370 U.S.

269
82 S.Ct. 1277
8 L.Ed.2d 484

C.J.D. RUDOLPH et al., Petitioners,

v.
UNITED STATES.
No. 396.
Argued April 3, 1962.
Decided June 18, 1962.

Richard A. Freling, Dallas, Tex., for petitioners.

John B. Jones, Jr., Washington, D.C., for respondent.
PER CURIAM.

The petition for certiorari in this case was granted because it was thought to
present important questions involving the definition of 'income' and 'ordinary
and necessary' business expenses under the Internal Revenue Code. 368 U.S.
913, 82 S.Ct. 195, 7 L.Ed.2d 130. An insurance company provided a trip from
its home office in Dallas, Texas, to New York City for a group of its agents and
their wives. Rudolph and his wife were among the beneficiaries of this trip, and
the Commissioner assessed its value to them as taxable income.* It appears to
be agreed between the parties that the tax consequences of the trip turn upon
the Rudolphs' 'dominant motive and purpose' in taking the trip and the
company's in offering it. In this regard the District Court, on a suit for a refund,
found that the trip was provided by the company for 'the primary purpose of
affording a pleasure trip * * * in the nature of a bonus, reward, and
compensation for a job well done' and that from the point of view of the
Rudolphs it 'was primarily a pleasure trip in the nature of a vacation * * *.'
D.C., 189 F.Supp. 2, 45. The Court of Appeals approved these findings. 5
Cir., 291 F.2d 841. Such ultimate facts are subject to the 'clearly erroneous'
rule, cf. Commissioner v. Duberstein, 363 U.S. 278, 289291, 80 S.Ct. 1190,
1199, 4 L.Ed.2d 1218 (1960), and their review would be of no importance save
to the litigants themselves. The appropriate disposition in such a situation is to
dismiss the writ as improvidently granted. See Rice v. Sioux City Memorial

Park Cemetery, 349 U.S. 70, 78 n. 2, 75 S.Ct. 614, 618, 99 L.Ed. 897 (1955).
2

Writ of certiorari dismissed.

Mr. Justice FRANKFURTER took no part in the decision of this case.

Mr. Justice WHITE took no part in the consideration or decision of this case.

Separate opinion of Mr. Justice HARLAN.

Although the reasons given by the Court for dismissing the writ as
improvidently granted should have been persuasive against granting certiorari,
now that the case is here I think it better to decide it, two members of the Court
having dissented on the merits.

The courts below concluded (1) that the value of this 'all expense' trip to the
company-sponsored insurance convention constituted 'gross income' to the
petitioners within the meaning of 61 of the Internal Revenue Code of 1954,
26 U.S.C.A. 61 and (2) that the amount reflected was not deductible as an
'ordinary and necessary' business expense under 162 of the Code, 26
U.S.C.A. 162.1 Both conclusions are, in my opinion, unassailable unless the
findings of fact on which they rested are to be impeached by us as clearly
erroneous. I do not think they can be on this record, especially in light of the
'seasoned and wise rule of this Court' which 'makes concurrent findings of two
courts below final here in the absence of very exceptional showing of error.'
Comstock v. Group of Institutional Investors, 335 U.S. 211, 214, 68 S.Ct. 1454,
1456, 92 L.Ed. 1911.

The basic facts, found by the District Court, are as follows. Petitioners, husband
and wife, reside in Dallas, Texas, where the home office of the husband's
employer, the Southland Life Insurance Company, is located. By having sold a
predetermined amount of insurance, the husband qualified to attend the
company's convention in New York City in 1956 and, in line with company
policy, to bring his wife with him. The petitioners, together with 150 other
employees and officers of the insurance company and 141 wives, traveled to
and from New York City on special trains, and were housed in a single hotel
during their two-and-one-half-day visit. One morning was devoted to a
'business meeting' and group luncheon, the rest of the time in New York City to
'travel, sight-seeing, entertainment, fellowship or free time.' The entire trip
lasted one week.

