113 T.C. No. 5

UNITED STATES TAX COURT

WALTER R. STROHMAIER, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13353-97. Filed August 3, 1999.

P was an independent agent for an insurance

brokerage firm and a part-time minister. P was not

provided an office by the insurance brokerage firm; he

was not required to report to or visit the brokerage

firm office, nor did he conduct any business there. P,

as a minister, was not affiliated with any church. He

served as chaplain for a mobile home community, where

he performed religious services. Occasionally, P

delivered sermons or taught at various churches. In

neither activity did P receive or interview insurance

customers or religious patrons at his residence, nor

did he perform ministerial services there. P's

insurance activity was conducted by visiting clients at

their homes or other locations. P performed all the

preparatory work for both activities at his residence,

a rented apartment.

1. Held, although a portion of P's residence was

used exclusively and regularly in his two activities,

the residence was not his principal place of business.

Accordingly, the home office expenses are not
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1Unless otherwise indicated, section references are to the

Internal Revenue Code in effect for the years at issue. All Rule

references are to the Tax Court Rules of Practice and Procedure.

deductible. See sec. 280A(c)(1)(A), I.R.C.;

Commissioner v. Soliman, 506 U.S. 168, 175-177 (1993). 

2. Held, further, the car and truck expenses

incurred by P between his residence and the places

where he conducted religious services and the car and

truck expenses between his residence and the first and

last place of insurance customer contact each day are

not deductible as transportation expenses but are

nondeductible commuting expenses. See secs. 262,

162(a), I.R.C.; Wisconsin Psychiatric Servs. v.

Commissioner, 76 T.C. 839, 849 (1981); Curphey v.

Commissioner, 73 T.C. 766, 777-778 (1980); Heuer v.

Commissioner, 32 T.C. 947, 953 (1959), affd. per curiam

283 F.2d 865 (5th Cir. 1960); Walker v. Commissioner,

101 T.C. 537 (1993), distinguished.

3. Held, further, expenses incurred for meals, in

the absence of overnight lodging, are not deductible as

travel expenses away from home under sec. 162(a)(2),

I.R.C., where the meal expenses incurred are occasioned

by the taxpayer's rests to accommodate a medical

condition. See United States v. Correll, 389 U.S. 299

(1967); Barry v. Commissioner, 54 T.C. 1210 (1970),

affd. per curiam 435 F.2d 1290 (1st Cir. 1970).

Walter R. Strohmaier, pro se.

Robert W. Dillard, for respondent.

OPINION

PARR, Judge: This case was assigned to Special Trial Judge

D. Irvin Couvillion pursuant to section 7443A(b)(3)1 and Rules

180, 181, and 182. The Court agrees with and adopts the Opinion

of the Special Trial Judge, which is set forth below.
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2At trial, petitioner conceded respondent's disallowance of

Schedule C meal expenses of $212 and $113, respectively, for 1993

and 1994. Other adjustments in the notice of deficiency are

computational and will be resolved by the Court's holdings on the

contested issues. These adjustments are increases in

petitioner's self-employment taxes, the deduction allowable for

one-half of self-employment taxes, and the amounts of

petitioner's earned income credit.

 OPINION OF THE SPECIAL TRIAL JUDGE

COUVILLION, Special Trial Judge: Respondent determined

deficiencies of $766 and $1,954 in petitioner's Federal income

taxes for the years 1993 and 1994, respectively.

The issues for decision are: (1) Whether petitioner is

entitled to a home office deduction under section 280A(c) for the

year 1994 in connection with his trade or business activities;

(2) whether petitioner is entitled, under section 162(a), for the

years 1993 and 1994, to deductions for car and truck expenses in

excess of amounts allowed by respondent; and (3) whether

petitioner is entitled, under section 162(a)(2), for the years

1993 and 1994, to deductions for travel expenses in excess of

amounts allowed by respondent.2

Some of the facts were stipulated. Those facts, with the

exhibits annexed thereto, are so found and are incorporated

herein by reference. At the time the petition was filed,

petitioner's legal residence was Lake Wales, Florida.
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Petitioner was engaged as an independent contractor in two

trade or business activities during the years at issue: a

ministerial activity and an insurance sales activity.

