Opinion
Docket No. 12712.
1948-04-20
WILLIAM W. TODD, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
William W. Todd, pro se. James C. Maddox, Esq., for the respondent.
1. The Commissioner has determined a deficiency in petitioner's income tax for the year 1943, based on the disallowance of a claimed deduction for 1942 and a similar one for 1943. Petitioner pleads the statute of limitations as to the 1942 adjustment. Petitioner's income tax return for 1943 was filed March 15, 1944, and the deficiency notice was mailed September 20, 1946. Held, that although the year 1942 was involved in part, determination of the deficiency was not barred by the statute of limitations. Lawrence W. Carpenter, 10 T.C. 64. William W. Todd, pro se. James C. Maddox, Esq., for the respondent.
2. Petitioner is a civilian employee of the United States Government and maintains a home for his family in Bozeman, Montana. In 1942 he was a civilian employee with the Engineer Corps of the War Department, with headquarters in St. Louis, Missouri. In August of that year he was transferred to Newport News, Virginia, as a civilian employee of the War Department at that port of embarkation. During the remainder of 1942 and in 1943 he incurred certain expenses for meals and lodging while working at his post of duty. Held, these expenditures are not deductible as traveling expenses while away from home in pursuit of a trade or business under the provisions of section 23(a)(1)(A), I.R.C., but constitute personal living expenses and are not deductible. See sec. 24(a)(1), I.R.C.
The Commissioner has determined a deficiency of $351.58 in petitioner's income tax for the year 1943. The deficiency results from certain adjustments made to the income tax returns filed by petitioner for the years 1942 and 1943. The year 1942 is involved because of the forgiveness feature of the Current Tax Payment Act of 1943. The adjustments which the Commissioner made for the years 1942 and 1943 were explained in the deficiency notice as follows:
(a) It is held that the amounts of $1,613.70 and $1,111.00 representing amounts claimed as deductions in your income tax returns for the years 1942 and 1943, respectively, as expenditures for quarters, subsistence and transportation while away from your home in Bozeman, Montana, are not proper deductions from gross income under the provisions of Section 23(2) of the Internal Revenue Code.
In assailing the determination made by the Commissioner the petitioner first pleads that the statute of limitations bars any adjustment for the year 1942. He next assigns error to the effect that the Commissioner erred in not allowing to petitioner both of the foregoing claimed deductions, $1,613.70 for the year 1942 and $1,111 for the year 1943.
FINDINGS OF FACT.
William W. Todd, petitioner herein, is an individual with permanent legal residence at Bozeman, Montana, and temporary residence in Washington, D.C. The return for the year 1943, here involved, was filed with the collector for the district of Montana on March 15, 1944.
The notice of deficiency attached to the petitioner was mailed to petitioner on September 20, 1946.
On or about August 19, 1942, per telegraphic orders, on authority of the Secretary of War, petitioner was transferred at Government expense for transportation and per diem from the St. Louis, Missouri, Headquarters of the War Department Corps of Engineers, to the War Department Transportation Corps Installation, ‘Hampton Roads Port of Embarkation,‘ Newport News and Norfolk, Virginia.
General John R. Kilpatrick, port commander, was the petitioner's superior officer in France (AEF) in 1918-1919. General Kilpatrick wished to avail himself of the World War I, G-4 logistic experience of the petitioner and subsequent professional background and knowledge of Government regulations and procedure. Petitioner's civilian classification was civil service ‘Senior Administrative Officer,‘ but was known otherwise as ‘Aide To The Commanding General.‘ General Kilpatrick occupied the judge's chambers and adjacent offices on the second floor of the Federal Building at Newport News, Virginia. Petitioner had an office adjoining the general's quarters during tour of duty from August 1942 to December 1942 at Newport News. As such aide petitioner acted in a confidential capacity in a variety of matters in the early history of the organization of the port. During this time petitioner resided in the Shirley Hotel, a small residential hotel four blocks from port headquarters in the Federal Building, and he ate in city restaurants.
