Opinion
Docket No. 52093.
1955-07-26
JAMES R. WHITAKER AND ELNORA F. WHITAKER, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
James R. Whitaker, pro se. Sylvan Siegler, Esq., for the respondent.
TRAVEL EXPENSES— SEC. 23(a)(1)(A), I.R.C. 1939.— Petitioner was employed at Thule, Greenland, for the greater part of 1952 as a project engineer on a construction project being constructed under contract with the Department of the Army. He was not permitted to take his family with him. Held, the employment was of indefinite duration, and petitioner's main post of duty or principal place of business was at Thule, Greenland, in 1952, and his expenses for food and lodging while there were nondeductible personal living expenses. James R. Whitaker, pro se. Sylvan Siegler, Esq., for the respondent.
The Commissioner determined a deficiency of $522.26 in income tax for the year 1952.
The question is whether petitioner properly deducted amounts expended for meals and lodging at Thule, Greenland, as expenses incurred while away from home in the pursuit of a trade or business under section 23(a)(1)(A) of the Internal Revenue Code of 1939.
FINDINGS OF FACT.
Petitioners, husband and wife, filed their joint income tax return for 1952 with the director of internal revenue for the district of Iowa.
Petitioner, James R. Whitaker (hereafter referred to as petitioner), is a civil engineer. Early in 1951 he resided at Hawarden, Iowa, where he maintained a home for himself and his family.
In February 1951 petitioner commenced work as an assistant project engineer for North Atlantic Constructors, a joint venture operating under a contract with the Department of the Army for the performance of certain off-shore construction in the general vicinity of Thule, Greenland. By the end of 1951 he had been made a project engineer.
Petitioner's employment with North Atlantic Constructors began under a written contract. A second contract was signed on April 4, 1952. The contracts of employment were identical except for dates. Each was entitled ‘Off-Continent Employment Agreement,‘ and each contained, inter alia, the following provisions:
SECTION 2. TERM OF AGREEMENT.
The term of this Agreement shall be the period during which the services of the Employee are required. No definite period of employment is assured; however, after eight (8) months continuous employment at the job site the Employee may terminate his employment hereunder by giving the Contractor written notice specifying the date on which he desires to terminate his employment, which date shall not be less than than fifteen (15) days after the date of delivery of such notice to the Contractor.
SECTION 7. JOB SITE FACILITIES.
(a) Board, lodging, laundry and dry cleaning when available, social services, and such hospitalization, medical services and temporary dental care as in the opinion of the Contractor may be desirable, to keep the Employee in condition to render proper services, will be furnished by the Contractor at the job site to the extent authorized by the Contracting Office, at a charge of Five Dollars and Seventy Five Cents ($5.75) per day. The Employee hereby authorizes the Contractor to deduct all such charges from any payments otherwise due to the Employee hereunder.
(b) The Employee agrees that no claim shall arise against the Contractor for the adequacy of job site facilities furnished hereunder, it being recognized by the Employee that conditions at the job site are unusual; the Contractor will, to the extent of his ability, furnish the best facilities which are possible under the conditions encountered.
SECTION 10. TERMINATION OF EMPLOYMENT.
The Employee agrees that if he quits or is terminated for cause prior to the completion of eight (8) months service hereunder, the Contractor's obligations to the Employee shall cease on the date of such quitting or termination for cause, and the Employee shall be liable for the costs and other expenses for his return to the United States. * * *
SECTION 24. CERTIFICATION BY EMPLOYEE.
The Employee Certifies to the Contractor That He Has Read the Foregoing Agreement and That He Fully Understands Its Terms and Conditions, and Further Certifies That the Foregoing Terms and Conditions Constitute His Entire Agreement With the Employer, and That No Promises or Understandings Have Been Made Other Than Those Stated Above; and It Is Specifically Agreed by the Parties Hereto That This Agreement Shall Be Subject to Modification Only by Written Instrument Signed by Both the Contractor and the Employee.
The exact location of the petitioner's job site was a military secret and was not disclosed in the employment agreement. Petitioner was informed that he would be working in a cold climate, and that he would be sent outside the continental limits of the United States. The construction project for which petitioner was hired was located in Thule, Greenland.
In July 1951 petitioner was sent to Thule, Greenland, as assistant project engineer. He was in Thule from December 15, 1951, to January 5, 1952; from April 8, 1952, to August 12, 1952; and from August 29, 1952, to November 26, 1952. He returned to Thule in January 1953 and again in April 1953.
During the year 1952 petitioner left Thule on three separate occasions to travel to the United States. On each of these occasions he stopped in New York City, where his employer's main office was located, and in Minneapolis, Minnesota, where his employer's recruiting office was located.
Petitioner's family was not permitted to accompany him to Greenland. His family remained in Hawarden, Iowa, during all of 1952. On two of the three occasions that he traveled to the United States, petitioner visited his family in Hawarden.
Petitioner's employer either provided him with transportation to and within the United States, or reimbursed him for traveling expenses incurred. Petitioner's employer also reimbursed him for certain board and lodging expenses incurred at New York City, Minneapolis, Minnesota, and Hawarden, Iowa, in connection with petitioner's three trips to United States.
Petitioner's employer did not reimburse him for certain board and lodging expenses incurred at Minneapolis, Minnesota, during the months of February, March, and April 1952. The total amount of these expenses was $128.80.
On the joint income tax return filed by petitioner and his wife for the taxable year 1952, he deducted board and lodging expenses amounting to $1,503.05 from the total amount of wages received by him during the year. This sum consists of board and lodging expenses in the amount of $128.80 incurred at Minneapolis and board and lodging expenses in the amount of $1,374.25 incurred at Thule.
