Rev. Rul. 76-288

The Internal Revenue Service has been asked to state its position with respect to the deductibility of the cost of meals and lodging furnished to a housekeeper where they are furnished in conjunction with specified wages that are deductible, under section 214 of the Internal Revenue Code of 1954, as amounts paid for household services and care of a dependent child, disabled dependent, or disabled spouse, in order that the taxpayer may be gainfully employed.

Held, since the meals furnished to the housekeeper are part of the agreed compensation for the housekeeper's services and the related wages are deductible under section 214 of the Code, the taxpayer's out-of-pocket expenditures for the housekeeper's meals are also deductible within the limitations of section 214. Thus, that portion of the taxpayer's expenditures for food that is allocable to the housekeeper is includible in the computation of the section 214 deduction.

Held further, since the maintenance of a household is a personal expense normally incurred by a taxpayer, the lodging furnished to the housekeeper is not a deductible expense under section 214 of the Code unless it can be shown that the taxpayer made out-of-pocket expenditures directly attributable to the lodging of the housekeeper that were in addition to normal expenditures for maintaining the household; for example, additional rent required when the taxpayer moves to an apartment with an additional bedroom to accommodate the housekeeper and additional utilities attributable to the housekeeper. To the extent that the taxpayer can show additional expenditures for lodging for the housekeeper in the instant case, the taxpayer is entitled to a deduction for such expenditures within the limitations of section 214.

Compare Rev. Rul. 76-106, 1976-1 C.B. 71, which reaches a similar conclusion with respect to the medical expense deduction allowable for expenditures for meals and lodging furnished to an attendant who cares for the disabled taxpayer's personal and medical needs and performs household services, but requires that such amounts be further allocated as between deductible medical expenses and nondeductible personal expenses on the basis of the time spent by the attendant in performing nursing-type services and the time spent performing household and other personal services. This further allocation is required in Rev. Rul. 76-106, because section 262 of the Code provides that no deduction shall be allowed for personal, living, or family expenses, except as otherwise expressly provided, and the deduction expressly provided by section 213 does not extend to amounts paid for household and personal services, but is limited to amounts paid for medical care. This further allocation is not required under section 214, however, since the deduction allowable under section 214 expressly includes amounts paid for household services, in addition to amounts paid for care of a dependent child, disabled dependent, or disabled spouse.