In November of 1942 General Kilpatrick directed petitioner to organize a staff with personnel and set up an ‘Overseas Supply Division,‘ one of the three major operating divisions of a port of embarkation (per Army Tables of Organization), with the idea that the division would be turned over as an operating entity to Colonel Lee Garnett Day, a former associate of General Kilpatrick and petitioner in France in World War I. Following a personal physical survey of the Port of New York and paper comparison with the Port of San Francisco, recommendation was made by petitioner that the existing facilities at the Norfolk Army Base, then a part of the over-all Port of Hampton Roads, be utilized as headquarters of the Overseas Supply Division activities. When Colonel Day returned to Army service and took command of the division, on or about March 15, 1943, O.S.D. was staffed with 75 commissioned officers, 90 civilian employees, and 50 enlisted personnel.
On or about December 9, 1942, petitioner moved from the Newport News side of the Hampton Roads port facilities over to the Norfolk Army Base side. No travel order was required. There were no quarters on the Army base proper, either permanent or temporary, available to the petitioner. Accordingly, petitioner took up living quarters in a large room above the garage attached to a private home within walking distance of the Army base but some five miles from the city of Norfolk. When quarters were available in the bachelor officers' quarters on the base, petitioner moved in and resided there for the period from June 3 to November 15, 1943, on which later date the petitioner went on annual leave preparatory to transfer to the Reconstruction Finance Corporation in Washington, D.C. From December 9, 1942, until November 15, 1943, except when off the base, meals were taken in the civilian-officers' mess. The latter mess was not opened until February of 1943. Petitioner expended for meals and lodging while at his post of duty stationed at the Hampton Roads port of embarkation, Newport News, and Norfolk, Virginia, during the year 1943 the sum of $1,111. It is not possible from the record to determine how much he spent in 1942 for these same purposes at his station of duty at the Hampton Roads port of embarkation, but it was a considerable sum.
General Facts Respecting Petitioner's Services to the Government Since 1935 in Civilian Capacity.
Prior to October 1935 petitioner was in private practice as a public accountant in Helena and Bozeman, Montana, where he maintained a home. In October of 1935 he first went to work for the United States Government with the Federal Works Agency, having posts of duty and official headquarters in Denver, Omaha, Chicago, and St. Louis, from which points he did considerable traveling on Government per diem.
In March of 1942 he was still with the Federal Works Agency, but with post of duty and official headquarters in Washington, D.C. He transferred in that month to the Engineer Corps of the War Department with official headquarters and post of duty in St. Louis, Missouri, except for a short period when such official headquarters and post of duty were located in Springfield, Illinois.
In August of 1942, as elsewhere detailed in these findings, petitioner was transferred to Newport News, Norfolk, Virginia, in connection with the Army operations at those points. Those points were his official headquarters and post of duty, entailing but a little travel in 1942 and none in 1943. The travel in 1942 was for the Government on a per diem basis. During all of petitioner's employment by the Government, beginning in October 1935 and continuing through 1943, petitioner maintained his family in Bozeman, Montana. He was a civilian employee of the Government with classified status, and was assigned to the official headquarters and posts of duty as hereinabove recited.
OPINION.
BLACK, Judge:
The first issue raised by petitioner is that the Commissioner is without authority in determining a deficiency against him for the year 1943 to disallow a deduction of $1,613.70 claimed by petitioner on his income tax return for the year 1942, because the statute of limitations bars any adjustment for 1942. It should be borne in mind that the Commissioner has not determined any deficiency in petitioner's income tax for the year 1942. What he has done is to determine a deficiency for the year 1943, and in so doing he must of necessity take into consideration petitioner's income and deductions for the year 1942. This is made necessary by the forgiveness provisions of the Current Tax Payment Act of 1943.
Petitioner's income tax return for 1943 was filed March 15, 1944. The notice of deficiency was mailed to petitioner on September 20, 1946. Therefore, the deficiency was determined within three years of the filing of petitioner's return for the year 1943. The statute of limitations had not barred the deficiency at the time of the mailing of the deficiency notice. The precise issue which petitioner raises as to the statute of limitations was raised by the taxpayer in Lawrence W. Carpenter, 10 T.C. 64, and was decided adversely to the contention of the taxpayer. Therefore, following that case, we decide the issue of the statute of limitations against petitioner.