The insurance activity consisted of the sales of various

types of insurance to senior citizens. The various categories of

insurance petitioner offered included insurance for long-term

care, supplementary Medicare benefits, home health care,

annuities, and life insurance. Petitioner was affiliated with an

insurance brokerage firm from which petitioner was provided a

customer list of insured persons. From this list, petitioner

serviced policy holders having problems or questions regarding

their coverage, and he endeavored to sell them other coverage

they did not have. Any applications for such insurance were

taken by petitioner, who then forwarded the applications to the

insurance brokerage firm for processing and the ultimate issuance

of insurance by an insurance provider. The insurance brokerage

firm was located approximately 50 miles from petitioner's

residence. Petitioner was not provided an office by the

brokerage firm, nor was he required to report or visit the office

of the brokerage firm. None of petitioner's work was conducted

at the brokerage firm's office. Petitioner worked out of his

home, which was an apartment he rented at Lake Wales, Florida. 

He worked at hours of his choice. Petitioner's means of getting

business was contacting individuals listed on the customer list
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provided by the brokerage firm or responding to individuals who

had service requests on their existing coverage. Petitioner did

not receive or interview clients at his apartment. Instead,

petitioner went out and met with potential clients. Petitioner

did not employ anyone to assist him in his activity. As

petitioner explained at trial:

The agency [the brokerage firm] had sufficient business

on the books that I could cultivate business from my

home by simply looking at the records * * *. I would

make a phone call or I would show up at the person's

house. But when I went to that individual's house, I

already knew what he had. And I had a proposal in my

attache case saying, this is what I'm going to sell

that individual, which was homework done at my home

office.

 * * * * * * *

my position * * * is that the business is a home-based

business, in that the majority of the paperwork, the

grunt work, is done prior to going out to a client's

home. And, because there is no structured territory or

structured requirements, since I am totally

independent, my understanding of the Internal Revenue

Code is that this qualifies as a home business.

Petitioner performed services as a minister for

approximately 6 months each year, essentially during the winter

and spring. Petitioner was not affiliated with a particular

church. His ministerial activity consisted of serving as a

chaplain to a mobile home community located approximately 35

miles from Lake Wales, Florida. That community consisted of

people petitioner referred to as "snowbirds", which he defined as
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people from the northern United States who came to Florida each

year for the winter and spring months. Petitioner conducted

services there twice weekly. Petitioner also taught at First

Baptist Church of Orlando, Florida, weekly and, in addition,

occasionally preached at various churches. All of petitioner's

sermons were prepared at his home office. No services or other

sacerdotal rites were performed at petitioner's apartment, nor

did he ever receive or counsel religious patrons there.

On his Federal income tax returns for 1993 and 1994,

petitioner's income and expenses from his insurance and

ministerial activities were combined and reported on Schedule C,

Profit or Loss From Business. The following income and expenses

were reported:

 1993 1994

Gross income $20,144.89 $30,421

Expenses:

 Advertising $502 $427

 Car & truck expenses 13,990 16,828

 Commissions & fees 661 --

 Legal & professional 179 304

 Office expenses 388 73

 Taxes & licenses 86 --

 Travel 4,106 4,977

 Meals & entertainment:

 80% 274 --

 50% -- 152

 Other expenses -- 2,313 

 Total 20,186.00 25,074

Tentative profit (loss) (41.11) 5,347

Expenses for business use of home -- 532

 Net profit (loss) ($41.11)* $4,815

*Rounded to $42 on return.
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In the notice of deficiency, respondent disallowed the

following expenses:

 1993 1994

Car & truck $1,193 $1,239

Travel 4,056 4,927

 Meals & entertainment 212 113

Expenses for business

 use of home -- 532

As noted earlier, respondent made computational adjustments,

flowing from the above, to petitioner's self-employment taxes,

the deduction for one-half of such taxes, and the earned income

credit claimed by petitioner. As also noted earlier, petitioner

conceded at trial the $212 and $113 disallowed meals and

entertainment expenses claimed respectively for 1993 and 1994.

