T.C. Memo. 1998-373

UNITED STATES TAX COURT

ANNE R. DUGAN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9808-97. Filed October 15, 1998.

Anne R. Dugan, pro se.

Kimberley J. Peterson, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

THORNTON, Judge: Respondent determined a deficiency in

petitioner's Federal income tax for the year 1994 in the amount

of $11,402 and an addition to tax in the amount of $545 under

section 6651(a)(1).
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Unless otherwise indicated, all section references are to

the Internal Revenue Code as in effect for the year in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

After concessions by the parties, the sole issue for

decision is whether petitioner is entitled to a business

deduction for the cost of certain meals in the amount of $450 for

the taxable year 1994. We hold that she is not.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. 

The stipulated facts are incorporated into these findings by this

reference. When the petition in this case was filed, petitioner

resided in Sunnyvale, California.

During 1994, petitioner was self-employed as a licensed

acupuncturist. She maintained a business address in San Jose,

California, for all of 1994, and in Sunnyvale, California, for

part of the year.

Petitioner shared office space at the San Jose address with

a chiropractor, Dr. Catherine Zimmerman, who used the office

Mondays, Wednesdays, and Fridays. Petitioner used the office

Tuesdays and Thursdays. Petitioner paid Dr. Zimmerman rent, and

they shared office expenses. They also treated some patients in
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common, as Dr. Zimmerman referred a number of patients to

petitioner.

During 1994, petitioner and Dr. Zimmerman often met at

lunchtime and shared meals. At their lunch meetings, petitioner

and Dr. Zimmerman discussed treatment of their patients and

details of office administration and operations. Petitioner also

met with Dr. Zimmerman at times when they did not share a meal,

but lunchtime was often the best opportunity to meet.

Petitioner and Dr. Zimmerman alternated paying for their

meals together. Each week, petitioner paid for one to three

meals with Dr. Zimmerman.

On her Federal income tax return for the taxable year 1994,

petitioner reported expenses attributable to meals taken with Dr.

Zimmerman totaling $900. After application of the 50-percent

limitation for meals and entertainment pursuant to section

274(n)(1), these expenses gave rise to a claimed deduction of

$450, which respondent disallowed as not being ordinary and

necessary expenses for petitioner's trade or business.

OPINION

Section 262(a) generally disallows the deduction of

personal, living, or family expenses. Except as permitted under

sections 162, 212, or 217, the costs of a taxpayer's meals not

incurred in traveling away from home are nondeductible personal

expenses. Sec. 1.262-1(b)(5), Income Tax Regs.
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1 Sec. 212, which applies to nontrade or nonbusiness

expenses that are costs of producing income, and sec. 217, which

applies to moving expenses, are not at issue in this case. Nor

were the expenses incurred while petitioner was traveling away

from home. 

Section 162(a) allows as a deduction "all the ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on any trade or business". The question for

consideration is whether petitioner is entitled under section 162

to deduct the cost of the meals with Dr. Zimmerman.1

Petitioner bears the burden of proving that the expenses in

question are ordinary and necessary business expenses. See Rule

142; Welch v. Helvering, 290 U.S. 111 (1933). "Daily meals are

an inherently personal expense, and a taxpayer bears a heavy

burden in proving they are routinely deductible." Moss v.

Commissioner, 80 T.C. 1073, 1078 (1983), affd. 758 F.2d 211 (7th

Cir. 1985).

In Moss, members of a law firm met daily at a local cafe to

discuss work-related matters. As in the instant case, the noon

hour was chosen as the most convenient and practical time for the

firm to hold meetings. This Court acknowledged the valid

business purposes for the lunch meetings, but nevertheless held

the costs of the meals to be nondeductible personal expenses,

rather than ordinary and necessary business expenses. 

we are convinced that petitioner and his partners and

associates discussed business at lunch, that the

meeting was a part of their working day, and that this
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time was the most convenient time at which to meet. We

are also convinced that the partnership benefited from

the exchange of information and ideas that occurred. 

But this does not make his lunch deductible any

more than riding to work together each morning to

discuss partnership affairs would make his share of the

commuting costs deductible. * * * [Moss v.

Commissioner, supra at 1080-1081.]

In affirming this Court's decision in Moss v. Commissioner,

supra, the U.S. Court of Appeals for the Seventh Circuit focused

on the lack of a business objective for the meals, distinguishing

meals with "outsiders", such as clients or customers, from meals

with coworkers: 

[Coworkers] know each other well already; they don't

need the social lubrication that a meal with an

outsider provides--at least don't need it daily.

* * * * * * *

* * * the meal itself was not an organic part of the

meeting, * * * where the business objective, to be

fully achieved, required sharing a meal. [Moss v.

Commissioner, 758 F.2d at 213-214.]

Similarly, in Hankenson v. Commissioner, T.C. Memo. 1984-

200, this Court held that expenses of meals incurred by a

physician in the course of frequent lunchtime meetings which he

hosted for nurses and medical colleagues constituted

nondeductible personal expenses, because of the absence of a

clear nexus between the expenses and the taxpayer's production of

income.

In the instant case, sharing a meal with Dr. Zimmerman was

not integral to petitioner's business objectives and has not been
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clearly linked to her production of income. They met at

lunchtime because that was the most convenient and feasible time

to meet. Their business relationship was well established and

did not require "social lubrication", at least not as often as

petitioner and Dr. Zimmerman dined together. Indeed, the

frequency of their lunches together and the reciprocal nature of

their meal arrangement belie the existence of any business

purpose for the meals.

Petitioner has stipulated that she and Dr. Zimmerman

alternated paying for the meals. In substance, then, each was

bearing only the expense of her individual meals. If taxpayers

were permitted to deduct meal expenses in such circumstances

then, as this Court has observed, "only the unimaginative would

dine at their own expense." Moss v. Commissioner, 80 T.C. at

1081.

Accordingly, we sustain respondent's determination. To

reflect the foregoing and concessions by the parties, 

 Decision will be entered

under Rule 155.