The taxpayer, a law student residing with her husband in Boston, accepted a 10‑week summer associate position with a New York City law firm. She maintained the couple's apartment in Boston, where her husband remained, and rented temporary accommodations in New York for the summer. She incurred lodging, meal, and related living expenses in New York and sought to deduct them as ordinary and necessary business expenses "while away from home" under I.R.C. § 162(a)(2). The IRS disallowed the deductions on the ground that New York, not Boston, was her "tax home" during the summer because New York was her only place of business. The Tax Court upheld the Commissioner, and the taxpayer appealed to the First Circuit.
Whether a law student's living expenses incurred while working a temporary summer job in New York City are deductible as "traveling expenses while away from home in the pursuit of a trade or business" under I.R.C. § 162(a)(2) when the taxpayer's only business during the period was in New York and she had no business ties to Boston, where she maintained a household.
Under I.R.C. § 162(a)(2), a taxpayer may deduct ordinary and necessary traveling expenses incurred while away from home in the pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465 (1946), establishes three requirements: (1) the expense must be reasonable and necessary traveling expense; (2) incurred while away from home; and (3) incurred in pursuit of the taxpayer's trade or business. For § 162(a)(2) purposes, "home" generally means the taxpayer's tax home—her principal place of business or employment, not her personal residence. Deductions are allowed when business exigencies compel the taxpayer to maintain two places of abode, resulting in duplicative living expenses; they are disallowed when the duplication arises from personal choices. Temporary employment may justify deduction only if the taxpayer already has a trade or business connection to the claimed home base; absent such a connection, the place of temporary employment is the tax home and living expenses there are personal and nondeductible under § 262.
No. The taxpayer's New York living expenses were not deductible under § 162(a)(2) because her tax home during the summer was New York—the sole location of her business activity—and she had no business ties to Boston. The duplication of living expenses was caused by personal, not business, reasons.
The court anchored its analysis in the Flowers framework, emphasizing that § 162 targets business, not personal, expenses. The statutory phrase "away from home" presupposes that the taxpayer has a business-based home from which she is away. During the relevant period, the taxpayer had no trade or business activity in Boston—she was a student. Her only business was in New York, where she worked as a summer associate. Thus, New York was her tax home for § 162 purposes. The court rejected the argument that the temporary nature of the New York job, standing alone, turns New York into an "away from home" location. The temporary/indefinite distinction is relevant only when the taxpayer has an existing business base elsewhere that necessitates duplicative expenses due to business exigencies. Here, maintaining the Boston household stemmed from personal circumstances (marital and educational choices), not from the needs of any business carried on in Boston. Allowing a deduction would improperly shift personal living costs to the tax system and undermine the principle that daily living expenses are nondeductible under § 262. Moreover, the court stressed that "home" does not mean the place of personal residence or family domicile when that meaning conflicts with the business focus of § 162. To permit deductions whenever a taxpayer chooses to keep a residence in one city while accepting a temporary job in another would create a per se rule favoring personal preferences and would distort the statute. Because the taxpayer lacked business ties to Boston, she failed both the "away from home" and the "in pursuit of business" elements. The Tax Court's decision for the Commissioner was therefore affirmed.
Hantzis teaches that the tax home is a business concept, not a personal or familial one, and that temporary employment outside one's residence does not automatically produce deductible travel expenses. The case is frequently assigned in Federal Income Tax courses to illustrate: (1) the Flowers test; (2) the definition of "tax home"; (3) the limited role of the temporary-employment doctrine; and (4) the necessity of showing that duplicate living costs arise from business exigencies rather than personal choices. It is especially salient for students and professionals with internships, clerkships, or short-term assignments away from where they live or go to school.
Hantzis v. Commissioner squarely holds that a taxpayer's 'home' under § 162(a)(2) is her business base, not her place of residence, and that temporary work away from where one lives does not by itself generate deductible travel expenses. The decision prevents taxpayers from converting personal choices—such as maintaining a household in one city while briefly working or studying in another—into deductible business costs.