Rev. Rul. 60-147

The Internal Revenue Service will no longer litigate cases arising under section 22(n)(2) of the Internal Revenue Code of 1939 where an employee incurs transportation expenses (as distinguished from the cost of meals and lodging) on business trips which take him outside his home area but do not keep him away from home overnight.

This new position was adopted by the Service after the Tax Court of the United States decision in Joseph M. Winn, et ux. , 32 T.C. 220 (1959). The court held that the employee's nonreimbursable expenses for transportation on 168-mile round trips, which he had to make each month to report to his employer, were deductible, in computing adjusted gross income, as travel expenses `while away from home,' notwithstanding the fact that such trips were not overnight trips.

On the other hand, the court also held that the cost of the employee's meals while on such trips were nondeductible personal expenses.

The Service considers the decision erroneous to the extent that it allows an employee to deduct transportation expenses on one-day round trips as expenses of travel `while away from home' under section 22(n)(2) of the 1939 Code.

However, the issue as to such transportation expenses will not be further litigated in view of the adverse decisions in the Winn case and in Kenneth Waters , 12 T.C. 414; Horace E. Podems , 24 T.C. 21; Douglas A. Chandler v. Commissioner , 226 Fed.(2d) 467; Lewis R. Lang v. United States , 134 Fed.Supp. 214; and Charles M. Scott v. Kelm , 110 Fed.Supp. 819.

The same problem does not arise under present law because section 62(2)(C) of the Internal Revenue Code of 1954 now allows an employee to deduct business transportation expenses in computing adjusted gross income even though they are neither reimbursable by the taxpayer's employer nor incurred while traveling away from home.

This new position of the Service applies only to the deductibility of an employee's nonreimbursable business transportation expenses under section 22(n)(2) of the 1939 Code. Pending court cases and claims involving this particular issue for years governed by the 1939 Code will be disposed of in conformity with this position.

¹ Based on Technical Information Release 216, dated March 15, 1960.