U.S. Supreme Court Blair v. Commissioner, 300 U.S. 5 (1937) Blair v. Commissioner of Internal
Revenue No. 247 Argued January 5,
1937 Decided February 1,
1937 300 U.S.
5 CERTIORARI TO THE CIRCUIT COURT OF
APPEALS FOR THE SEVENTH
CIRCUIT Syllabus 1. A judgment of the Circuit Court of Appeals holding a
beneficiary named in a trust taxable upon trust income
notwithstanding assignments previously made by him, and basing this
conclusion upon the ground that, under the local law, the trust was
a spendthrift trust giving the beneficiary no power to assign, held inapplicable as res judicata in favor of the
Government in proceedings to collect taxes from the same person,
for subsequent years, the situation having been changed meanwhile
by a decision of the state court construing the trust and upholding
the assignments. Tait v. Western Maryland Ry. Co., 289 U. S. 620 ,
distinguished. P. 300 U. S. 8 .

															2. Whether a testamentary trust is a spendthrift trust barring
the voluntary alienation of his interest by the beneficiary
depends Page 300 U. S. 6 upon the law of the State in which the donor resided and in
which the trust was created and the property situated. P. 300 U. S. 9 .

															3. A decision by the intermediate appellate court of Illinois
upholding the right of the life beneficiary of a trust to assign
parts of his interest, in suit brought by the trustees for
instructions and impleading the beneficiary and his assignees, held conclusive of the validity of the assignments. P. 300 U. S. 10 .

															4. In the general application of the Revenue Acts, income tax
liability is attached to ownership. P. 300 U. S. 11 .

															5. Provisions of the Revenue Acts (1921, § 219(a)(d); 1924 and
1926, § 219(a)(b); 1928, § 162(a)(b)) imposing upon the beneficiary
of a trust liability for the tax upon the income "distributable" to
him, refer to the owner of the beneficial interest, whether he was
such initially or becomes such by an assignment valid under the
local law governing the trust. P. 300 U. S. 12 .

															6. Assignments of interests, of specified amounts each year
thereafter, in the net income which the assignor was then or might
thereafter be entitled to receive during his life under a trust, held assignments not merely of the right to receive
income, but of corresponding interests in the trust estate. P. 300 U. S. 12 .

															7. A beneficiary entitled during life to the income of property
held in trust is the owner, not of a chose in action merely, but of
an equitable interest in the corpus of the property, and that
interest, in the absence of a valid restraint upon alienation, he
may assign in part, or as a whole. P. 300 U. S. 13 .

															83 F.2d 655, 662, reversed.

															Certiorari, 299 U.S. 527, to review a judgment which reversed a
decision of the Board of Tax Appeals, 31 B.T.A. 1192, overruling
income tax assessments. Page 300 U. S. 7 MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

															This case presents the question of the liability of a
beneficiary of a testamentary trust for a tax upon the income which
he had assigned to his children prior to the tax years and which
the trustees had paid to them accordingly.

															The trust was created by the will of William Blair, a resident
of Illinois who died in 1899, and was of property located in that
State. One-half of the net income was to be paid to the donor's
widow during her life. His son, the petitioner Edward Tyler Blair,
was to receive the other one-half and, after the death of the
widow, the whole of the net income during his life. In 1923, after
the widow's death, petitioner assigned to his daughter, Lucy Blair
Linn, an interest amounting to $6,000 for the remainder of that
calendar year, and to $9,000 in each calendar year thereafter, in
the net income which the petitioner was then or might thereafter be
entitled to receive during his life. At about the same time, he
made like assignments of interests, amounting to $9,000 in each
calendar year, in the net income of the trust to his daughter Edith
Blair and to his son, Edward Seymour Blair, respectively. In later
years, by similar instruments, he assigned to these children
additional interests, and to his son William McCormick Blair other
specified interests, in the net income. The trustees accepted the
assignments and distributed the income directly to the
assignees.

															The question first arose with respect to the tax year 1923, and
the Commissioner of Internal Revenue ruled that the income was
taxable to the petitioner. The Board of Tax Appeals held the
contrary. 18 B.T.A. 69. The Circuit Court of Appeals reversed the
Board, holding that, under the law of Illinois, the trust was a
spendthrift trust, Page 300 U. S. 8 and the assignments were invalid. Commissioner v.
Blair, 60 F.2d 340. We denied certiorari. 288 U.S. 602.

															Thereupon the trustees brought suit in the superior court of
Cook county, Illinois, to obtain a construction of the will with
respect to the power of the beneficiary of the trust to assign a
part of his equitable interest and to determine the validity of the
assignments he had made. The petitioner and the assignees were made
defendants. The Appellate Court of Illinois, First District, after
a review of the Illinois decisions, decided that the trust was not
a spendthrift trust, and upheld the assignments. Blair v.
Linn, 274 Ill.App. 23. Under the mandate of the appellate
court, the superior court of Cook county entered its decree which
found the assignments to be "voluntary assignments of a part of the
interest of said Edward Tyler Blair in said trust estate" and, as
such, adjudged them to be valid.

