Andrews v. Commissioner
931 F.2d 132 (1st Cir. 1991)

  • Andrews owned a swimming pool construction business in New England. He also owned a horse breeding business in Florida.
    • He owned a house in both locations, and spent 6 months of the year in each place.
  • Andrews filed his taxes, claiming an exemption for qualified meals and lodging for the entire time he was in Florida.
    • 26 U.S.C. 162(a)(2) allows a deduction for unreimbursed expenses for meals and lodging incurred "while away from home or in the pursuit of a trade of business."
    • Andrews claimed he lived in New England, and the time he spent in Florida was 100% business related.
  • The IRS denied the deduction. Andrews appealed.
    • The IRS argued that Andrews was living in Florida for those 6 months, and so he couldn't claim a 162(a)(2) deduction because he was at home.
      • 26 U.S.C. 262 specifies that personal living expenses are not deductible.
  • The Tax Court found for the IRS. Andrews appealed.
    • The Trial Court found that 162(a)(2) only allows for a deduction while the taxpayer is "away from home," and Andrews was not away from home while living in Florida.
    • The Tax Court found that Andrews had two homes, at least as far as 162(a)(2) was concerned, so he could never claim a deduction under 162(a)(2) no matter which of his two houses he was living in.
  • The Appellate Court vacated and remanded.
    • The Appellate Court overturned the Tax Court's finding that Andrews had two "tax homes."
    • The Court found that Andrews's "tax home" was near his primary place of business (aka his "major post of duty"), and when he is at his other place of business (aka his "minor post of duty"), he was entitled to take a deduction under 162(a)(2).
    • The Court remanded back to the Tax Court to determine which of Andrews' businesses was his primary place of business.
  • The basic idea behind 162(a)(2) is that if a person has to duplicate their living expenses because of business, they are entitled to deduct the cost of the second set of living expenses.
    • So if you have a house, but are forced to also pay for a hotel because you are traveling for work, that's a duplicate living expense.
    • By the same logic, Andrews' two businesses required him to have duplicate houses, so he gets to deduct the expenses for one of them.