Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 77-16

1977-1 C.B. 37

Section 62 -- Adjusted Gross Income
Section 162 -- Business Expense Deduction

IRS Headnote

Deduction of expenses of seeking new employment. Travel and transportation expenses incurred by an individual in seeking new employment in the same trade or business are deductions in computing adjusted gross income; the expenses of typing, printing, and mailing a resume are allowable as itemized deductions; Rev. Rul. 75-120 clarified.

Full Text

Rev. Rul. 77-16

Advice has been requested concerning the manner in which expenses that are deductible under section 162 of the Internal Revenue Code of 1954 in seeking new employment in the same trade or business may be claimed for Federal income tax purposes.

An individual, a corporate executive with the same employer for 10 years, became dissatisfied with the employer. The individual believed that recent changes in the company had limited the employer's future and had caused internal organizational instability. For these reasons, the individual decided to secure new employment as a corporate executive, the individual's same trade or business.

The individual incurred expenditures for the typing and printing of a resume and postage for mailing copies of the printed resume to prospective employers. As a result of responses, the individual incurred transportation expenses to attend scheduled evening interviews after work with prospective employers in the city where the individual lived and traveling expenses away from home to attend scheduled interviews in several other cities.

Rev. Rul. 75-120, 1975-1 C.B. 55, states that in David J. Primuth, 54 T.C. 374 (1970), the United States Tax Court concluded that an employee is engaged in the trade or business of performing services as an employee separate and apart from the performance of those services for the existing employer. Rev. Rul. 75-120 holds that expenses incurred by an individual in seeking new employment in the same trade or business are deductible under section 162 of the Code if directly connected with the individual's trade or business as determined by all the objective facts and circumstances.

Section 62(2) of the Code provides, in part, that in connection with the performance of services by an employee the following types of otherwise deductible trade or business expenses are allowable as deductions from gross income in computing the employee's adjusted gross income: (A) reimbursed expenses, (B) expenses for travel away from home, and (C) transportation expenses.

In this case, the individual incurred expenses, in connection with the performance of services as an employee, while the individual was seeking new employment in the same trade or business of being a corporate executive. The expenditures for typing, printing, and postage are not of the type specified in section 62(2) of the Code. The expenditures for transportation and travel away from home are the type specified in section 62(2).

Accordingly, in the instant case, the transportation expenses and the expenses for travel away from home are allowable as deductions from gross income in computing the individual's adjusted gross income. The expenses for typing, printing, and postage are allowable as deductions from the individual's adjusted gross income in computing taxable income only if the individual elects to itemize deductions.

Rev. Rul. 75-120 is clarified.