															At that time, there were pending before the Board of Tax Appeals
proceedings involving the income of the trust for the years 1924,
1925, 1926, and 1929. The Board received in evidence the record in
the suit in the state court, and, applying the decision of that
court, the Board overruled the Commissioner's determination as to
the petitioner's liability. 31 B.T.A. 1192. The Circuit Court of
Appeals again reversed the Board. That court recognized the binding
effect of the decision of the state court as to the validity of the
assignments, but decided that the income was still taxable to the
petitioner upon the ground that his interest was not attached to
the corpus of the estate, and that the income was not subject to
his disposition until he received it. Commissioner v.
Blair, 83 F.2d 655, 662.

															Because of an asserted conflict with the decision of the state
court, and also with decisions of circuit courts of appeals, we
granted certiorari. October 12, 1936. First. The Government contends that the judgment
relating to the income for 1923 is conclusive in this
proceeding Page 300 U. S. 9 as res judicata. Tait v. Western Maryland Ry.
Co., 289 U. S. 620 .
Petitioner insists that this question was not raised before the
Board of Tax Appeals, and hence was not available before the
Circuit Court of Appeals. General Utilities Co. v.
Helvering, 296 U. S. 200 , 296 U. S. 206 ; Helvering v. Savage, 297 U. S. 106 , 297 U. S. 109 .
The Government respondents that the answers before the Board of Tax
Appeals in the instant case had been filed before the first
decision of the Circuit Court of Appeals was entered, and that,
while the case was heard before the Board without amended
pleadings, the whole matter was actually before the Board and the
question of res judicata was raised by an assignment of
error on the petition for review before the Circuit Court of
Appeals.

															It is not necessary to review the respective contentions upon
this point, as we think that the ruling in the Tait case
is not applicable. That ruling and the reasoning which underlies it
apply where, in the subsequent proceedings, although relating to a
different tax year, the questions presented upon the facts and the
law are essentially the same. Tait v. Western Maryland Ry. Co.,
supra, pp. 289 U. S.
624 -626. Here, after the decision in the first
proceeding, the opinion and decree of the state court created a new
situation. The determination of petitioner's liability for the year
1923 had been rested entirely upon the local law. Commissioner
v. Blair, 60 F.2d 340, 342, 344. The supervening decision of
the state court interpreting that law in direct relation to this
trust cannot justly be ignored in the present proceeding so far as
it is found that the local law is determinative of any material
point in controversy. Compare Freuler v. Helvering, 291 U. S. 35 ; Hubbell v. Helvering, 70 F.2d 668. Second. The question of the validity of the assignments
is a question of local law. The donor was a resident of Illinois,
and his disposition of the property in that State was subject to
its law. By that law, the character Page 300 U. S. 10 of the trust, the nature and extent of the interest of the
beneficiary, and the power of the beneficiary to assign that
interest in whole or in part are to be determined. The decision of
the state court upon these questions is final. Spindle v.
Shreve, 111 U. S. 542 , 111 U. S.
547 -548; Uterhart v. United States, 240 U. S. 598 , 240 U. S. 603 ; Poe v. Seaborn, 282 U. S. 101 , 282 U. S. 110 ; Freuler v. Helvering, supra, p. 291 U. S. 45 . It
matters not that the decision was by an intermediate appellate
court. Compare Graham v. White-Phillips Co., 296 U. S.
27 . In this instance, it is not necessary to go beyond
the obvious point that the decision was in a suit between the
trustees and the beneficiary and his assignees, and the decree
which was entered in pursuance of the decision determined as
between these parties the validity of the particular assignments.
Nor is there any basis for a charge that the suit was collusive,
and the decree inoperative. Freuler v. Helvering, supra. The trustees were entitled to seek the instructions of the court
having supervision of the trust. That court entertained the suit,
and the appellate court, with the first decision of the Circuit
Court of Appeals before it, reviewed the decisions of the Supreme
Court of the State and reached a deliberate conclusion. To derogate
from the authority of that conclusion and of the decree it
commanded, so far as the question is one of state law, would be
wholly unwarranted in the exercise of federal jurisdiction.

															In the face of this ruling of the state court, it is not open to
the Government to argue that the trust "was, under the Illinois
law, a spendthrift trust." The point of the argument is that, the
trust being of that character, the state law barred the voluntary
alienation by the beneficiary of his interest. The state court held
precisely the contrary. The ruling also determines the validity of
the assignment by the beneficiary of parts of his interest. That
question was necessarily presented and expressly decided. Page 300 U. S. 11 Third. The question remains whether, treating the
assignments as valid, the assignor was still taxable upon the
income under the federal income tax act. That is a federal
question.

															Our decisions in Lucas v. Earl, 281 U.
S. 111 , and Burnet v. Leininger, 285 U.
S. 136 , are cited. In the Lucas case, the
question was whether an attorney was taxable for the whole of his
salary and fees earned by him in the tax years, or only upon
one-half by reason of an agreement with his wife by which his
earnings were to be received and owned by them jointly. We were of
the opinion that the case turned upon the construction of the
taxing act. We said that

															"the statute could tax salaries to those who earned them, and
provide that the tax could not be escaped by anticipatory
arrangements and contracts, however skilfully devised, to prevent
the salary when paid from vesting even for a second in the man who
earned it."