The company paid all the expenses of the convention-trip which amounted to
$80,000; petitioners' allocable share being $560. When petitioners did not
include the latter amount in their joint income tax return, the Commissioner
assessed a deficiency which was sustained by the District Court, 189 F.Supp. 2,
and also by the Court of Appeals, one judge dissenting, in a per curiam opinion,
291 F.2d 841, citing its recent decision in Patterson v. Thomas, 5 Cir., 289 F.2d
108, where the same result had been reached. The District Court held that the
value of the trip being 'in the nature of a bonus, reward, and compensation for a
job well done,' was income to Rudolph, but being 'primarily a pleasure trip in
the nature of a vacation,' the costs were personal and nondeductible.

I.
10

Under 61 of the 1954 Code was the value of the trip to the taxpayer-husband
properly includible in gross income? That section defines gross income as 'all
income from whatever source derived,' including, among other items,
'compensation for services.' Certain sections of the 1954 Code enumerate
particular receipts which are included in the concept of 'gross income,'2
including prizes and awards (with certain exceptions);3 while other sections,
101121, specifically exclude certain receipts from 'gross income,' including,
for example, gifts and inheritances 4 (see Commissioner v. Duberstein, 363 U.S.
278, 80 S.Ct. 1190, 4 L.Ed.2d 1218), and meals or lodgings furnished for the
convenience of the employer.5 The Treasury Regulations emphasize the
inclusiveness of the concept of 'gross income.'6

11

In light of the sweeping scope of 61 taxing 'all gains except those specifically
exempted,' Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430, 75 S.Ct.
473, 476, 99 L.Ed. 483; see Commissioner v. Lo Bue, 351 U.S. 243, 246, 76
S.Ct. 800, 802, 100 L.Ed. 1142; James v. United States, 366 U.S. 213, 219, 81
S.Ct. 1052, 1055, 6 L.Ed.2d 246, and its purpose to include as taxable income
'any economic or financial benefit conferred on the employee as compensation,
whatever the form or mode by which it is effected,' Commissioner v. Smith,
324 U.S. 177, 181, 65 S.Ct. 591, 593, 89 L.Ed. 830, it seems clear that the
District Court's findings, if sustainable, bring the value of the trip within the
reach of the statute.

12

Petitioners do not claim that the value of the trip is within one of the statutory
exclusions from 'gross income' (see notes 4 and 5, supra) as did the taxpayer in
Patterson v. Thomas, 289 F.2d 108, 111112; rather they characterize the
amount as a 'fringe benefit' not specifically excluded from 61 by other
sections of the statute, yet not intended to be encompassed by its reach.
Conceding that the statutory exclusions from 'gross income' are not exhaustive,

as the Government seems to recognize is so under Glenshaw, it is not now

necessary to explore the extent of any such nonstatutory exclusions.7 For it was
surely within the Commissioner's competence to consider as 'gross income' a
'reward, or a bonus given to * * * employees for excellence in service,' which
the District Court found was the employer's primary purpose in arranging this
trip. I cannot say that this finding, confirmed as it has been by the Court of
Appeals, is inadequately supported by this record.8
II.
13

There remains the question whether, though income, this outlay for
transportation, meals, and lodging was deductible by petitioners as an 'ordinary
and necessary' besiness expense under 162.9 The relevant factors on this
branch of the case are found in Treas. Reg. 1.1622.10 In summary, the
regulation in pertinent part provides:

14

Traveling expenses, including meals, lodgings and other incidentals, reasonable

and necessary in the conduct of the taxpayer's business and directly attributable
to it are deductible, but expenses of a trip 'undertaken for other than business
purposes' are 'personal expenses' and the meals and lodgings are 'living
expenses.' Treas.Reg. 1.1622(a).

15

If a taxpayer who travels to a destination engages in both 'business and personal

activities,' the traveling expenses are deductible only if the trip is 'related
primarily' to the taxpayer's business; if 'primarily personal,' the traveling
expenses are not deductible even though the taxpayer engages in some business
there; yet expenses allocable to the taxpayer's trade or business there are
deductible even though the travel expenses to and fro are not.11 Id., 1.162 2(b)
(1).

16

Whether a trip is related primarily to the taxpayer's business or is primarily

personal in nature 'depends on the facts and circumstances in each case.' Id.,
1.1622(b) (2); so too with expenses paid or incurred in attending a
convention. Id., 1.1622(d).