As shown above, petitioner claimed car and truck expenses of

$13,990 and $16,828, respectively, for 1993 and 1994. On

Schedule C of the return for 1993, petitioner based the $13,990

claimed on 49,302 business miles. Petitioner stated on the

return that he had no commuting mileage that year and 2,594

additional miles for other purposes. In the notice of

deficiency, respondent determined that petitioner had 45,702

business miles for 1993 instead of 49,302 miles claimed on the

return. Respondent allowed a deduction of $12,797 at the rate of

28 cents per mile and disallowed $1,193, the balance of the

amount claimed for 1993. On the 1994 return, petitioner based
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the $16,828 claimed on 57,355 business miles. That same return

also stated that petitioner had no commuting mileage during 1994

and an additional 3,019 miles for other purposes. In the notice

of deficiency, respondent determined that petitioner had 53,755

business miles during 1994 instead of 57,355 miles claimed on the

return. Respondent allowed a deduction of $15,589 at the rate of

29 cents per mile and disallowed $1,239, the balance of the

amount claimed for 1994. For both years, the allowable business

mileage determined by respondent represented a disallowance of

3,600 miles for each year from the amounts claimed by petitioner

on his tax returns. At trial, counsel for respondent stated that

the disallowed mileage represented mileage that respondent

determined to be commuting mileage by petitioner with respect to

his ministerial and insurance activities. As to the insurance

activity, respondent determined that petitioner incurred

commuting mileage from his residence to his first destination and

from his last destination to his residence. The disallowed

commuter mileage also included the mileage from petitioner's

residence to and from the areas where petitioner was involved in

his ministerial activity.

Petitioner has not challenged the formula or the method by

which respondent determined the 3,600 disallowed business miles

for each year at issue. Petitioner contends that his principal

place of business for both the insurance and ministerial
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3The Court notes that the standard mileage rates used by

respondent in allowing petitioner's business mileage were 28

cents and 29 cents per mile, respectively, for 1993 and 1994. 

Petitioner did not challenge the mileage rate used by respondent. 

The 49,302 business miles claimed by petitioner on his 1993

return, at 28 cents per mile, would amount to $13,804.56; yet,

the amount petitioner claimed on his return was $13,990. For

1994, the 57,355 business miles claimed by petitioner on that

return, at 29 cents per mile, would amount to $16,632.95; yet,

the amount claimed by petitioner on his return was $16,828. It

appears to the Court that, since petitioner has not questioned

the allowable mileage rate for each year, either he miscalculated

the amount on his returns or included in his car and truck

expenses other items that were not disclosed or addressed at

trial. These discrepancies were not raised as an issue by

petitioner.

activities was his home; consequently, the disallowed mileage

constituted business mileage.3

The first issue is whether petitioner is entitled to a home

office deduction of $532 for 1994. Petitioner contends his

apartment was his principal place of business. Respondent

disputed this assertion.

Under section 162(a), a taxpayer is permitted to deduct all

ordinary and necessary expenses paid or incurred in carrying on a

trade or business. Under section 280A(c)(1)(A), however,

deductions associated with a home office are generally disallowed

unless the home office was used exclusively and regularly as the

principal place of business of the taxpayer. Respondent does not

dispute that petitioner used a portion of his apartment

exclusively and regularly in his business activities but denies
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that petitioner's residence constituted the principal place of

business for his two activities.

Where a taxpayer's business is conducted in part in the

taxpayer's residence and in part at another location, the

following two primary factors are considered in determining

whether the home office qualifies under section 280A(c)(1)(A) as

the taxpayer's principal place of business: (1) The relative

importance of the functions or activities performed at each

business location, and (2) the amount of time spent at each

location. See Commissioner v. Soliman, 506 U.S. 168, 175-177

(1993).