															That was deemed to be the meaning of the statute as to
compensation for personal service, and the one who earned the
income was held to be subject to the tax. In Burnet v.
Leininger, supra, a husband, a member of a firm, assigned
future partnership income to his wife. We found that the revenue
act dealt explicitly with the liability of partners as such. The
wife did not become a member of the firm; the act specifically
taxed the distributive share of each partner in the net income of
the firm, and the husband, by the fair import of the act, remained
taxable upon his distributive share. These cases are not in point.
The tax here is not upon earnings which are taxed to the one who
earns them. Nor is it a case of income attributable to a taxpayer
by reason of the application of the income to the discharge of his
obligation. Old Colony Trust Co. v. Commissioner, 279 U. S. 716 ; Douglas v. Willcuts, 296 U. S. 1 , 296 U. S. 9 ; Helvering v. Stokes, 296 U. S. 551 ; Helvering v. Schweitzer, 296 U. S. 551 ; Helvering v. Coxey, 297 U.S. Page 300 U. S. 12 694. See also Burnet v. Wells, 289 U.
S. 670 , 289 U. S. 677 .
There is here no question of evasion or of giving effect to
statutory provisions designed to forestall evasion; or of the
taxpayer's retention of control. Corliss v. Bowers, 281 U. S. 376 ; Burnet v. Guggenheim, 288 U. S. 280 .

															In the instant case, the tax is upon income as to which, in the
general application of the revenue acts, the tax liability attaches
to ownership. See Poe v. Seaborn, supra; Hoeper v. Tax
Commission, 284 U. S. 206 .

															The Government points to the provisions of the revenue acts
imposing upon the beneficiary of a trust the liability for the tax
upon the income distributable to the beneficiary. * But the term is
merely descriptive of the one entitled to the beneficial interest.
These provisions cannot be taken to preclude valid assignments of
the beneficial interest, or to affect the duty of the trustee to
distribute income to the owner of the beneficial interest, whether
he was such initially or becomes such by valid assignment. The one
who is to receive the income as the owner of the beneficial
interest is to pay the tax. If, under the law governing the trust,
the beneficial interest is assignable, and if it has been assigned
without reservation, the assignee thus becomes the beneficiary, and
is entitled to rights and remedies accordingly. We find nothing in
the revenue acts which denies him that status.

															The decision of the Circuit Court of Appeals turned upon the
effect to be ascribed to the assignments. The court held that the
petitioner had no interest in the corpus of the estate, and could
not dispose of the income until he received it. Hence, it was said
that "the income was his," and his assignment was merely a
direction to pay over to others what was due to himself. The
question was considered to involve "the date when the income became
transferable." 83 F.2d 655 at 662. The Page 300 U. S. 13 Government refers to the terms of the assignment -- that it was
of the interest in the income "which the said party of the first
part now is, or may hereafter be, entitled to receive during his
life from the trustees." From this, it is urged that the
assignments "dealt only with a right to receive the income," and
that "no attempt was made to assign any equitable right, title or
interest in the trust itself." This construction seems to us to be
a strained one. We think it apparent that the conveyancer was not
seeking to limit the assignment so as to make it anything less than
a complete transfer of the specified interest of the petitioner as
the life beneficiary of the trust, but that, with ample caution, he
was using words to effect such a transfer. That the state court so
construed the assignments appears from the final decree which
described them as voluntary assignments of interests of the
petitioner "in said trust estate," and it was in that aspect that
petitioner's right to make the assignments was sustained.

															The will creating the trust entitled the petitioner during his
life to the net income of the property held in trust. He thus
became the owner of an equitable interest in the corpus of the
property. Brown v. Fletcher, 235 U.
S. 589 , 235 U. S.
598 -599; Irwin v. Gavit, 268 U.
S. 161 , 268 U. S.
167 -168; Senior v. Braden, 295 U.
S. 422 , 295 U. S. 432 ; Merchants' Loan & Trust Co. v. Patterson, 308 Ill.
519, 530, 139 N.E. 912. By virtue of that interest, he was entitled
to enforce the trust, to have a breach of trust enjoined, and to
obtain redress in case of breach. The interest was present property
alienable like any other, in the absence of a valid restraint upon
alienation. Commissioner v. Field, 42 F.2d 820, 822; Shanley v. Bowers, 81 F.2d 13, 15. The beneficiary may
thus transfer a part of his interest. as well as the whole. See Restatement of the Law of Trusts, §§ 130, 132 et
seq. The assignment of the beneficial interest is not the
assignment of a chose in action. but of the "right, title, and Page 300 U. S. 14 estate in and to property." Brown v. Fletcher, supra; Senior
v. Braden, supra. See Bogert, Trusts and Trustees,
vol. 1, § 183, pp. 516, 517; 17 Columbia Law Review, 269, 273, 289,
290.

															We conclude that the assignments were valid, that the assignees
thereby became the owners of the specified beneficial interests in
the income, and that, as to these interests, they, and not the
petitioner, were taxable for the tax years in question. The
judgment of the Circuit Court of Appeals is reversed, and the cause
is remanded with direction to affirm the decision of the Board of
Tax Appeals. It is so ordered. * Revenue Acts of 1921, § 219(a)(d), 42 Stat. 246; 1924 and
1926, § 219(a)(b), 43 Stat. 275, 44 Stat. 32; 1928, §
162(a)(b).


U.S. Supreme Court Commissioner v. Flowers, 326
U.S. 465 (1946) Commissioner v.
Flowers No. 145 Argued December 11, 12,
1945 Decided January 2,
1946 326
U.S. 465 CERTIORARI TO THE CIRCUIT COURT OF
APPEALS FOR THE FIFTH
CIRCUIT Syllabus 1. Under § 23(a)(1)(A) of the Internal Revenue Code, authorizing
in computing income tax the deduction of traveling expenses
incurred in the pursuit of a trade or business, as interpreted by §
19.23(a)-2 of Treasury Regulations 103, traveling expenses of an
employee resulting from the fact that he chooses for reasons of
personal convenience to maintain a residence in a city other than
that in which his post of duty is located are not deductible as
travel expenses in pursuit of business. P. 326 U. S.
473 .