17

Finally, the deductibility of the expenses of a taxpayer's wife who accompanies

her husband depends, first, on whether his trip is a 'business trip.' Id., 1.162
2(c); if so, it must further be shown that the wife's presence on the trip also had
a bona fide business purpose. Ibid.

18

Where, as here, it may be arguable that the trip was both for business and

personal reasons, the crucial question is whether, under all the facts and
circumstances of the case, the purpose of the trip was 'related primarily to
business' or was, rather, 'primarily personal in nature.' That other trips to other
conventions or meetings by other taxpayers were held to be primarily related to
business is of no relevance here; that certain doctors, lawyers, clergymen,
insurance agents or others 12 have or have not been permitted similar deductions
only shows that in the circumstances of those cases, the courts thought that the
expenses were or were not deductible as 'related primarily to business.'
19

The husband places great emphasis on the fact that he is an entrapped

'organization man,' required to attend such conventions, and that his future
promotions depend on his presence. Suffice it to say that the District Court did
not find any element of compulsion; to the contrary, it found that the petitioners
regarded the convention in New York City as a pleasure trip in the nature of a
vacation. Again, I cannot say that these findings are without adequate
evidentiary support. Supra, 370 U.S., pp. 273 274, 82 S.Ct., p. 1280.

20

The trip not having been primarily a business trip, the wife's expenses are not
deductible. It is not necessary, therefore, to examine whether they would or
would not be deductible if, to the contrary, the husband's trip was related
primarily to business.

21

Where, as here, two courts below have resolved the determinative factual issues
against the taxpayers, according to the rules of law set forth in the statute and
regulations, it is not for this Court to re-examine the evidence, and disturb their
findings, unless 'clearly erroneous.' That is not the situation here.

22

I would affirm.

23

Mr. Justice DOUGLAS, with whom Mr. Justice BLACK joins, dissenting.

I.
24

It could not, I think, be seriously contended that a professional man, say a

Senator or a Congressman, who attends a convention to read a paper or conduct
a seminar with all expenses paid has received 'income' within the meaning of
the Internal Revenue Code. Nor would it matter, I assume, that he took his wife
and that her expenses were also paid. Income has the connotation of something
other than the mere payment of expenses. The statute, 26 U.S.C. 61, 26 U.S.
C.A. 61, speaks in terms of financial gain, of compensation for services,
'including fees, commissions, and similar items.' The form of payment for

services covers a wide range. Treasury Regulations 1.611 provide:

25

'Gross income includes income realized in any form, whether in money,

property, or services. Income may be realized, therefore, in the form of
services, meals, accommodations, stock, or other property, as well as in cash.'

26

The formula 'all expenses paid' might be the disguise whereby compensation
'for services' is paid. Yet it would be a rare case indeed where one could
conclude that a person who gets only his expenses for attendance at one
convention gets 'income' in the statutory sense. If this arrangement were regular
and frequent or if it had the earmarks of a sham device as a cloak for
remuneration, there would be room for fact-finders to conclude that it was
evasive. But isolated engagements of the kind here in question have no rational
connection with compensation 'for services' rendered.

27

It is true that petitioner was an employee and that the expenses for attending
the convention were paid by his employer. He qualified to attend the
convention by selling an amount of insurance that met a quota set by the
company. Other salesmen also qualified, some attending and some not
attending. They went from Dallas, Texas, to New York City, where they stayed
two and a half days. One day was given to a business session and a luncheon;
the rest of the time was left for social events.

28

On this record there is no room for a finding of fact that the 'expenses paid'
were 'for services' rendered. They were apparently a proper income tax
deduction for the employer. The record is replete with evidence that from
management's point of view it was good business to spend money on a
convention for its leading agentsa convention that not only kept the group
together in New York City, but in transit as well, giving ample time for group
discussions, exchanges of experience, and educational training. It was the
exigencies of the employment that gave rise to the convention. There was
nothing dishonest, illegitimate, or unethical about this transaction. No services
were rendered. New York City may or may not have been attractive to the
agents and their wives. Whether a person enjoys or dislikes the trip that he
makes 'with all expenses paid' has no more to do with whether the expenses
paid were compensation 'for services' rendered than does his attitude toward his
job.