In the notice of deficiency respondent determined that of the total amount of $1,503.05 claimed as board and lodging expenses, only the sum of $128.80 represented on allowable deduction for meals and lodging while employed by North Atlantic Constructors.
Board and lodging expenses in the amount of $1,374.25 were incurred by petitioner at Thule from December 15, 1951, to January 5, 1952; from April 8 to August 12, 1952; and from August 29 to November 26, 1952. The sum of $1,274.25 was apparently computed by multiplying the number of days in question by $5.75, the amount which petitioner's employer charged him for board, lodging, and related services furnished at the job site under the terms of the employment agreement.
Petitioner spent a total of 222 days at his job site in Thule, Greenland, during the taxable year 1952.
Thule, Greenland, was petitioner's main post of duty or principal place of business in 1952.
OPINION.
TIETJENS, Judge:
We here are concerned with section 23(a)(1)(A) of the Internal Revenue Code of 1939 which, inter alia, provides for the deduction of ‘traveling expenses * * * while away from home in the pursuit of a trade or business.’
Petitioner earnestly contends that his ‘principal place of business' during 1952 was in New York, where the main office of his employer was located, and which he and his employer both ‘considered’ to be his principal place of business. He also argues that his ‘home’ was in Hawarden, Iowa, where his family continued to reside and to which he returned, and thus that the expenses which he seeks to deduct were incurred while away from home.
But questions with reference to the meaning of ‘home’ as used in the section of the Code referred to are not so easily answered. In Raymond E. Kershner, 14 T.C. 168, we said at page 174, ‘For the purposes of the statute, a taxpayer's home means his place of business, employment, or post or station at which he is employed.’ This, of course, must depend upon more than the mere fact that the taxpayer or his employer ‘considered’ such and such a place to be the employee's principal place of business or employment or his home. The ultimate fact must depend upon all the evidence of record in the light of the statutory language.
The proper conclusion becomes more difficult where the taxpayer, as here, travels from place to place during the taxable year in pursuit of his business or that of his employer. In cases of this type we have held that a distinction is to be made whether the employment is of a ‘temporary’ or ‘indefinite’ duration at a particular place. Beatrice II. Albert, 13 T.C. 129.
The employment of petitioner in Thule may have lacked permanence, but from an examination of all the facts as we see them, it was not the kind of employment to be considered temporary in character. Rather, we think it was of indefinite duration as specifically set out in the employment contract. At least 8 months employment was contemplated and petitioner in fact spent 222 days in Greenland during 1952. Petitioner was required to make several trips from Thule to ‘Stateside,‘ and he argues that this supports his contention that Thule was not his principal place of business or post. He testified, however, that the time spent in the States was for the purpose of planning and conferring with reference to the job in Greenland, and we think the inference is clear that these trips were incidental to the proper performance of his primary job in Thule. They do not prove that he had a post or principal place of employment elsewhere.
We are unable to distinguish this case in any material respect from Ney v. United States, (D. Ark.) 77 F.Supp. 1005, affd. (C.A. 8) 171 F.2d 449, certiorari denied 336 U.S. 967. In that case the taxpayer maintained a home for his family and had a business in Fort Smith, Arkansas. He accepted employment with the Office of Price Administration with the understanding that the appointment would be of short duration but he was persuaded to remain longer than anticipated. His first post of duty was in Atlanta, Georgia, but he was later transferred to Washington, D.C. He sought to deduct living expenses incurred by reason of having to maintain separate residences in Atlanta and Washington, D.C. The deduction was denied, the appellate court saying:
Neither do we think the expenditures can be said to have been incurred by plaintiff while away from home within the meaning of Section 23(a)(1)(A.) They are personal and living expenses and not business expenses.
The Ney case was followed in Robert F. Green, 12 T.C. 656. See also Michael J. Carroll, 20 T.C. 382, where it was held that a taxpayer who was employed by the War Department on an appointment of indefinite tenure for a period of about a year as a banking and taxation consultant in Korea could not deduct expenses of meals and lodging while in Korea, since Korea was his principal place of employment, and he was not ‘away from home’ within the meaning of section 23(a) (1)(A).
Here, although petitioner contends Thule was not his main post of duty or principal place of business, we think the facts call for the ultimate finding that it was. The fact that petitioner was not permitted to take his family to Thule, so that he had no choice in the matter, does not help petitioner. In this respect the case is somewhat similar to Willard S. Jones, 13 T.C. 880, where petitioner accepted indefinite employment at Oak Ridge, Tennessee. No housing was there available for his family, and as a practical matter the petitioner had no more choice in making his family home in Oak Ridge than petitioner here had of moving his family to Thule. His home was 75 miles away in Bakewell, Tennessee. He sought to deduct the cost of food and lodging while in Oak Ridge. We denied the deduction saying, inter alia,
The fact that housing conditions in Oak Ridge were such that it was difficult or impossible to bring his wife there with him is not of any help to petitioner in this case.
We also point out that while the facts in Michael J. Carroll, supra, do not show that petitioner was not permitted to take his family to Korea, we gather from the character of the orders issued him and the world conditions involved that practical considerations prevented him from so doing. We can perceive no difference between a petitioner who is not permitted to move his family to his post of duty and one who is prevented by practical reasons from doing so.
On all the facts we hold that the deductions in dispute are not travel expenses away from home deductible within the meaning of the statute. They were personal living expenses.
Because of an uncontested adjustment.
Decision will be entered for the respondent.