T.C. Memo. 2009-102



                        UNITED STATES TAX COURT



BRUCE CLARK ALLEN AND JAN LYNN ALLEN, Petitioners v. COMMISSIONER
                 OF INTERNAL REVENUE, Respondent



     Docket No. 3779-07.                 Filed May 18, 2009.



     Bruce Clark Allen and Jan Lynn Allen, pro sese.

     Aimee R. Lobo-Berg, for respondent.



                MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:     Respondent determined deficiencies of $3,458

and $525 in petitioners’ Federal income taxes for 2003 and 2004,

respectively.    After concessions, the issues for decision are:

(1) Whether petitioners are entitled to travel and transportation

expense deductions on the basis of the location of their tax

home; (2) whether petitioners are entitled to additional
                               - 2 -

deductions for their rental property beyond what respondent has

allowed; (3) whether petitioner Bruce Clark Allen (Mr. Allen), as

an Oregon certified court interpreter, is a public official for

tax purposes; and (4) whether petitioners are entitled to

deductions for expenses attributable to Mr. Allen’s work as a

court interpreter beyond what respondent has allowed.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioners resided in Oregon at the time they filed their

petition.

     Petitioners are married and in January 2003 owned a home in

The Dalles, Oregon, where they both lived.   From January 1

through approximately September 19, 2003, petitioner Jan Lynn

Allen (Mrs. Allen) was employed as a teacher by The Dalles School

District.

     The Oregon Judicial Department (OJD), Office of the State

Court Administrator, administers a program for the certification

of court interpreters.   Or. Rev. Stat. sec. 45.291 (2003).   Mr.
                               - 3 -

Allen fulfilled the certification requirements and became an

Oregon Court Certified Interpreter in 2001.   In general,

under Oregon law, when a court is required to appoint an

interpreter for any person in a proceeding before the court or

whenever a hearing officer is required to appoint an interpreter

in an adjudicatory proceeding, the court, hearing officer, or

designee of the hearing officer is to first call an interpreter

who has been certified under Oregon Revised Statutes section

45.291, when available, before calling a noncertified court

interpreter.   Or. Rev. Stat. sec. 45.288 (2003).

     From January 1 through March 30, 2003, Mr. Allen worked as a

self-employed Spanish language interpreter for the Oregon

Employment Department and the OJD in The Dalles.    Mr. Allen

received a Form 1099-MISC, Miscellaneous Income, reporting these

earnings as nonemployee compensation, with neither Social

Security taxes nor Federal income taxes deducted.

     Mr. Allen also taught part time at Columbia Gorge Community

College (CGCC) in The Dalles from January 6 through June 12,

2003.

     Petitioners planned to move away from The Dalles after Mrs.

Allen finished the 2002-03 school year.   Petitioners hoped that

both would secure employment in a single locale away from The

Dalles.
                                 - 4 -

     In a step toward achieving petitioners’ goal, Mr. Allen

interviewed with the OJD for a staff interpreter position and

received an offer for a job in Pendleton, Oregon (approximately

125 miles east of The Dalles).    Mr. Allen accepted and began

working for the OJD on March 31, 2003 (9 hours per day, 4 days

per week, with his schedule changing to 8 hours per day, 5 days

per week after June 29, 2003).    Mr. Allen stayed in a motel when

in Pendleton.

     After he started with the OJD in Pendleton, Mr. Allen’s CGCC

teaching position required that he drive to The Dalles to teach 2

hours on Tuesday and Thursday nights through June 12, 2003.      The

nights Mr. Allen taught at CGCC, he stayed at petitioners’ home

in The Dalles.    After March 31, 2003, Mr. Allen also worked in

The Dalles as a self-employed interpreter on 3 days (April 25,

May 2, and June 13, 2003).

     Mr. Allen received a Form W-2, Wage and Tax Statement, from

the Oregon Judicial Department reporting his wages after he

became an employee on March 31, 2003.    Mr. Allen received a Form

W-2 for his CGCC earnings.

     Mrs. Allen attempted to secure a job in Pendleton but was

not successful.   She pursued teaching positions in other Oregon

cities and in August 2003 accepted a job in Oregon City, Oregon

(approximately 215 miles east of Pendleton).    Mrs. Allen began

teaching for the Oregon City School District on or about
                                - 5 -

September 22, 2003, and continued in this position throughout

2004.   Petitioners rented a home in Oregon City that Mrs. Allen

moved into in September 2003.   Petitioners continued to rent this

home throughout 2004.