29

In popular understanding a trip to a convention 'with all expenses paid' may be

an award. Yet the tax laws are filled with exemptions for 'awards' which are not
considered to be income. The exemption of gifts is one example. Others are the

exemptions of the proceeds of life insurance payable at death, disability

benefits, the rental values of parsonages, scholarship and fellowship grants,
allowances of U.S. employees abroad, mustering-out payments to members of
the Armed Forces, etc. Employees may receive from their employers many
fringe benefits that are not income. Treasury Regulations 31.3401(a)1(b)
(10) provide:
30

'Ordinarily, facilities or privileges (such as entertainment, medical services, or

so-called 'courtesy' discounts on purchases), furnished or offered by an
employer to his employees generally, are not considered as wages subject to
withholding if such facilities or privileges are of relatively small value and are
offered or furnished by the employer merely as a means of promoting the
health, good will, contentment, or efficiency of his employees.'

31

The fringe benefits of this one convention trip are less obviously income than
the fringe benefits listed in the Regulations. For the latter are constantly
recurringday after day, week after week. Moreover, on this record the
convention promotes the 'efficiency' of the agents as much as the other fringe
benefits enumerated in the Regulations.

II.
32

The expenses, if 'income,' are plainly deductible. The Government, however,

says that our problem is to determine 'whether it is consistent with the ends of
an equitable and workable tax system' to make them such. The problem of
designing an 'equitable' tax system is, however, for Congress, not for the Court.

33

The test of deductibility to be applied here is whether the expenses are

'ordinary and necessary' in the carrying on of petitioner's business. The Act is
explicit in permitting the deduction of traveling expenses (including the entire
amount expended for meals and lodging) while away from home in the 'pursuit
of a trade or business,' 26 U.S.C. 162(a)(2), 26 U.S.C.A. 162(a) (2).

34

The Regulations are even more explicit. Section 1.1622(b)(1) provides:

35

'If a taxpayer travels to a destination and while at such destination engages in

both business and personal activities, traveling expenses to and from such
destination are deductible only if the trip is related primarily to the taxpayer's
trade or business. If the trip is primarily personal in nature, the traveling
expenses to and from the destination are not deductible even though the
taxpayer engages in business activities while at such destination.' (Italics

added.)

36

Thus, by the very terms of the Regulations a taxpayer who combines business
and pleasure may deduct all 'traveling expenses,' provided the business purpose
is dominant.

37

Section 1.1622(b)(2) of the Regulations states:

38

'Whether a trip is related primarily to the taxpayer's trade or business or is

primarily personal in nature depends on the facts and circumstances in each
case. The amount of time during the period of the trip which is spent on
personal activity compared to 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. If, for example, a taxpayer spends one
week while at a destination on activities which are directly related to his trade
or business and subsequently spends an additional five weeks for vacation or
other personal activities, the trip will be considered primarily personal in nature
in the absence of a clear showing to the contrary.' Where, as here, at least onehalf of the time is spent on mundane 'business' activities,1 the case is nowhere
near the colorable transaction described in 1.1622(b)(2).

39

I see no reason to take this case out of the main stream of precedents and
establish a special rule for insurance conventions. Judge Brown, dissenting in
the Court of Appeals, shows how discriminatory this decision is:

40

'Deductions have been allowed as 'ordinary and necessary' to clergymen

attending a church convention; to expenses of an employee attending
conventions of a related business group; to a lawyer attending a meeting of the
American Bar Association; to a legal secretary attending the national
convention of the National Association; to physicians attending medical
conventions; to certified public accountants attending conventions; to university
teachers in attending conventions or scientific meetings; to professional
cartoonists attending political conventions; to persons attending the Red Cross
Convention; to school teachers attending summer school; to attorneys attending
an institute on Federal taxation; to employees sent to refresher courses to
become more acquainted with new processes in the industry; to a furniture store
sending its buyers to the annual furniture mart; to representatives to annual
conventions of trade associations; and to an insurance agent away from home
on business.' 291 F.2d 841, 844845.

