Rev. Rul. 55-604

Advice has been requested whether an employee having two widely separated posts of duty may deduct as traveling expenses the cost of his meals and lodging while working either at his principal post of duty or at his minor post of duty when he maintains his family residence at the latter location.

In the instant case the taxpayer has been employed for many years by a company which owns and operates several department stores. Prior to 1954, his only post of duty was at the company's headquarters and main store located in the city of X . Early in 1954, however, he was appointed by the company as the manager of a new store in the city of Y , which is about 100 miles from the city of X . Since receiving that assignment, he has rented a single room on a monthly basis in the city of Y and usually stays there from Monday evening until Saturday evening of each week. Each Saturday evening he returns to the city of X and stays at his family residence until the following Monday evening. The company requires the taxpayer to report at its headquarters each Monday for the purpose of discussing with company officials all important problems and developments connected with the operation of the new store.

Section 162 of the Internal Revenue Code of 1954 provides in part as follows:

(a) IN GENERAL.-There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including-

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(2) traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; * * *

It is now well established that a taxpayer's `home' for traveling expense purposes is located at the place where he conducts his trade or business, unless he is so engaged at two or more distant localities, in which event his `home' is located at his principal or regular post of duty during the taxable year. Since the company directed the taxpayer to work in the city of Y five days a week and to be in the city of X only one day a week, it is clear that his principal or regular post of duty was transferred to the city of Y , notwithstanding the fact that the company's headquarters, the employee's family residence, and his minor or temporary post of duty all remained in the city of X . It is also obvious that after such transfer, the taxpayer retained his family residence in the city of X for personal reasons, and that his added expenses for meals and lodging in the city of Y were not occasioned by the exigencies of business but were motivated by the personal convenience and necessities of the taxpayer. Compare, Commissioner v. J. N. Flowers , 326 U.S. 465, Ct. D. 1659, C.B. 1946-1, 57. Accordingly, it is held that the taxpayer may not deduct the cost of his meals and lodging while discharging his duties in the city of Y , his principal or regular place of employment, even though such place is located at a distance from his family residence and his minor or temporary place of employment. This conclusion is in accord with the decisions in Jerome M. Ney v. United States , 171 Fed.(2d) 449; Robert F. Green et ux. v. Commissioner , 12 T.C. 656; and S.M.R. O'Hara v. Commissioner , 6 T.C. 841.

Under such circumstances, the Internal Revenue Service is unable to apply or agree with the dictum found in Joseph H. Sherman, Jr., et ux. v. Commissioner , 16 T.C. 332 at 337, to the effect that a taxpayer having two occupations or posts of duty which require him to spend a substantial amount of time in each of two cities may deduct his traveling expenses `incurred in connection with attendance upon the one removed from his residence.' Although the Commissioner has acquiesced in the Sherman decision (C.B. 1951-2, 4), the above-quoted dictum does not represent the position of the Service and will not be regarded as a rule of law to be generally applied in other similar cases.

It is also clear that where a taxpayer is engaged in business at two widely separated locations, he may deduct his expenses for meals and lodging while discharging his duties at that location which is removed from his principal post of duty. This position is in accord with Walter F. Brown v. Commissioner , 13 B.T.A. 832, acquiescence, C.B. VIII-1, 6 (1929); Joseph W. Powell v. Commissioner , 34 B.T.A. 655, acquiescence, C.B. XV-2, 19 (1936); and the Sherman case, supra . Although the residence of each taxpayer considered in those cases was located at his principal or regular post of duty, the same conclusion was reached in Revenue Ruling 54-147, C.B. 1954-1, 51, and in Revenue Ruling 54-497, C.B. 1954-2, 75, with respect to taxpayers who maintained their family residences at their minor or temporary posts of duty. Accordingly, it is held that an employee having two widely separated posts of duty may deduct the cost of his meals and lodging while his work requires him to be at his minor or temporary post of duty, even though he maintains his family residence at that location. In such cases the deduction is limited, of course, to that portion of the family expenses for meals and lodging which is properly attributable to the taxpayer's presence there in the actual performance of his duties