The next and principal issue raised by petitioner is whether amounts spent by petitioner for living expenses at his posts of duty and official headquarters during 1942 and 1943 constitute traveling expenses while away from home in pursuit of a trade or business within the meaning of section 23(a)(1)(A) of the Internal Revenue Code, as petitioner contends, or whether these expenses constitute personal living expenses within the meaning of section 24(a)(1) and are, therefore, not deductible, as the Commissioner has determined and still contends. Under 0he facts which have been proved, we decide this issue in favor of the Commissioner. Since 1935 petitioner has been a civilian employee of the United States Government in one capacity or another. During all this time petitioner has maintained his family at Bozeman, Montana. This, of course, he has a right to do, but it does not give him the right of a travel status while working at his regular post of duty in the Government service. If it did, then doubtless thousands of other Government employees would be entitled to the same sort of deductions as he claims.
The facts show that in August 1942 petitioner was transferred from St. Louis, Missouri, which was then his official headquarters, to duty in a civilian capacity with the War Department at Newport News, Virginia. He received travel pay to cover the expenses of this change of location, and that is not involved here. After he arrived at Newport News he was at what was to be his then post of duty and he would be entitled to a travel status only when traveling out of there on official business. There was very little of such travel on the part of petitioner in 1942, and what there was is not involved here. Apparently there was none in 1943.
The Commissioner cites the following cases among others, in support of his determination: Commissioner v. Flowers, 326 U.S. 465; Barnhill v. Commissioner, 148 Fed.(2d) 913; York v. Commissioner, 160 Fed.(2d) 385; Thompson v. Commissioner, 161 Fed.(2d) 185; Herman Martin, 44 B.T.A. 185; S. M. R. O'Hara, 6 T.C. 841; Arnold P. Bark, 6 T.C. 851; John D. Johnson, 8 T.C. 303. We think these cases undoubtedly support the determination which the Commissioner has made. The effect of these decisions is to hold that a taxpayer's living expenses while he is carrying on his duties at his regular place of business are personal and not business expenses. York v. Commissioner, supra. In that case the court, in affirming our memorandum opinion decision, said:
The Tax Court was clearly right in ruling against petitioner. A man's living expenses while he is carrying on his business at his regular place of business are personal and not business expenses. This is true even though he maintains, as petitioner did at first, a place of abode so distant from his place of business that daily commuting is impossible. Commissioner v. Flowers, 326 J.S. 465. * * *
We must so hold in the instant case.
Petitioner in his reply brief, which we have carefully read and considered, endeavors to distinguish the foregoing decisions and others cited by respondent on the ground that they differed on their facts. It is, of course, true that in these cases there are certain differences in fact from those of the instant case, but the controlling principle decided in these cited cases is that expenditures of the kind which petitioner seeks to deduct in the instant case are personal expenses and are not deductible. Petitioner in his brief lays particular stress on the fact that the travel orders which he received in August of 1942 directing him to proceed from what was then his headquarters in St. Louis, Missouri, to Newport News, Virginia, did not provide for the payment by the Government of the cost of moving petitioner's household goods, as authorized under the provisions of Executive Orders Nos. 8588 and 9122. Petitioner's travel orders directing him to proceed from St. Louis, Missouri, to his new post of duty at Newport News, Virginia, are not in evidence and we do not know what they contained. But, assuming that those orders did not provide for payment by the Government of the cost of moving petitioner's household goods, that has nothing to do with the issue which we have here to decide. Petitioner is not claiming in this proceeding any deduction for the cost of moving his household goods from St. Louis to Newport News. Certainly it would not have any bearing on the question as to whether after the transfer petitioner's regular post of duty as a civilian employee of the United States Government was at Newport News, Virginia.
Decision will be entered for the respondent.