41

Insurance conventions go back at least to 1924 (Report No. 15, Life Insurance

Sales Research Bureau, Nov. 1924) and are premised on the idea that agents
and companies benefit from the knowledge and increase in morale which result
from them.2 Why they should be treated differently from other conventions is a
mystery. It cannot be, as the district judge thought and as the Government
seems to argue, because going to New York City is, as a matter of law, a
'pleasure trip.' If we are in the field of judicial notice, I would think that some
might conclude that the weekend in New York City was a chore and that those
who went sacrificed valuable time that might better have been spent on the
farm, in the woods, or along the seashore.
42

Moreover, federal revenue agents attending their convention are given a

deduction for the expenses they incur. We are advised that

43

'* * * the Commissioner has recently withdrawn his objections in two Tax
Court cases to the deduction of convention expenses incurred by two IRS
employees in attending conventions of the National Association of Internal
Revenue Employees.

44

'No explanation has been given publicly for the Tax Court action of the
Commissioner, it being generally presumed that the IRS employees met the
tests of Reg. 1.1622(d) by showing a sufficient relationship between the
trade or business of being an IRS employee and attendance at conventions of
the NAIRE. The National Association of Internal Revenue Employees has
hailed the Commissioner's actions as setting a precedent which can be cited by
IRS employees when taking deductions for expenses incurred in attending
NAIRE conventions.' CCH Standard Federal Tax Reports No. 23, April 19,
1961, pt. 1, p. 2.

45

It is odd, indeed, that revenue agents need make no accounting of the movies
they saw or the nightclubs they attended, in order to get the deduction, while
insurance agents must.

III.
46

The wife's expenses 3 are, on this record, also deductible. The Treasury
Regulations state in 1.1622(c):

47

'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. The same rules apply to any other members of
the taxpayer's family who accompany him on such a trip.'
48

The civil law philosophy, expressed in the community property concept,

attributes half of the husband's earnings to the wifean equitable idea that at
long last was reflected in the idea of income splitting under the federal income
tax law.4 The wife's contribution to the business productivity of the husband in
at least some activities is well known. It was specially recognized in the
insurance field long before the issue of deductibility of her expenses arose
under the federal income tax.5 Business reasons motivated the inclusion of
wives in this particular insurance convention. An insurance executive testified
at this trial:

49

'Q. I hand you Plaintiff's Exhibit 15, and you will notice it is a letter addressed
to 'John Doe'; also a bulletin entitled 'A New Partner Has Been Formed.'

50

'Will you tell us what that consists of?

51

'A. This is a letter addressed to the wife of an agent, a new agent, as we make
the contract with him. This letter is sent to his wife within a few days after the
contract, enclosing this booklet explaining to her how she can help her husband
in the life insurance business.

52

'Q. Please tell us, as briefly as you can and yet in detail, how you as agency
director for Southland attempt to integrate the wives' performance with the
performance of agents in the life insurance business.

53

'A. One of the important functions we have in mind is the attendance at these
conventions. In addition to that communication, occasionally there are letters
that will be written to the wife concerning any special sales effort that might be
desired or promoted. The company has a monthly publication for the agents and
employees that is mailed to their homes so the wife will have a convenient
opportunity to see the magazine and read it.

54

'At most of our convention program(s), we have some specific reference to the
wife's work, and in quite a few of the convention programs we have had wives
appear on the program.

55

'Q. Suppose you didn't have the wives and didn't seek to require their attendance
at a convention, would there be some danger that your meetings and

conventions would kind of degenerate into stag affairs, where the whole
purpose of the meeting would be lost?
56

'A. I think that would definitely be a tendency.'

57

I would reverse the judgments below and leave insurance conventions in the
same category as conventions of revenue agents, lawyers, doctors, business
men, accountants, nurses, clergymen and all others, until and unless Congress
decides otherwise.

A joint return had been filed.

As I see this case, there is no need to explore whether the proper reporting
procedure for a deductible expense is not to include it in income in the first
place, cf. Treas.Reg. 1.162 17(b), or to 'run it through' the taxpayer's income
with an offsetting deduction in the same amount.

E.g., 71 (Alimony and separate maintenance payments), 72 (Annuities;

certain proceeds of endowment and life insurance contracts), 73 (Services of
child).