															2. Traveling expenses in pursuit of business, within the meaning
of § 23(a)(1)(A) of the Internal Revenue Code, can arise only when
the employer's business forces the taxpayer to travel and live
temporarily at some place other than where his business
headquarters are located, thereby advancing the interests of the
employer. The exigencies of business, rather than the personal
conveniences and necessities of the traveler, must be the
motivating factor. P. 326 U. S.
474 .

															3. The interpretation given by § 19.23(a)-2 of Treasury
Regulations 103 to the provision of § 23(a)(1)(A) of the Internal
Revenue Code, which is precisely the same as that given to
identical provisions of prior and subsequent Revenue Acts, must be
deemed to have legislative approval, and to have the force of law.
P. 326 U. S.
469 . Page 326 U. S. 466 4. Whether particular expenses are deductible as traveling
expenses under § 23(a)(1)(A) of the Internal Revenue Code, as
interpreted by § 19.23(a)-2 of Treasury Regulations 103, is in most
instances purely a question of fact, upon which the Tax Court's
inferences and conclusions should not be disturbed by an appellate
court. P. 326 U. S.
470 .

															148 F.2d 163, reversed.

															Certiorari, post, p. 701, to review the reversal of a
decision of the Tax Court which sustained the Commissioner's
disallowance of certain deductions in computing the taxpayer's
income tax.

															MR. JUSTICE MURPHY delivered the opinion of the Court.

															This case presents a problem as to the meaning and application
of the provision of s 23(a)(1)(A) of the Internal Revenue Code,
[ Footnote 1 ] allowing a
deduction for income Page 326 U. S. 467 tax purposes of "traveling expenses (including the entire amount
expended for meals and lodging) while away from home in the pursuit
of a trade or business."

															The taxpayer, a lawyer, has resided with his family in Jackson,
Mississippi, since 1903. There, he has paid taxes, voted, schooled
his children, and established social and religious connections. He
built a house in Jackson nearly thirty years ago, and at all times
has maintained it for himself and his family. He has been connected
with several law firms in Jackson, one of which he formed and which
has borne his name since 1922.

															In 1906, the taxpayer began to represent the predecessor of the
Gulf, Mobile & Ohio Railroad, his present employer. He acted as
trial counsel for the railroad throughout Mississippi. From 1918
until 1927, he acted as special counsel for the railroad in
Mississippi. He was elected general solicitor in 1927, and
continued to be elected to that position each year until 1930, when
he was elected general counsel. Thereafter, he was annually elected
general counsel until September, 1940, when the properties of the
predecessor company and another railroad were merged and he was
elected vice-president and general counsel of the newly formed
Gulf, Mobile & Ohio Railroad.

															The main office of the Gulf, Mobile & Ohio Railroad is in
Mobile, Alabama, as was also the main office of its predecessor.
When offered the position of general solicitor in 1927, the
taxpayer was unwilling to accept it if it required him to move from
Jackson to Mobile. He had established himself in Jackson both
professionally and personally, and was not desirous of moving away.
As a result, an arrangement was made between him and the railroad
whereby he could accept the position and continue to reside in
Jackson on condition that he pay his traveling expenses between
Mobile and Jackson and pay his living expenses in both places. This
arrangement permitted the taxpayer to determine for himself the
amount Page 326 U. S. 468 of time he would spend in each of the two cities, and was in
effect during 1939 and 1940, the taxable years in question.

															The railroad company provided an office for the taxpayer in
Mobile, but not in Jackson. When he worked in Jackson, his law firm
provided him with office space, although he no longer participated
in the firm's business or shared in its profits. He used his own
office furniture and fixtures at this office. The railroad,
however, furnished telephone service and a typewriter and desk for
his secretary. It also paid the secretary's expenses while in
Jackson. Most of the legal business of the railroad was centered in
or conducted from Jackson, but this business was handled by local
counsel for the railroad. The taxpayer's participation was advisory
only, and was no different from his participation in the railroad's
legal business in other areas.

															The taxpayer's principal post of business was at the main office
in Mobile. However, during the taxable years of 1939 and 1940, he
devoted nearly all of his time to matters relating to the merger of
the railroads. Since it was left to him where he would do his work,
he spent most of his time in Jackson during this period. In
connection with the merger, one of the companies was involved in
certain litigation in the federal court in Jackson, and the
taxpayer participated in that litigation.

															During 1939, he spent 203 days in Jackson and 66 in Mobile,
making 33 trips between the two cities. During 1940, he spent 168
days in Jackson and 102 in Mobile, making 40 trips between the two
cities. The railroad paid all of his traveling expenses when he
went on business trips to points other than Jackson or Mobile. But
it paid none of his expenses in traveling between these two points
or while he was at either of them.

															The taxpayer deducted $900 in his 1939 income tax return and
$1,620 in his 1940 return as traveling expenses Page 326 U. S. 469 incurred in making trips from Jackson to Mobile and as
expenditures for meals and hotel accommodations while in Mobile.
[ Footnote 2 ] The Commissioner
disallowed the deductions, which action was sustained by the Tax
Court. But the Fifth Circuit Court of Appeals reversed the Tax
Court's judgment, 148 F.2d 163, and we granted certiorari because
of a conflict between the decision below and that reached by the
Fourth Circuit Court of Appeals in Barnhill v.
Commissioner, 148 F.2d 913.