     After Mrs. Allen accepted the Oregon City position, Mr.

Allen pursued OJD opportunities in the Oregon City area so that

he and his wife could live and work in the same locale.       On or

about October 8, 2003, the OJD transferred Mr. Allen to Portland,

Oregon (approximately 17 miles northwest of Oregon City), and he

lived in the Oregon City rental home with Mrs. Allen.       Mr. Allen

continued to work for the OJD in Portland throughout 2004.

     After moving to Oregon City, petitioners rented their house

in The Dalles from October 12, 2003, through June 12, 2004.      They

retained use of the basement so that they could make improvements

to the house.    On November 11, 2004, petitioners sold their house

in The Dalles.

     On their 2003 joint Form 1040, U.S. Individual Income Tax

Return, petitioners attached a Schedule A, Itemized Deductions,

and each claimed unreimbursed employee expenses including travel,

meals, and entertainment expenses.      Mr. Allen claimed

transportation expenses.   Petitioners also attached a Schedule C,

Profit or Loss From Business, claiming expenses with respect to

Mr. Allen’s services as a self-employed interpreter, which
                                - 6 -

included travel, meals, and entertainment, car and truck

expenses, utilities, and expenses for business use of a home.

     On their 2004 joint tax return petitioners reported $2,200

not-for-profit rental income and claimed a $2,200 deduction on

Schedule A for repairs and not-for-profit rental expenses.     Both

petitioners also claimed unreimbursed employee expenses on their

2004 Schedule A.    For Mr. Allen these included vehicle expenses,

transportation expenses, travel, meals, and entertainment

expenses.   Petitioners also attached a Schedule D, Capital Gains

and Losses, on which they claimed an exclusion, under section

121, of $30,317 of gain on the sale of their residence in The

Dalles.

     In the notice of deficiency for 2003 and 2004 sent to

petitioners, the Internal Revenue Service (IRS) disallowed a

number of the claimed Schedule A and Schedule C deductions for

both tax years.    During negotiations with the IRS, petitioners

made concessions for both tax years.    Petitioners also:   (1)

Requested additional deductions for increased itemized deductions

for travel and transportation expenses for their 2003 trips

outside The Dalles to income-producing activities on the premise

that their only tax home in 2003 was The Dalles; (2) claimed that

Oregon City was their only tax home in 2004 and requested

additional deductions; (3) claimed deductions for expenses

associated with Mr. Allen’s work in 2004 as a court interpreter
                                - 7 -

on the premise that he is a public official; and (4) requested

additional Schedule C deductions attributable to Mr. Allen’s

court interpreter work for meals and entertainment, and business

utilities expenses.    The IRS made concessions regarding portions

of these claimed deductions and disallowed the remainder.

                               OPINION

     Claiming that The Dalles was their only tax home in 2003,

petitioners argue that they are entitled to transportation

expense deductions for any travel outside The Dalles to any

income-producing activity and that they are both entitled to

travel (lodging, meals, and incidentals) expense deductions for

days that they worked in locations away from The Dalles.

     With respect to the dispute over the location of their tax

home, petitioners contend that Mr. Allen’s employment in

Pendleton was temporary, that married couples cannot have

separate tax homes, and that a taxpayer has only one tax home

each year.

     Respondent argues that petitioners are not entitled to the

claimed travel and transportation expenses beyond what has been

allowed because neither petitioner was away from his or her tax

home when the travel expenses were incurred.    Respondent asserts

that Mrs. Allen’s tax home was The Dalles from January 1 through

September 19, 2003, and Oregon City from September 19 through

December 31, 2003.    Respondent contends that from January 1
                               - 8 -

through March 30, 2003, Mr. Allen’s tax home was The Dalles; from

March 31 through October 7, 2003, his tax home was Pendleton; and

from October 8 through December 31, 2003, his tax home was Oregon

City.

     Deciding whether transportation and travel expenses are

deductible requires the determination of a taxpayer’s tax home.

See sec. 162(a).   The word “home” for purposes of section

162(a)(2) generally refers to the area of a taxpayer’s principal

(if there is more than one regular) place of employment and not

where his personal residence is located.   Henderson v.

Commissioner, 

, 499 (9th Cir. 1998), affg. T.C. Memo.

1995-559; Mitchell v. Commissioner, 

, 581 (1980).