74: '(a) GENERAL RULE.Except as provided in subsection (b) and in

section 117 (relating to scholarships and fellowship grants), gross income
includes amounts received as prizes and awards.
'(b) EXCEPTION.Gross income does not include amounts received as prizes
and awards made primarily in recognition of religious, charitable, scientific,
educational, artistic, literary, or civic achievement, but only if
'(1) the recipient was selected without any action on his part to enter the contest
or proceeding; and
'(2) the recipient is not required to render substantial future services as a
condition to receiving the prize or award.'

102.

119. Some of the other exclusions are 101 (Certain death payments), 103
(Interest on certain governmental obligations), 104 (Compensation for
injuries or sickness), 105 (Amounts received under accident and health plans),
113 (Mustering-out payments for members of the Armed Forces), 117
(Scholarship and fellowship grants).

Treas.Reg. 1.611(a) provides:

'Gross income means all income from whatever source derived, unless
excluded by law. Gross income includes income realized in any form, whether
in money, property, or services. Income may be realized, therefore, in the form
of services, meals, accommodations, stock, or other property, as well as in cash.'
See also Treas.Reg. 1.612(a) (1), (d) and 1.741(a).

Petitioners rely on 3401 of the 1954 Code, 26 U.S.C.A. 3401, relating to

withholding taxes, and more especially on Treas.Reg. 31.3401(a)1(b) (10)
providing that certain fringe benefits are not considered 'wages' subject to
withholding. The Government admits that not all 'fringe benefits' have been
taxed as income, but it is enough to point out here that the withholding tax
analogy is not perfect, for payments to laid-off employees from companyfinanced supplemental unemployment benefit plans are 'taxable income' to the
employees although not 'wages' subject to withholding. Rev.Rul. 56249,
19561 Cum.Bull. 488, as amplified by Rev.Rul. 60330, 19602
Cum.Bull. 46.

The District Court said (189 F.Supp., at 45):

'All of the evidence considered, we think it irrefutably leads to this conclusion:
That the insurance company was just doing a gracious magnanimous thing of
awarding those leading agents a trip just as much as if it had awarded them an
automobile, or suit of clothes * * *.
'* * * (W)e conclude, that the trip was earned by * * * Rudolph, and was in the
nature of a bonus, reward, and compensation for a job well done.'
It is pertinent to note that in addition to the facts referred to on p. 271 of 370
U.S., on p. 1279 of 82 S.Ct., supra, the record shows that company-sponsored
conventions of the same kind have in recent years been held in Canada, Mexico
City, Havana, Colorado and California, places well known for their appeal to
tourists, and far removed from the home office in Dallas. While this factor
alone does not render the expenses nondeductible, see I.R.S. News Rel. No. IR
394, August 3, 1961, it certainly was a relevant circumstance for the District
Court to consider.

'(a) IN GENERAL.There shall be allowed as a deduction all the ordinary and

necessary expenses paid or incurred during the taxable year in carrying on any
trade or business, including
'(2) traveling expenses (including the entire amount expended for meals and
lodging) while away from home in the pursuit of a trade or business * * *.'

No question is raised in this case as to whether the $80,000 paid by the

company for the total convention expense is deductible by the corporation.
There is no need to explore the lack of symmetry in certain 'income' and
'deductibility' areas in the 1954 Code permitting employers to provide certain
'fringe benefits' to employeessuch as parking facilities, swimming pools,
medical serviceswhich have not generally been considered income to the
employee, but which, if paid for by the employee with his own funds, would
not be a deductible expense. The practicalities of a tax system do not demand
hypothetical or theoretical perfection, and these workaday problems are
properly the concern of the Commissioner, not of the Courts.
10

Although this Regulation is part of those promulgated on April 3, 1958, it is

applicable to this 1956 transaction. The power to make the Regulations
prospective only, Int.Rev.Code of 1954, 7805(b), 26 U.S.C.A. 7805(b), was
not exercised, and they were made applicable to taxable years beginning after
December 31, 1953. T.D. 6291, 19581 Cum.Bull. 63. Moreover, the result
here would not be different under the prior comparable Regulation. Treas.Reg.
118, 39.23(a)2(a).

