Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 64-9

1964-1 C.B. 65

Sec. 61

Sec. 162

Sec. 262

IRS Headnote

An individual from time to time accepts invitations to address various organizations throughout the country and is reimbursed by the organizations for travel expenses. Such acceptance is conditioned upon reimbursement of both his own and his wife's traveling expenses. The wife performs no services incident to the purpose of the trips. Held , the traveling expenses incurred by the individual on behalf of his wife constitute personal, living, or family expenses, the deduction of which is precluded by section 262 of the Internal Revenue Code of 1954. Held further , the amounts of reimbursements received by the individual for his wife's traveling expenses are includible in his gross income in the taxable year in which such reimbursements are made.

Full Text

Rev. Rul. 64-9

Advice has been requested with respect to the treatment, for Federal income tax purposes, of amounts received by a taxpayer as reimbursement for the travel expenses of his wife when she accompanies him on speaking engagements, under the circumstances described below.

The taxpayer in the instant case is a full-time salaried employee. From time to time he receives invitations to address various organizations throughout the country. The individual conditions his acceptance upon reimbursement by the organizations of both his own and his wife's traveling expenses. The wife is not expected to, nor does she, render any services to the organizations. The taxpayer does not receive fees or honorariums from the various organizations for his services, but only reimbursement of his own and his wife's actual traveling expenses.

Section 61(a) of the Internal Revenue Code of 1954 provides that, except as otherwise provided, gross income means all income from whatever source derived, including among other things, compensation for services, including fees, commissions and similar items.

Section 162(a) of the Code provides, in part, that among the ordinary and necessary business expenses allowable as deductions are traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant) while away from home in the pursuit of trade or business.

However, section 1.162-2(c) of the Income Tax Regulations provides that where a taxpayer's wife accompanies him on a business trip, expenses attributable to her travel are not deductible unless it can be adequately shown that the wife's presence on the trip has a bona fide business purpose. The wife's performance of some incidental service does not cause her expenses to qualify as deductible business expenses.

In addition, section 262 of the Code provides that, except as otherwise expressly provided, no deduction shall be allowed for personal, living, or family expenses.

Inasmuch as the taxpayer neither requests nor receives fees for his speaking engagements, but merely receives reimbursement for his own and his wife's traveling expenses, it is clear that his speaking activities are not intended to be, and are not, profit-making activities. Such activities are not, under the circumstances, a trade or business within the meaning of section 162 of the Code. Compare Revenue Ruling 55-431, C.B. 1955-2, 312, which holds that speaking activities constitute a trade or business (for purposes of the Self-Employment Contributions Act of 1954) where the individual seeks or otherwise indicates his availability for speaking engagements for which he receives lecture fees or other compensation and fills such engagements with reasonable regularity during the year.

Even though section 162 of the Code and section 1.162-2(c) of the regulations are not, strictly speaking, applicable to the facts of this case, nevertheless the general principle of section 1.162-2(c) is applicable insofar as it indicates when a wife's traveling expenses are deemed to be personal under section 262 of the Code. Thus, in the instant case, the taxpayer's wife's traveling expenses are held to be personal, living, or family expenses (expressly made nondeductible by section 262) because the wife's presence on the husband's speaking trips does not have a bona fide purpose connected with the business of the organizations addressed by the taxpayer. Compare Walter M. Sheldon et ux. v. Commissioner , 299 Fed.(2d) 48 (1962).

Reimbursements received for personal expenses are generally includible in gross income. See Alex Silverman et ux. v. Commissioner , 253 Fed.(2d) 849 (1958), where the taxpayer's employer, in order to induce the taxpayer to travel to Europe on business, paid all of the traveling expenses of the taxpayer's wife so that she could accompany him on the trip. The wife performed no services for the employer and her presence did not serve any business purpose. The United States Court of Appeals for the Eighth Circuit held that the wife's expenses were personal and nondeductible and that payment of the wife's traveling expenses by the employer resulted in taxable income to the taxpayer.

Similarly, in the instant case, the taxpayer's wife performs no services for the organizations involved and her traveling expenses are personal, nondeductible expenses.

Accordingly, it is further held that the amounts of the reimbursements for his wife's traveling expenses, received by the taxpayer from the various organizations, are includible in the taxpayer's gross income in the year in which such reimbursements are made.