The turtle is not often referred to in tax discussions, but the Tax Court compared the taxpayer to a turtle in rendering its decision in the case of Jacobs v. Commissioner, TC Summary Opinion 2015-3.

Mr. Jacobs was a long haul truck driver, spending much of his time on the road. When he wasn’t on the road he considered his home to be in Cottage Grove, Minnesota where he stayed in the guest room of his long time friend. His friend and he had grown up in Israel and immigrated to the United States.

Mr. Jacobs claimed per diem meal expenses on his personal return based on his time on the road. Generally a taxpayer can obtain a deduction for travel expenses while away from home [IRC §162(a)(2)] but no deduction is allowed for personal, family and living expenses [IRC §262(a)].

Obviously, each individual needs to eat which would generally make this into a clearly personal expense. However the law recognizes that a taxpayer away from home will incur duplicative personal expenses and may get with higher cost expenses. Thus the law allows a deduction for travel related expenses (such as meals) so long as the taxpayer is away from home.

But this home is not necessarily what the taxpayer may see as his home (or even what other portions of the IRC will see as such—see the special “abode” rules of §911(d)(3) for example that apply in the case of foreign earned income exclusion). Rather, IRC §162(a)(2) requires the individual to be traveling away from his/her tax home.

The tax home for §162(a)(2) is normally the taxpayer’s principal place of employment. But what about a taxpayer whose principal place of employment is on the road, as is the case with Mr. Jacobs?

In that case, the court notes:

Cases decided over many decades give us the answer--a taxpayer who’s constantly in motion is a “tax turtle”--that is, someone with no fixed residence who carries his “home” with him. See, e.g., Henderson v. Commissioner, 143 F.3d 497, 501 (9th Cir. 1998), aff’g T.C. Memo. 1995-559; Deamer v. Commissioner, 752 F.2d 337, 339 (8th Cir. 1985), aff’g T.C. Memo. 1984-63; Johnson v. Commissioner, 115 T.C. 210, 221 (2000). Such a taxpayer is not entitled to business deductions for traveling expenses under section 162. Kroll v. Commissioner, 49 T.C. 557, 562 (1968). The burden of proof is on the taxpayer if he disagrees with the Commissioner, Welch v. Helvering, 290 U.S. 111 (1933), and that is a high hurdle for a tax turtle to clear.

Clearly being deemed a “tax turtle” (normally referred to as an “itinerant” taxpayer by judges who failed to compare litigants to the noble turtle) is not a good thing for the taxpayer.

The Court notes that Revenue Ruling 73-529 provides three factors to decide:

The business connection to the locale of the claimed home;
The duplicative nature of the taxpayer’s living expenses while traveling and at the claimed home; and
Personal attachments to the claimed home.

In Mr. Jacobs' case the Court found Mr. Jacobs failed to show any of these criteria would turn in his favor.

Mr. Jacobs claimed that the house of his friend as a “kibbutz” replicating their situation back in Israel, making the home to which he was attached and for which he incurred duplicative expenses. The Court was not convinced.

As the Court noted:

A house in the suburbs occupied by one family with a friend who stops by once in a while is by no measure “a communal farm or settlement.” Jacobs provided no documentation or testimony that assets of the “kibbutz members” were communal. And we also find that Jacobs provided no documentation or proof of the payments he claimed to make to Casper as a contribution to the household. We found it especially telling that Casper, in his testimony, said that Jacobs occupied the “guest room”--the same room other visitors used when they visited.

The Court also found no evidence of duplicated expenditures on the part of Mr. Jacobs:

Jacobs claimed he put in around $10,000 per year to the Cottage Grove “kibbutz”, though he had no evidence to substantiate his claim. …

Regarding the second factor, we have already found that Jacobs lacked evidence to show he financially contributed to the Casper home--let alone that these expenses duplicated those that he incurred on the road.

As well, the Court ruled there was no business connection to the location.

So the only issue left for us to discuss is whether Jacobs had a business reason for living there. We can’t see any. If Jacobs used Casper’s address for mail, voting, or other incidentals as he claimed (but provided no evidence of), we find it was for his convenience and affection for the Caspers, not for any business reason. We find instead that Jacobs is an itinerant worker--a tax turtle--whose tax home followed him on the road.