When taxpayers have multiple jobs in different locations during

the year, are married, and incur duplicate living expenses,

identifying the location of the tax home requires review of

multiple factors including:   (1) Whether employment is permanent,

temporary, or indefinite; (2) whether there is a business

justification for incurring duplicate living expenses; (3)

whether the spouses have separate tax homes; and (4) whether the

taxpayers actually have multiple tax homes during 1 year because

their principal places of business have changed.

     In considering whether employment is permanent, temporary,

or indefinite, the general rule is that if the location of the

taxpayer’s regular place of business changes, so does the
                                - 9 -

taxpayer’s tax home--from the old location to the new location.

Kroll v. Commissioner, 

, 562-563 (1968).    There is an

exception to this rule if the employment is, or is reasonably

expected to be, temporary.    Peurifoy v. Commissioner, 

, 60 (1958).    However, this exception does not apply if the

employment away from home is indefinite.    Kroll v. Commissioner,

supra at 562.    Unless termination is foreseeable within a short

period of time, employment that merely lacks permanence is

considered indefinite.    See Neal v. Commissioner, 

,

1159 (9th Cir. 1982) (following Kasun v. United States, 

, 1061 (7th Cir. 1982)), affg. per curiam T.C. Memo. 1981-

407.    A taxpayer will not be treated as being temporarily away

from home during any period of employment exceeding 1 year.     Sec.

162(a).    Mr. Allen’s OJD position in Pendleton was indefinite and

not temporary because nothing in the record indicates that

termination was foreseeable within a short period of time.

Likewise, Mr. Allen’s Oregon City OJD employment was not

temporary.

       The second factor for identifying the tax home is that the

taxpayers must have some business justification beyond merely

personal reasons for maintaining an alleged tax home remote from

a place of employment.    See Henderson v. Commissioner, supra at

500; Tucker v. Commissioner, 

, 787-788 (1971).     Mr.

Allen had business reasons to be in multiple locations--the OJD
                               - 10 -

position in Pendleton and teaching for CGCC and working as a

self-employed interpreter in The Dalles.     Although this weighs in

petitioners’ favor, all of the facts are reviewed to identify the

tax home.

      Third, when married couples maintain multiple places of

abode, review is required to determine whether they have separate

tax homes.   Married couples that both work and file a joint tax

return may have separate tax homes.     See Hammond v. Commissioner,

, 287-288 (1953), affd. 

 (5th Cir. 1954);

Chwalow v. Commissioner, T.C. Memo. 1971-185, affd. 

,

478 (3d Cir. 1972).

     Last, when taxpayers have employment or business in multiple

locations during 1 year, the principal place of business is

generally used to determine the tax home.     See Stright v.

Commissioner, T.C. Memo. 1993-576.      When a taxpayer accepts

employment either permanently or for an indefinite time away from

the place of his usual abode, the taxpayer’s tax home will shift

to the location of the taxpayer’s new principal place of

business.    See Coombs v. Commissioner, 

, 1276 (9th

Cir. 1979), affg. in part and revg. in part on a different issue

 (1976).   Determining the principal place of business

includes review of the location where the taxpayer spends more of

his time, engages in greater business activity, and derives a

greater proportion of his income.     Markey v. Commissioner, 490
                              - 11 -

F.2d 1249, 1255 (6th Cir. 1974), revg. T.C. Memo. 1972-154.    The

Court of Appeals for the Ninth Circuit has applied the Markey

test to determine the tax home when a taxpayer both earns a

substantial income and stays overnight in each of two locations.

See Folkman v. United States, 

 (9th Cir. 1980)

(applying the Markey test, the court concluded that the

taxpayer’s tax home was the location where he spent more working

time and derived most of his income); see also Stright v.

Commissioner, supra.   Mr. Allen’s principal place of business

from March 31 through October 7, 2003, was Pendleton because he

devoted more working time to his OJD employment in Pendleton than

to the jobs in The Dalles, and he earned most of his income in

Pendleton.

     Because Mr. Allen’s OJD employment in Pendleton was not

temporary and Pendleton was his principal place of employment or

business, Mr. Allen's tax home from March 31 through October 7,

2003, was Pendleton.   When Mr. Allen transferred with the OJD to

Portland on approximately October 8, 2003, for a position that

continued throughout 2004, his tax home became the Oregon City

rental home.