															The portion of § 23(a)(1)(A) authorizing the deduction of
"traveling expenses (including the entire amount expended for meals
and lodging) while away from home in the pursuit of a trade or
business" is one of the specific examples given by Congress in that
section of "ordinary and necessary expenses paid or incurred during
the taxable year in carrying on any trade or business." It is to be
contrasted with the provision of § 24(a)(1) of the Internal Revenue
Code, disallowing any deductions for "personal, living, or family
expenses." And it is to be read in light of the interpretation
given it by Sec.19.23(a)-2 of Treasury Regulations 103, promulgated
under the Internal Revenue Code. This interpretation, which is
precisely the same as that given to identical traveling expense
deductions authorized by prior and successive Revenue Acts,
[ Footnote 3 ] is deemed to
possess implied legislative approval, and to have the effect of
law. Helvering v. Winmill, 305 U. S.
79 ; Boehm v. Commissioner, 326 U.
S. 287 . In pertinent part, this interpretation states
that

															"Traveling expenses, as ordinarily Page 326 U. S. 470 understood, include railroad fares and meals and lodging. If the
trip is undertaken for other than business purposes, the railroad
fares are personal expenses, and the meals and lodging are living
expenses. If the trip is solely on business, the reasonable and
necessary traveling expenses, including railroad fares, meals, and
lodging, are business expenses. . . . Only such expenses as are
reasonable and necessary in the conduct of the business and
directly attributable to it may be deducted. . . . Commuters' fares
are not considered as business expenses, and are not
deductible."

															Three conditions must thus be satisfied before a traveling
expense deduction may be made under § 23(a)(1)(A):

															(1) The expense must be a reasonable and necessary traveling
expense, as that term is generally understood. This includes such
items as transportation fares and food and lodging expenses
incurred while traveling.

															(2) The expense must be incurred "while away from home."

															(3) The expense must be incurred in pursuit of business. This
means that there must be a direct connection between the
expenditure and the carrying on of the trade or business of the
taxpayer or of his employer. Moreover, such an expenditure must be
necessary or appropriate to the development and pursuit of the
business or trade.

															Whether particular expenditures fulfill these three conditions
so as to entitle a taxpayer to a deduction is purely a question of
fact in most instances. See Commissioner v. Heininger, 320 U. S. 467 , 320 U. S. 475 .
And the Tax Court's inferences and conclusions on such a factual
matter, under established principles, should not be disturbed by an
appellate court. Commissioner v. Scottish American Co., 323 U. S. 119 ; Dobson v. Commissioner, 320 U. S. 489 .

															In this instance, the Tax Court, without detailed elaboration,
concluded that

															"The situation presented in this Page 326 U. S. 471 proceeding is, in principle, no different from that in which a
taxpayer's place of employment is in one city and, for reasons
satisfactory to himself, he resides in another."

															It accordingly disallowed the deductions on the ground that they
represent living and personal expenses, rather than traveling
expenses incurred while away from home in the pursuit of business.
The court below accepted the Tax Court's findings of fact, but
reversed its judgment on the basis that it had improperly construed
the word "home" as used in the second condition precedent to a
traveling expense deduction under § 23(a)(1)(A). The Tax Court, it
was said, erroneously construed the word to mean the post, station,
or place of business where the taxpayer was employed -- in this
instance, Mobile -- and thus erred in concluding that the
expenditures in issue were not incurred "while away from home." The
Court below felt that the word was to be given no such "unusual" or
"extraordinary" meaning in this statute, that it simply meant "that
place where one in fact resides" or "the principal place of abode
of one who has the intention to live there permanently." 148 F.2d
at 164. Since the taxpayer here admittedly had his home, as thus
defined, in Jackson, and since the expenses were incurred while he
was away from Jackson, the deduction was permissible.

															The meaning of the word "home" in § 23(a)(1)(A) with reference
to a taxpayer residing in one city and working in another has
engendered much difficulty and litigation. 4 Mertens, Law of
Federal Income Taxation (1942) § 25.82. The Tax Court [ Footnote 4 ] and the administrative Page 326 U. S. 472 rulings [ Footnote 5 ] have
consistently defined it as the equivalent of the taxpayer's place
of business. See Barnhill v. Commissioner, supra. On the
other hand, the decision below and Wallace v.
Commissioner, 144 F.2d 407, have flatly rejected that view,
and have confined the term to the taxpayer's actual residence. See also Coburn v. Commissioner, 138 F.2d 763.

															We deem it unnecessary here to enter into or to decide this
conflict. The Tax Court's opinion, as we read it, was grounded
neither solely nor primarily upon that agency's conception of the
word "home." Its discussion was directed mainly toward the relation
of the expenditures to the railroad's business, a relationship
required by the third condition of the deduction. Thus, even if the
Tax Court's definition of the word "home" was implicit in its
decision, and even if that definition was erroneous, its judgment
must be sustained here if it properly concluded that the necessary
relationship between the expenditures and the railroad's business
was lacking. Failure to satisfy any one of the three conditions
destroys the traveling expense deduction.