Whether the functions or activities performed at the home

office are necessary to the business is relevant but not

controlling, and the location at which goods and services are

delivered to customers generally will be regarded as an important

indicator of the principal place of a taxpayer's business, which

must be given great weight and is a principal consideration in

most cases. See id. at 175, 176. The relative importance of

business activities engaged in at the home office may be

substantially outweighed by business activities engaged in at

another location. The Supreme Court has explained as follows:
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If the nature of the business requires that its

services are rendered or its goods are delivered at a

facility with unique or special characteristics, this

is a further and weighty consideration in finding that

it is the delivery point or facility, not the

taxpayer's residence, where the most important

functions of the business are undertaken.

Id. at 176.

Petitioner contends that virtually all the work he did with

respect to his insurance clients was done at home to determine

what insurance coverage a customer had and the additional

coverage such customer might need. His visit to each customer

was to close the deal. As the Court views the situation,

however, the visit by petitioner to each customer to close a

transaction represented the most important function of

petitioner's activity because, no matter how much preparatory

work was done by petitioner at home, none of this work was of any

value unless the customer agreed to buy the insurance proposed by

petitioner. Petitioner made no sales either at home or by

telephone. The visit to each customer was to consummate a

transaction. The consummation of the transaction constituted the

delivery point or the facility at which the goods or services

were delivered. If a customer declined the offered insurance,

all of the preparatory work by petitioner was for naught. There

would be no delivery. In relative terms, therefore, the most

important function or activity of petitioner was his visit to
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each customer where the transaction with such customer was

consummated. The record does not show how many hours he worked

at home compared to the hours he visited his clients. The

preparatory work at petitioner's home, while necessary and

relevant, was not controlling.

With respect to petitioner's ministerial activity,

petitioner's sermons and other services were not offered at his

apartment. The delivery of those services occurred away from his

apartment. While petitioner prepared and researched his topics

or sermons at home, the most significant function of his activity

was the delivery of his services to the places where his patrons

or followers were located. The preparation for his services at

his apartment, while certainly relevant and necessary, was

secondary to the delivery of the services.

The Court, therefore, sustains respondent on the

disallowance of the home office expense claimed by petitioner for

1994.

The second issue is whether petitioner is entitled, under

section 162(a), to deductions for car and truck expenses in

excess of amounts allowed by respondent. As noted earlier,

respondent determined that petitioner incurred 3,600 commuting

miles for each year at issue and, therefore, disallowed car and

truck expenses of $1,193 and $1,239, respectively, for 1993 and

1994.
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It is well settled that, as a general rule, the expenses of

traveling between one's home and his place of business or

employment constitute commuting expenses which are nondeductible,

personal expenses. See sec. 262; Fausner v. Commissioner, 413

U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946);

Feistman v. Commissioner, 63 T.C. 129 (1974); Sullivan v.

Commissioner, 1 B.T.A. 93 (1924).

This Court has previously held that "a taxpayer's cost of

transportation between his residence and local job sites may be

deductible if his residence serves as his 'principal place of

business' and the travel is in the nature of normal and

deductible business travel." Wisconsin Psychiatric Servs. v.

Commissioner, 76 T.C. 839, 849 (1981); see Curphey v.

Commissioner, 73 T.C. 766, 777-778 (1980); Heuer v. Commissioner,

32 T.C. 947, 953 (1959). Petitioner's residence was not his

principal place of business.

The Court notes, however, that, in Walker v. Commissioner,

101 T.C. 537 (1993), the taxpayer was allowed to deduct

transportation expenses incurred between his residence and local,

temporary job sites. In Walker, the taxpayer's residence was

considered his "regular" place of business rather than his

"principal" place of business. However, the conclusion in Walker

was based on a concession of the issue by the Commissioner based

on Rev. Rul. 90-23, 1990-1 C.B. 28. This revenue ruling has
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subsequently been amended to reflect existing case law, as

articulated above. See Rev. Rul. 94-47, 1994-2 C.B. 18. Since

petitioner's residence was not his "principal place of business",

it follows that the expenses relating to the disallowed mileage

for each year constitutes commuting expenses that are not

deductible. Respondent is sustained on this issue.