     For similar reasons, Oregon City became Mrs. Allen’s tax

home on September 22, 2003, and remained her tax home throughout

2004.   Her teaching employment was not temporary, and her
                              - 12 -

principal place of employment shifted to Oregon City when she

began her position there.

     After starting their respective employment in the Oregon

City area, neither petitioner had a business reason to maintain a

residence in The Dalles because neither had employment or

business there.

     Having determined petitioners’ tax homes, we can decide the

deductibility of petitioners’ claimed travel and transportation

expenses.   Travel expenses may be deductible, including amounts

expended for meals and lodging while away from home in the

pursuit of a trade or business.   Sec. 162(a)(2).   For an expense

to be deductible, a taxpayer must show that the expense was

incurred away from home, that the expense is ordinary and

necessary, and that the expense was incurred in pursuit of a

trade or business.   Commissioner v. Flowers, 

, 470

(1946); Bochner v. Commissioner, 

, 827 (1977).

     Petitioners have not shown that the travel expenses claimed

as deductions for 2003 were incurred while away from their

respective tax homes in the pursuit of a trade or business.

Thus, no additional travel expenses are deductible beyond those

respondent has allowed.

     Petitioners argue in the alternative that if Mr. Allen’s tax

home shifted to Pendleton when he started his employment there,

petitioners are entitled to deductions for Mr. Allen’s trips
                                - 13 -

between Pendleton and The Dalles, beyond what respondent allowed.

Respondent argues that petitioners are not entitled to additional

deductions for travel expenses that Mr. Allen incurred in The

Dalles from March 31 through October 7, 2003, because he could

have returned to Pendleton (his tax home during this period)

after teaching at CGCC.   Respondent contends that most of the

time Mr. Allen spent during trips to The Dalles was primarily for

personal purposes.

     If expenses for travel to and from a destination are

incurred for both business and other purposes, such expenses are

deductible only if the travel is primarily related to the

taxpayer’s trade or business.    Sec. 1.162-2(b)(1), Income Tax

Regs.   If a trip is primarily personal in nature, expenses are

not deductible even if the taxpayer engaged in some business

activities at the destination.    Id.    Whether travel is primarily

related to the taxpayer’s trade or business or is primarily

personal is a question of fact.    Sec. 1.162-2(b)(2), Income Tax

Regs.; see also Holswade v. Commissioner, 

, 698, 701

(1984).   The amount of time spent on personal activity during the

trip, compared with the amount of time spent on activities

directly relating to the taxpayer’s trade or business, is an

important factor in determining whether the trip is primarily

personal.   Sec. 1.162-2(b)(2), Income Tax Regs.   The taxpayer
                               - 14 -

must prove that the trip was primarily related to the trade or

business.   Rule 142(a).

     Petitioners have not established that Mr. Allen spent more

time teaching and/or on his self-employed interpreter activity

than on personal endeavors during his days in The Dalles.      Thus,

petitioners are not entitled to additional travel expense

deductions for Mr. Allen’s trips to The Dalles from March 31

through October 7, 2003.

     Petitioners argue that Mr. Allen is entitled to

transportation expense deductions for miles driven from their

home in The Dalles to his Pendleton OJD employment.    Section

262(a) provides that no deduction is allowed for personal,

living, or family expenses.    In general, the cost of daily

commuting to and from work is a nondeductible personal expense.

See Commissioner v. Flowers, 

, 473-474 (1946); sec.

1.162-2(e), Income Tax Regs.    Except as allowed by respondent,

petitioners’ claimed transportation expenses for Mr. Allen’s

trips from the residence in The Dalles to his Pendleton

employment are not deductible under section 162(a), nor are his

transportation expenses incurred while commuting between the

Oregon City home and his Portland OJD employment.     For the same

reason, Mrs. Allen’s claimed transportation expense deductions

for miles driven between her Oregon City employment and the

Oregon City rental home in 2003 are not allowed.
                              - 15 -

     The parties agree that in 2004 Oregon City was petitioners’

tax home.   However, petitioners claim that they are entitled to

Schedule A travel, transportation, and meals and entertainment

expense deductions for any time that they spent outside of Oregon

City preparing their former residence in The Dalles for sale.

Petitioners contend that preparing The Dalles property for sale

provided a business reason for them to travel to The Dalles.

From January 2004 through June 12, 2004, petitioners rented out a

portion of their property in The Dalles.    On their 2004 tax

return petitioners claimed not-for-profit rental expenses equal

to rent moneys received.