															Turning our attention to the third condition, this case is
disposed of quickly. There is no claim that the Tax Court
misconstrued this condition or used improper standards in applying
it. And it is readily apparent from the Page 326 U. S. 473 facts that its inferences were supported by evidence and that
its conclusion that the expenditures in issue were nondeductible
living and personal expenses was fully justified.

															The facts demonstrate clearly that the expenses were not
incurred in the pursuit of the business of the taxpayer's employer,
the railroad. Jackson was his regular home. Had his post of duty
been in that city, the cost of maintaining his home there and of
commuting or driving to work concededly would be nondeductible
living and personal expenses lacking the necessary direct relation
to the prosecution of the business. The character of such expenses
is unaltered by the circumstance that the taxpayer's post of duty
was in Mobile, thereby increasing the costs of transportation,
food, and lodging. Whether he maintained one abode or two, whether
he traveled three blocks or three hundred miles to work, the nature
of these expenditures remained the same.

															The added costs in issue, moreover, were as unnecessary and
inappropriate to the development of the railroad's business as were
his personal and living costs in Jackson. They were incurred solely
as the result of the taxpayer's desire to maintain a home in
Jackson while working in Mobile, a factor irrelevant to the
maintenance and prosecution of the railroad's legal business. The
railroad did not require him to travel on business from Jackson to
Mobile, or to maintain living quarters in both cities. Nor did it
compel him, save in one instance, to perform tasks for it in
Jackson. It simply asked him to be at his principal post in Mobile
as business demanded and as his personal convenience was served,
allowing him to divide his business time between Mobile and Jackson
as he saw fit. Except for the federal court litigation, all of the
taxpayer's work in Jackson would normally have been performed in
the headquarters at Mobile. The fact that he traveled frequently
between the two cities and incurred Page 326 U. S. 474 extra living expenses in Mobile, while doing much of his work in
Jackson, was occasioned solely by his personal propensities. The
railroad gained nothing from this arrangement except the personal
satisfaction of the taxpayer.

															Travel expenses in pursuit of business within the meaning of §
23(a)(1)(A) could arise only when the railroad's business forced
the taxpayer to travel and to live temporarily at some place other
than Mobile, thereby advancing the interests of the railroad.
Business trips are to be identified in relation to business demands
and the traveler's business headquarters. The exigencies of
business, rather than the personal conveniences and necessities of
the traveler, must be the motivating factors. Such was not the case
here.

															It follows that the court below erred in reversing the judgment
of the Tax Court. Reversed. MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.

															[ Footnote 1 ]

															26 U.S.C. § 23(a)(1)(A), as amended, 56 Stat. 819.

															"§ 23. DEDUCTIONS FROM GROSS INCOME."

															"In computing net income there shall be allowed as
deductions:"

															"(a) Expenses. --"

															"(1) Trade or business expenses. --"

															"(A) In general. -- All the ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
any trade or business, including a reasonable allowance for
salaries or other compensation for personal services actually
rendered; traveling expenses (including the entire amount expended
for meals and lodging) while away from home in the pursuit of a
trade or business, and rentals or other payments required to be
made as a condition to the continued use or possession, for
purposes of the trade or business, of property to which the
taxpayer has not taken or is not taking title or in which he has no
equity."

															[ Footnote 2 ]

															No claim for deduction was made by the taxpayer for the amounts
spent in traveling from Mobile to Jackson. He also took trips
during the taxable years to Washington, New York, New Orleans,
Baton Rouge, Memphis, and Jackson (Tenn.), which were apparently in
the nature of business trips for which the taxpayer presumably was
reimbursed by the railroad. No claim was made in regard to
them.

															[ Footnote 3 ]

															Article 23(a)-2 of Regulations 101, 94, 86; Article 122 of
Regulations 77 and 74; Article 102 of Regulations 69 and 65;
Article 101(a) of Regulations 62.

															[ Footnote 4 ] Bixler v. Commissioner, 5 B.T.A. 1181; Griesemer v.
Commissioner, 10 B.T.A. 386; Brown v. Commissioner, 13 B.T.A. 832; Duncan v. Commissioner, 17 B.T.A. 1088; Peters v. Commissioner, 19 B.T.A. 901; Lindsay v.
Commissioner, 34 B.T.A. 840; Powell v. Commissioner, 34 B.T.A. 655; Tracy v. Commissioner, 39 B.T.A. 578; Priddy v. Commissioner, 43 B.T.A. 18; Schurer v.
Commissioner, 3 T.C. 544; Gustafson v. Commissioner, 3 T.C. 998.

															[ Footnote 5 ]

															Section 19.23(a)-2 of Treasury Regulations 103 does not attempt
to define the word "home," although the Commissioner argues that
the statement therein contained to the effect that commuters' fares
are not business expenses, and are not deductible "necessarily
rests on the premise that home,' for tax purposes, is at the
locality of the taxpayer's business headquarters." Other
administrative rulings have been more explicit in treating the
statutory home as the abode at the taxpayer's regular post of duty. See, e.g., O.D. 1021, 5 Cum.Bull. 174 (1921); I.T. 1264,
I-1 Cum.Bull. 122 (1922); I.T. 3314, 1939-2 Cum.Bull. 152; G.C.M.
23672, 1943 Cum.Bull. 66. MR. JUSTICE RUTLEDGE, dissenting.