The third issue is petitioner's entitlement to deductions

for travel expenses for 1993 and 1994 in connection with his

insurance and ministerial activities. Petitioner claimed $4,106

and $4,977, respectively, for 1993 and 1994, for travel expenses. 

In the notice of deficiency, respondent allowed petitioner a

deduction of $50 for each year based on one out-of-town overnight

trip by petitioner each year. Respondent determined that the

disallowed amounts, $4,056 and $4,927, respectively, for 1993 and

1994, did not represent travel away from home, and, therefore,

such amounts were not deductible. Petitioner agreed that, as to

the amounts at issue, he was not away from home overnight and did

not obtain lodging in connection with those expenses. The

disallowed amounts represented costs of meals petitioner incurred

in connection with his two business activities.

Petitioner contends that he incurred the meal expenses

because he suffered with a medical condition, apnea, which

required that he take rest periods during the day. As a result,

his work day, in each of the instances he sustained such
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expenses, was much longer than normal, and he, therefore,

sustained the cost of these meals on his extended work days. 

Petitioner contends that, because he was required to rest during

the course of his work day, he is entitled to a deduction for the

expenses at issue.

Section 162(a)(2) permits the deduction of traveling

expenses, including meals, while away from home in the pursuit of

a trade or business. For a taxpayer to be considered "away from

home" within the meaning of section 162(a)(2), the Supreme Court

has held that the taxpayer must be on a trip requiring sleep or

rest. See United States v. Correll, 389 U.S. 299 (1967). In

Barry v. Commissioner, 54 T.C. 1210 (1970), affd. per curiam 435

F.2d 1290 (1st Cir. 1970), this Court applied the Correll rule in

disallowing expenses for meals claimed by a taxpayer on 1-day

business trips that extended from 16 to 19 hours during which the

taxpayer rested briefly once or twice in his automobile but

always returned home without incurring an expense for lodging. 

This Court held, in Barry, that the rest period required for the

deductibility of travel expenses requires a rest of sufficient

duration in time that necessitates the securing of lodging, and

that a mere pause in the daily work routine does not satisfy the

requirements of section 162(a)(2). The rationale for allowance

of the deduction in such cases is the taxpayer's significantly

higher expenses incurred by reason of the lodging. See United
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States v. Correll, supra at 304-305. On the other hand, where no

lodging expense is incurred, the meal expenses incurred by the

taxpayer do not add to the taxpayer's business expenses because

such expenses result from the sort of rest that anyone can, at

any time, without special arrangement and without special

expense, take in his own automobile or office. See Barry v.

Commissioner, supra at 1213; see also Siragusa v. Commissioner,

T.C. Memo. 1980-68, affd. without published opinion 659 F.2d 1062

(2d Cir. 1981). The fact that petitioner's rests were

necessitated by a medical condition does not render his meal

expenses deductible as travel expenses. In Barry v.

Commissioner, 435 F.2d at 1291, the Court stated:

The Commissioner's rule, known as the overnight rule,

and approved in United States v. Correll, * * *, is

particularly aimed at formulating an objective test

which will obviate individual analysis of countless

factual variations * * *. Nor does [the] taxpayer

qualify as one obliged to sleep or rest simply because

the length of his trip tired him, and he stopped by the

side of the road for a brief nap. * * * The rule

requires a stop of sufficient duration that it would

normally be related to a significant increase in

expenses. * * * [Emphasis added.]

See Chappie v. Commissioner, 73 T.C. 823, 830 (1980). Under

Barry v. Commissioner, supra, the factual variation suggested by

petitioner does not entitle him to a deduction of his travel 
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expenses for 1993 and 1994 in the absence of lodging. Respondent

is sustained on this issue.

 Decision will be entered

 for respondent.