     Section 183(a) disallows any deduction attributable to

activities not engaged in for profit except as provided under

section 183(b).   Section 183(b)(1) permits deductions which are

otherwise allowable regardless of profit objective.    Deductions

that would be allowable if the activity were engaged in for

profit are permitted, but only to the extent that gross income

attributable to the activity exceeds the deductions permitted by

section 183(b)(1).   Sec. 183(b)(2).   Because petitioners have

already claimed expenses equal to the not-for-profit rental

income, the claimed travel and transportation expenses are not

deductible.   In 2004 petitioners claimed an exclusion of capital

gains under section 121 for the sale of their home in The Dalles.

Thus, even if the claimed expenses were taken into account in
                              - 16 -

computing the gain on the sale, the result would be no additional

capital gains.

     Petitioners’ next argument is that Mr. Allen, as an Oregon

certified court interpreter, is a public official and under

section 1402(c) is exempt from self-employment tax for his 2003

independent contractor earnings.   Petitioners also claim that Mr.

Allen is entitled to section 162 deductions in 2004 for business

utility expenses and meals and entertainment expenses when

employed by the OJD because he is a public official.    Petitioners

contend that Oregon Revised Statutes sections 45.272-45.279

(2003) create the office of court interpreter and that there is a

delegation of a portion of the sovereign powers of government

according to the policy statement underlying Oregon Revised

Statutes section 45.273.   Petitioners also assert that as an

Oregon certified court interpreter, Mr. Allen had to take an

official oath.

     Section 1401 imposes taxes on self-employment income,

defined generally as the “net earnings from self-employment

derived by an individual”.   Sec. 1402(b).   Net earnings from

self-employment are “the gross income derived by an individual

from any trade or business carried on by such individual, less

the deductions allowed by this subtitle which are attributable to

such trade or business”.   Sec. 1402(a).

     For purposes of self-employment income or net earnings from
                             - 17 -

self-employment, the term “trade or business” has “the same

meaning as when used in section 162 (relating to trade or

business expenses)”, with certain exceptions.    Sec. 1402(c).

Section 7701(a)(26) provides that, for purposes of the Internal

Revenue Code, “the term ‘trade or business’ includes the

performance of the functions of a public office.”     However, one

of the specific exceptions under section 1402(c) to the meaning

of “trade or business” for self-employment tax purposes is the

performance of the functions of a public office (with a further

qualification not here pertinent).    Sec. 1402(c)(1).   Section

1402(c)(1) thus negates, for self-employment tax purposes, the

inclusion under section 7701(a)(26) of the performance of public

office functions within the meaning of “trade or business”,

provided the exceptions are not met.    Accordingly, income derived

by an individual from the performance of the functions of a

public office is generally not subject to self-employment tax.

See Porter v. Commissioner, 

, 561 (1987), revd. on

other grounds 

 (8th Cir. 1988), affd. sub nom. Adams

v. Commissioner, 

 (3d Cir. 1988); see also Ekren v.

Commissioner, T.C. Memo. 1986-509.

     The term “public official” is not defined in the Internal

Revenue Code, but section 1.1402(c)-2(b), Income Tax Regs.,

provides the following examples:     The President, the Vice

President, a governor, a mayor, the Secretary of State, a member
                              - 18 -

of Congress, a State representative, a county commissioner, a

judge, a justice of the peace, a county or city attorney, a

marshal, a sheriff, a constable, a registrar of deeds, or a

notary public.

     Caselaw demonstrates elements that courts use to define

“public official”.   See Porter v. Commissioner, supra at 555-558.

In general,

           An office is a public station conferred by the
     appointment of government. The term embraces the idea
     of tenure, duration, emolument and duties fixed by law.
     Where an office is created, the law usually fixes its
     incidents, including its terms, its duties, and its
     compensation. * * * [Metcalf & Eddy v. Mitchell, 

, 520 (1926); citations omitted.]

     In Pope v. Commissioner, 

, 1009 (6th Cir.

1943), the Court of Appeals analyzed five elements to define

public office:

          (1) It must be created by the Constitution or the
     Legislature, or by a municipality or other body with
     authority conferred by the Legislature. (2) There must
     be a delegation of a portion of the sovereign powers of
     government to be exercised for the benefit of the
     public. (3) The powers conferred and the duties to be
     discharged must be defined either directly or
     indirectly by the Legislature or through legislative
     authority. (4) The duties must be performed
     independently and without control of a superior power
     other than the law. (5) The office must have some
     permanency and continuity and the officer must take an
     official oath.

