ordinary and necessary; (2) incurred while away from home;

and (3) incurred in pursuit of a trade or business.   See sec.

162(a)(2); Commissioner v. Flowers, 326 U.S. 465, 470 (1946).

The purpose underlying the allowance of 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 conditions necessary for this deduction is a

question of fact.   See Commissioner v. Flowers, supra at 470.

Generally, a taxpayer may not deduct the expenses of travel away

from home unless the travel is required by the exigencies of his

business, rather than by his “personal conveniences and
                                 - 5 -
necessities”.   Commissioner v. Flowers, supra at 474.    For

purposes of section 162(a), the taxpayer’s principal place of

business or employment is generally considered his or her tax

home.   See Mitchell v. Commissioner, 74 T.C. 578, 581 (1980).

Accordingly, if a taxpayer chooses for personal reasons to

maintain a residence away from his place of employment, expenses

for lodging in the vicinity of the principal place of business or

employment, which is his or her tax home, are not deductible

because the taxpayer is not away from home.    See sec. 162(a);

Bochner v. Commissioner, 67 T.C. 824, 827 (1977); Foote v.

Commissioner, 67 T.C. 1, 4-5 (1976).

     During 1993, 1994, and 1995 the principal place of business

of each petitioner was New York City.    During these years, Mrs.

Bittner was employed as an operating nurse in New York City, and

Mr. Bittner needed to maintain a residence in New York City

because of his acting career.    Petitioners have failed to present

any evidence that they maintained their residence in Dallas for

economic or business purposes.    Accordingly, we find that

petitioners maintained their residence in Dallas out of personal

preference and not because of any business necessity.    See

Commissioner v. Flowers, supra.     Mr. Bittner was not away from

home when he occupied the apartment in New York City.    Any

payments Mr. Bittner made toward the cost of maintaining the New

York City apartment were payments for maintenance of the family
                                - 6 -
home and were not deductible as payments for business expenses

paid or incurred while away from home.

     Moreover, transactions among family members that result in

the distribution of income within a family unit “are subject to

the closest scrutiny.”    Van Zandt v. Commissioner, 40 T.C. 824,

830 (1963), affd. 341 F.2d 440 (5th Cir. 1965); Coombs v.

Commissioner, T.C. Memo. 1984-366.      A transaction that is entered

into solely for the purpose of tax reduction and which has no

economic or commercial objective to support it is a sham and

without effect for Federal income tax purposes.     See Rice’s

Toyota World, Inc. v. Commissioner, 81 T.C. 184 (1983), affd. in

part and revd. in part 752 F.2d 89 (4th Cir. 1985).

     We find that petitioners’ supposed rental agreement was

solely motivated by tax concerns and not by any commercial or

financial objectives.    Mr. Bittner alleges that he paid rent to

his wife by giving her promissory notes and that he paid such

notes when he deposited revenue from his acting career into

petitioners’ joint checking account.     Petitioners do not assert

that Mr. Bittner’s supposed business use of the apartment

prevented Mrs. Bittner from using or enjoying the apartment.

Instead, petitioners concede that Mrs. Bittner occupied the

apartment when she was employed at the hospital.     Contrary to

petitioners’ assertions, these circumstances merely demonstrate

that Mr. Bittner contributed to maintaining petitioners’ marital
                                 - 7 -
residence.    Accordingly, we find that petitioners did not enter

into their supposed rental arrangement for economic or commercial

objectives.   Instead, we find that petitioners concocted this

sham arrangement solely to claim tax benefits with respect to

their principal residence and tax home in New York.        There was no

real rent here except for the rent Mrs. Bittner paid to the

hospital for the apartment she was allowed to rent because she

was a full-time employee of the hospital.

     For reasons set forth above, we hold that petitioners are

not entitled to the deductions for rent expense they claimed on

their 1993, 1994, and 1995 Federal income tax returns.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,



                                              Decision will be entered

                                         for respondent.
