F. E. Smith and v. K. Smith v. Neal S‪.‬

Appellant* pilots ships in the Puget Sound area, including Seattle and various other ports located from one hundred miles
north to sixty miles south of that city. He used his personal automobile in traveling between his residence and the waterfronts
of these ports to undertake pilotage assignments and to return to his home from such assignments. He contends that the costs
of all such transportation were ordinary and necessary business expenses deductible under section 162(a) of the Internal Revenue
Code of 1954, 26 U.S.C. § 162(a) (1964). The District Director allowed appellant to deduct costs incurred in traveling between his home and piers other than those
located in Seattle, and in traveling from one work assignment to another. However, he disallowed costs incurred by appellant
in traveling between appellant's home and the Seattle waterfront, on the ground that Seattle was appellant's principal place
of employment and costs of transportation between that city and his residence were therefore "commuting" costs, which have
long been classified as non-deductible under section 262 of the Code, 26 U.S.C. § 262 (1964), as "living and personal expenses
lacking the necessary direct relationship to the prosecution of the business." Commissioner of Internal Revenue v. Flowers,
326 U.S. 465, 473, 66 S. Ct. 250, 254, 90 L. Ed 203 (1946). See sections 1.62-1(g), 1.162-2(e) and 1.262-1(b)(5) of Treasury
Regulations on Income Tax (1954 Code). Appellant paid the additional tax and sued the District Director for refund.