Hantzis v. Commissioner, 638 F.2d 248 (1st Cir. 1981)
Hantzis v. Commissioner is a cornerstone case in federal income tax law addressing the boundary between deductible business travel expenses and nondeductible personal living expenses.
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.
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.