Commissioner v. Flowers

326 U.S. 465 (1945)

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Nature of the Case

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Facts

Flowers (P) was a lawyer. P has resided in Jackson, Mississippi since 1903. In 1906, P began to represent a Railroad, his present employer. He acted as trial counsel for them throughout Mississippi. He was eventually elected general solicitor in 1927 and has continued to be elected to that position since 1927 and in 1930 he was elected general counsel until September 1940 when the properties of the Railroad were merged with another and he was elected vice president and general counsel of the newly formed Railroad. The main office was in Mobile, Alabama which was also the main office of the predecessor company. When he first worked for the railroad, he accepted on the condition that the railroad would pay his travel expenses to and from Jackson and living expenses in both places. P had an office in Mobile for the railroad but not in Jackson. When he was in Jackson, P’s law firm provided him with office space but he no longer shared in profits and he used his own furniture and fixtures at that office. The railroad did provide telephone service, a desk for his secretary and a typewriter. Most of the legal business was done in Jackson but this was handled by local counsel for the railroad. P’s principal place of business was in Mobile but because of the merger, P spent almost all of his time in 1939-40 in Jackson. In 1939 he spent 203 days in Jackson and 66 in mobile and made 33 trips between the cities. In 1940, it was 168 days in Jackson and 102 in Mobile with 40 trips between them. The railroad paid travel expenses when P went on trips other than to Jackson and Mobile but not while he was at either of them. P deducted $900 in 1939 and $1,620 in 1940 for his meals and hotel accommodations while in Mobile. The IRS disallowed the deductions.