The IRS defines a taxpayer’s “tax home” for travel deductions under IRC § 162(a) as the taxpayer’s regular or principal place of business. If the taxpayer has no regular or principal place of business, the tax home is considered the taxpayer’s regular place of abode in a real and substantial sense. This definition is crucial for determining whether travel expenses, including meals and lodging, are deductible as they must be incurred while “away from home” in the pursuit of a trade or business.

Legal Reasoning and Rationale

1. Definition of Tax Home:

   • Under IRC § 162(a)(2), travel expenses are deductible if they are ordinary and necessary expenses incurred while away from home in the pursuit of a trade or business. The term “home” for these purposes is generally the taxpayer’s principal place of business or employment.
   • If the taxpayer has no regular or principal place of business, the tax home is the taxpayer’s regular place of abode in a real and substantial sense.

2. Revenue Rulings and Court Cases:

   • Rev. Rul. 75-432: This ruling clarifies that a taxpayer cannot deduct the cost of meals and lodging while performing duties at their principal place of business, even if they maintain a permanent residence elsewhere. The “home” referred to in IRC § 162(a)(2) is generally the place where the taxpayer conducts their trade or business.
   • Rev. Rul. 93-86: This ruling addresses the effect of the 1-year limitation on temporary travel. It states that if employment away from home in a single location is realistically expected to last (and does in fact last) for 1 year or less, the employment is considered temporary. If it is expected to last more than 1 year, it is considered indefinite, and travel expenses are not deductible.
   • Rev. Rul. 80-212: This ruling provides that a taxpayer’s “home” for purposes of IRC § 162(a)(2) is the taxpayer’s regular or principal place of business. If the taxpayer has no regular or principal place of business, then the tax home is the taxpayer’s regular place of abode in a real and substantial sense. The ruling also outlines three objective factors to determine the bona fide nature of a taxpayer’s claimed abode.
   • Commissioner v. Flowers: The Supreme Court held that travel expenses are deductible only if they are incurred while away from home in the pursuit of a trade or business, and the expenses must be necessary and directly attributable to the business.

3. Minister’s Tax Home:

   • For ministers, the tax home is generally the location where they perform their ministerial duties. If a minister is assigned to a church or religious organization, that location is considered their tax home. Travel expenses incurred while away from this location in the pursuit of ministerial duties may be deductible if they meet the criteria under IRC § 162(a)(2).

Conclusion

The IRS defines a taxpayer’s tax home as the principal place of business or, if none, the regular place of abode in a real and substantial sense. For ministers, this would typically be the location where they perform their ministerial duties. Travel expenses are deductible under IRC § 162(a)(2) if they are incurred while away from this tax home in the pursuit of a trade or business, provided they are ordinary, necessary, and not lavish or extravagant. Relevant Revenue Rulings and court cases, such as Rev. Rul. 75-432, Rev. Rul. 93-86, Rev. Rul. 80-212, and Commissioner v. Flowers, provide further clarification on these definitions and requirements.

Still, have questions?
Contact Pro Advisor Support to answer your questions.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101
Fax: (888) 876.5101

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com