															I think the judgment of the Court of Appeals should be affirmed.
When Congress used the word "home" in § 23 of the Code, I do not
believe it meant "business headquarters." And, in my opinion, this
case presents no other question.

															Congress allowed the deduction for "traveling expenses
(including the entire amount expended for meals and lodging) while
away from home in the pursuit of a trade or business." Treasury
Regulations 103, § 19.23(a)-1, are to the same effect, with the
word "solely" added after "home." Section 19.23(a)-2 also provides:
"Commuters' fares are not considered as business expenses and are
not deductible." By this decision, the latter regulation is Page 326 U. S. 475 allowed, in effect, to swallow up the deduction for many
situations where the regulation has no fit application.

															Respondent's home was in Jackson, Mississippi, in every sense,
unless for applying § 23. There, he maintained his family, with his
personal, political, and religious connections; schooled his
children; paid taxes, voted, and resided over many years. There too
he kept hold upon his place as a lawyer, though not substantially
active in practice otherwise than to perform his work as general
counsel for the railroad. This required his presence in Mobile,
Alabama, for roughly a third of his time. The remainder he spent in
Jackson at the same work, except for the time he was required to
travel to points other than Mobile.

															The company's principal offices were there, including one set
aside for respondent's use. But the bulk of its trackage was in
Mississippi, and much of its legal work, with which he was
concerned, was done there. His choice to keep his home in Jackson
must have been affected by this fact, although it was motivated
chiefly by more purely personal considerations. It is doubtful
indeed, though perhaps not material, whether, by not moving to
Mobile, he did not save the Government from larger deductions on
account of traveling expense than those he claimed.

															There is no question, therefore, but that respondent's home was
in Jackson for every purpose, unless for the single one of applying
§ 23. Nor is it in doubt that he traveled from Jackson to Mobile
and return, as he claimed, or that he spent the sums deducted for
that purpose, including meals and lodging. Neither is it denied, as
matter of fact, that his sole reason for going to Mobile was to
perform his work as it required his presence there, or that he
returned to his home in Jackson periodically when his duties no
longer required him to be in Mobile.

															I think this makes a case squarely within the statute and the
regulations. But the Tax Court ruled that the claimed deductions
were "personal, living, or family expenses." Page 326 U. S. 476 Because the taxpayer elected to keep his home in Jackson, rather
than move to Mobile, and because his employer did not undertake to
pay these expenses, it viewed the case as being the same as if he
had moved to Mobile. In that event, it said, he would have been
required to bear the expenses of his own meals and lodging. This is
obvious, even though the "as if" conclusion does not follow. The
court went on, however, to give the further reason for it:

															"The situation . . . is, in principle, no different from that in
which a taxpayer's place of employment is in one city and, for
reasons satisfactory to himself, he resides in another."

															It seems questionable whether, in so ruling, the Tax Court has
not confused the taxpayer's principal place of employment with his
employer's. For, on the facts, Jackson, rather than Mobile, would
seem more appropriately to be found his business headquarters. But,
regardless of that, the authorities cited [ Footnote 2/1 ] and the Government's supporting argument
show that the case was regarded as, in essence, the commuter's,
excepted by the regulations.

															Apart from this ruling, the Tax Court made no finding, of fact
or law, that respondent was not engaged "in the pursuit of a trade
or business;" that he was not "away Page 326 U. S. 477 from home;" that the expenses were not "business expenses" or
"business traveling expenses;" or that they were not "ordinary and
necessary." Yet, by a merry-go-round argument [ Footnote 2/2 ] which always comes back to rest on
the idea that "home" means "business headquarters," the Government
seeks to inject such issues and findings, including a Dobson contention, into the Tax Court's determination. I
think there was only one issue -- a question of law requiring
construction of the statute as to the meaning of the word "home" --
and, if that is resolved against the Government, the Tax Court's
judgment has no other foundation on which to stand. Every other
contention falls when this one does. All stand if it is valid.

															I agree with the Court of Appeals that, if Congress had meant
"business headquarters," and not "home," it would have said
"business headquarters." When it used "home" instead, I think it
meant home in everyday parlance, not in some twisted special
meaning of "tax home" or "tax headquarters." [ Footnote 2/3 ] I find no purpose stated or implied in the
Act, the regulations, or the legislative history to support such a
distortion or to use § 23 as a lever to force people to move their
homes to the locality where their Page 326 U. S. 478 employer's business headquarters may be, although their own work
may be done as well in major part at home. The only stated purpose,
and it is clearly stated, not in words of art, is to relieve the
tax burden when one is away from home on business.

															The Government relies on administrative construction, by the
Commissioner and the Tax Court, and says that, unless this is
accepted, the Act creates tax inequality. If so, it is inequality
created by Congress, and it is not for the Commissioner or the Tax
Court, by administrative reconstruction, to rewrite what Congress
has written or to correct its views of equality. Moreover, in my
opinion, the inequity, if any, comes not from the statute or the
regulation, but from the construction which identifies petitioner
with a commuter.

															That word too has limitations unless it also is made a tool for
rewriting the Act. The ordinary, usual connotation, cf. 21
I.C.C. 428; Pennsylvania R. Co. v. Towers, 245 U. S.
6 , 245 U. S. 12 ,
does not include irregular, although frequent journeys of 350
miles, requiring Pullman accommodations and some twelve to fifteen
hours, one way.