11

No claim has been made by the husband in this case that specific business
expenses which may have been incurred at the convention in New York are
deductible. The only issue is the deductibility of the entire trip expense.
Compare Patterson v. Thomas, 289 F.2d 108, 114 and n. 13.

12

Deductions allowed: Coffey v. Commissioner, 21 B.T.A. 1242 (doctor);

Coughlin v. Commissioner, 2 Cir., 203 F.2d 307 (lawyer); Shutter v.
Commissioner, 2 B.T.A. 23 (clergyman); Callinan v. Commissioner, 12 T.C.M.
170 (legal secretary); see Rev.Rul. 59316, 19592 Cum.Bull. 57; Rev.Rul.
6016, 19601 Cum.Bull. 58.
Deductions not allowed: Duncan v. Commissioner, 30 T.C. 386 (doctor); Ellis
v. Burnet, 60 App.D.C. 193, 50 F.2d 343 (lawyer); Reed v. Commissioner, 35
T.C. 199 (lawyer); Patterson v. Thomas, 289 F.2d 108 (insurance agent);
Russell v. Commissioner, 11 T.C.M. 334 (railroad fireman).

The travel to and from the convention was in a group, so arranged as to develop
solidarity among the agents, and to provide a continuing seminar.

'One of the chief things to be accomplished by a convention is to secure

unanimous understanding of the principles underlying the company's sales
operations and the rules which experience has proved to be essential in carrying
out those principles. There is no sales organization anywhere which has a
complete and unanimous grasp of these matters but a convention can do more

to give the men that grasp than anything else. Home Offices are constantly
under the necessity of formulating principles and rules, and they are similarly
in a constant state of disappointment because they are not understood. The
convention is the place above all others where this can be accomplished.
'The extent to which the Home Office arranges for transportation depends
largely upon the situation of the convention city. If it is centrally located with
many lines of approach, it would be impracticable to arrange for many men to
meet on their way to the convention. But if the convention is to be held in an
isolated spot, or one at considerable distance from the home of the majority of
the members attending, then specific plans may be made for assembling at
some nearer location and proceeding together to the destination. If this latter is
at all feasible, it is desirable for several reasons. It gives the men a peculiar
feeling of satisfaction to travel on a 'special' train or on 'special' cars, it
encourages a friendlier feeling than is generally present at conventions at which
the men arrive as strangers, it makes the men more anxious to get down to the
real work of the convention when they arrive at their destination, and, above
all, it has a decided educational value in its contacts and ever present business
discussions.' Report No. 15, Life Insurance Sales Research Bureau, Nov. 1924,
pp. 13, 1718.
3

For reasons not germane to the problems of the federal income tax, the New
York Superintendent of Insurance has ruled that the payment of a wife's
expenses in attending an insurance convention is not permissible.
N.Y.Ins.Dept.Rulings (1953), Oct. 6, 1953. And see Insurance Law, 27
McKinney's Consol.Laws of N.Y., c. 28, 213, subdivisions 7 and 8, regulating
insurance agents' competitions.

See H.R.Rep. No. 1274, 80th Cong., 2d Sess., pp. 1, 47.

'Today an ever increasing number of wives take a real interest in what their
husbands do, and this interest is frequently referred to by men as being of very
great value to them. In fact, it has been said that a wife can not usually be so
wholly lacking in contact with her husband's work as to have no influence at all
upon it.
'In many cases, this influence is negative rather than positive, and this is
particularly true in the careers of many life insurance agents because their work
frequently involves evening appointmentsa condition usually resented by a
wife. Many a wife has thoroughly discouraged her husband because the only
thing which she ever knew about his work was that he had to go out at night or
that he had failed to 'write that ten' which would give her a new dress. She
knew nothing about the bigger things which life insurance accomplishes and of

which her husband was or could be a part. The recognition of the very great
desirability of 'selling' the wife on her husband's job has spread rapidly in recent
years, and today many husbands are helped over the rough spots of their career
by the enthusiasm and vision of their wives, much of which can be aroused or
increased at a convention'. Report No. 15, supra note 2, pp. 2526.