     The Oregon Revised Statutes provide a procedure for the

qualifications and use of court interpreters but do not create an

office of court interpreter as petitioners contend.   See Or. Rev.
                              - 19 -

Stat. secs. 45.272-45.279 (2003).   Although an Oregon court

interpreter provides a service that benefits the public and the

position is subject to Oregon laws governing hiring and

compensation, a person holding that position is not delegated a

portion of the sovereign powers of government to be exercised for

the benefit of the public.

     When an Oregon court interpreter becomes certified, he or

she is afforded the opportunity to be listed on the Office of

State Court Administrator’s roster of certified court

interpreters as available to undertake work.   This listing,

however, does not convey permanency and continuity.   See Or. Rev.

Stat. secs. 45.272-45.279.   Further, Mr. Allen did not take an

“oath of office” as petitioners contend but rather an oath to

abide by the Code of Professional Responsibility for Interpreters

in the Oregon Courts, to maintain high standards, to remain

neutral, and to interpret material thoroughly and precisely.

     Mr. Allen’s work as a Spanish language interpreter for the

OJD and Oregon Employment Department no more entails “the

performance of the functions of a public office” than the work of

a court reporter (recording and transcribing depositions), as

found in Ekren v. Commissioner, supra.

     The record shows Mr. Allen’s self-employment as a court

interpreter to be as an independent contractor and not an officer

or employee of a State or political subdivision.   Therefore, Mr.
                              - 20 -

Allen is subject to self-employment tax for his independent

contractor earnings.

     Generally, for an activity to be considered a trade or

business under section 162 it must be engaged in for profit.

This principle is modified by section 7701(a)(26), which

provides: “The term ‘trade or business’ includes the performance

of the functions of a public office.”    Therefore, if a taxpayer

performs the functions of a public office, he is entitled to

deduct his expenses under section 162.   See Frank v. United

States, 

, 95 (9th Cir. 1978).   Because Mr. Allen is

not a public officer as a court interpreter employed by the OJD,

the business utility expenses and meals and entertainment

expenses that petitioners claim for 2004 under section 162 are

not allowed.

     Petitioners argue that they are entitled to claimed 2003

Schedule C deductions for Mr. Allen’s court interpreter

profession for expenses that he incurred for a cellular phone,

home Internet service, and a subscription to satellite television

Spanish language channels.   Respondent contends that petitioners

are not entitled to deductions beyond what has been allowed for

cellular phone expenses and are not entitled to any deductions

claimed for the Internet service and satellite television Spanish

channel expenses.
                              - 21 -

     Petitioners claimed the full amount of Mr. Allen’s cellular

phone expenses incurred in 2003, and respondent allowed a portion

of the expenses as a deduction.   Cellular phones, as “listed

property”, must meet strict substantiation requirements for the

related expenses to be deductible.     See secs. 274(d),

280F(d)(4)(A)(v).   Petitioners offered no evidence proving that

they are entitled to cellular phone expense deductions claimed

for 2003 or 2004 beyond what respondent has allowed.       See sec.

1.274-5T(c)(2)(C), Temporary Income Tax Regs., 50 Fed. Reg. 46017

(Nov. 6, 1985).

     Respondent allowed a home office deduction for Mr. Allen’s

business use of the home in The Dalles under section 280A(c)(1)

for 7 months in 2003, and utility expenses have been included as

a part of this deduction.

     Costs of utilities provided to a taxpayer’s home are

disallowed as personal, living, or family expenses under section

262(a) unless the taxpayer uses a part of his home for his

business.   Sec. 1.262-1(b)(3), Income Tax Regs.    Internet

expenses have been characterized as utility expenses.       See Verma

v. Commissioner, T.C. Memo. 2001-132.

     Because petitioners have not established that the claimed

utility expenses have not been included in the home office

utility expense deduction allowed, they are not entitled to any
                             - 22 -

additional claimed Internet and satellite television deductions

for 2003.

     In reaching our decision, we have considered all arguments

made, and, to the extent not mentioned, we conclude that they are

irrelevant, moot, or without merit.

     To reflect the foregoing and concessions of the parties,


                                      Decision will be entered

                              under Rule 155.