															Congress gave the deduction for traveling away from home on
business. The commuter's case, rightly confined, does not fall in
this class. One who lives in an adjacent suburb or City and by
usual modes of commutation can work within a distance permitting
the daily journey and return, with time for the day's work and a
period at home, clearly can be excluded from the deduction on the
basis of the section's terms equally with its obvious purpose. But
that is not true if "commuter" is to swallow up the deduction by
the same sort of construction which makes "home" mean "business
headquarters" of one's employer. If the line may be extended
somewhat to cover doubtful cases, it need not be lengthened to
infinity or to cover cases as far removed from the prevailing
connotation of Page 326 U. S. 479 commuter as this one. Including it pushes "commuting" too far,
even for these times of rapid transit. [ Footnote 2/4 ]

															Administrative construction should have some bounds. It exceeds
what are legitimate when it reconstructs the statute to nullify or
contradict the plain meaning of nontechnical terms not artfully
employed. Moreover, in this case, the matter has been held in
suspension by litigation with varying results [ Footnote 2/5 ] and apparent qualification by the Tax
Court consequent upon some of the decisions. [ Footnote 2/6 ]

															By construing "home" as "business headquarters;" by reading
"temporarily" as "very temporarily" into § 23; by bringing down
"ordinary and necessary" from its first sentence into its second;
[ Footnote 2/7 ] by finding
"inequity" where Congress has said none exists; by construing
"commuter" to cover long distance, irregular travel, and by
conjuring Page 326 U. S. 480 from the "statutory setting" a meaning at odds with the plain
wording of the clause, the Government makes over understandable
ordinary English into highly technical tax jargon. There is enough
of this in the tax laws inescapably, without adding more in the
absence of either compulsion or authority. The arm of the tax
gatherer reaches far. In my judgment, it should not go the length
of this case. Congress has revised § 23 once to overcome niggardly
construction. [ Footnote 2/8 ] It
should not have to do so again.

															[ Footnote 2/1 ] Frank H. Sullivan, 1 B.T.A. 93; Mort L.
Bixler, 5 B.T.A. 1181; Jennie A. Peters, 19 B.T.A.
901; Walter M. Priddy, 43 B.T.A. 18.

															The Sullivan case illustrates the typical commuter
situation. The Peters case illustrates the extension of
that ruling to greater distances and irregular travel.

															Recent decisions, however, where the traveling distance is
great, appear to go on the theory, presented in the instant case,
that the word "home" within the meaning of § 23(a)(1) means
"principal place of business." See Tax Court Memorandum
Opinion, Dec. 13,853(M), 1 C.C.H. Tax Serv.1945, p. 1268. Thus,
Mertens says that the disallowance of traveling expenses to one's
place of business "is based primarily on the requirement that the
traveling expenses include only amounts expended while away
from home.'" 4 Mertens, Law of Federal Income Taxation
478. [ Footnote 2/2 ]

															Thus, the assertion that the deductions were "not even business' expenses" is brought back to the meaning of "home" by
the given reason that "the maintenance of more than one dwelling
place manifestly is not essential to the prosecution of a
business." And this, in turn, completes the circle by resting on
the conclusion that the taxpayer had two dwelling places, one in
Mobile (presumably the hotel or hotels where he stopped) "where he
resided during the periods the living expenses in question were
incurred," the other in Jackson "where he resided during other
periods." Likewise, the conclusion that the deductions were not
"ordinary and necessary expenses," see 326
U.S. 465 fn2/8|>note 8, depends on the view that Jackson was
not "home," but Mobile was. So with the assertion that the "Mobile
living expenses" were not "business traveling expenses." [ Footnote 2/3 ] Cf. 79 U. S. Lott, 12 Wall. 204; Addison v. Holly Hill Co., 322 U.
S. 607 , 322 U. S.
617 -618.

															[ Footnote 2/4 ]

															Conceivably men soon may live in Florida or California and fly
daily to work in New York and back. Possibly they will be regarded
as commuters when that day comes. But, if so, that is not this case
and, in any event, neither situation was comprehended by Congress
when § 23 was enacted.

															[ Footnote 2/5 ] See Wallace v. Commissioner, 144 F.2d 407; Coburn
v. Commissioner, 138 F.2d 763, and the decision now in review,
148 F.2d 163, with which compare Barnhill v. Commissioner and
Winborne v. Commissioner, 148 F.2d 913.

															[ Footnote 2/6 ] See Harry F. Schurer, 3 T.C. 544; Charles G.
Gustafson, 3 T.C. 998; Mortimer M. Mahony, C.C.H.Tax
Ct.Serv., Dec. 14,508(M), April 10, 1945; Charles J.
McLennan, C.C.H.Tax Ct.Serv., Dec. 14,644(M), June 25, 1945; Robert S. Shelley, C.C.H.Tax Ct.Serv., Dec. 15,642(M),
June 25, 1945.

															[ Footnote 2/7 ]

															The language is:

															"All the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on any trade or business, including a
reasonable allowance for salaries or other compensation for
personal services actually rendered; traveling expenses (including
the entire amount expended for meals and lodging) while away from
home in the pursuit of a trade or business. . . ."

															§ 23(a)(1)(A), Internal Revenue Code.

															[ Footnote 2/8 ]

															The Treasury Regulations in force in 1920 allowed deduction of
only the excess of the cost of meals and lodging away from home
over the cost at home, and under earlier regulations none of this
expense was allowed. Congress inserted the words "all" and "entire"
in the 1921 Act to overcome this ruling.