O'Connor
v.
Comm'r of Internal Revenue

Tax Court of the United States.Feb 28, 1946
6 T.C. 323 (U.S.T.C. 1946)
6 T.C. 323T.C.

Docket No. 5792.

1946-02-28

MILDRED A. O'CONNOR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

J. Stanley Halperin, Esq., for the petitioner. Thomas R. Charshee, Esq., for the respondent.


Cost of hiring a nursemaid to care for infant children of petitioner and her husband, both of whom were employed, and to assist petitioner in the discharge of her housekeeping duties, held, not deductible as an ordinary and necessary expense of carrying on a trade or business or as a nontrade or nonbusiness expense incurred for the production or collection of income, under section 23(a), I.R.C., as amended. J. Stanley Halperin, Esq., for the petitioner. Thomas R. Charshee, Esq., for the respondent.

This proceeding involves a deficiency of $106.77 in income tax for the calendar year 1941. The sole issue is whether petitioner, employed as a school teacher, is entitled to deduct the sum of $1,000 expended as salary, board, and lodging for a nursemaid employed by her to care for two minor children. The case was submitted upon a stipulation of facts and oral testimony. The stipulated facts are so found.

FINDINGS OF FACT.

Petitioner is an individual and resides at No. 131-06 228th Street, Laurelton, New York. Her separate income tax return for the calendar year 1941 was filed with the collector of internal revenue for the first district of New York. Petitioner is the wife of J. Vincent O'Connor and the mother of two minor children, aged 11 and 2 years, all of whom reside together at the same address. During the entire taxable year petitioner and her husband were regularly employed. The petitioner was employed as a teacher in the public schools of New York City. pin order to enable her to engage in such employment during the entire taxable year petitioner employed a nursemaid, whose duties were to care for the monor children and to assist petitioner in the discharge of her housekeeping duties. For such services petitioner paid a salary of $600, plus board and lodging having a fair market value of $400. Petitioner claimed the total payment of $1,000 as a deduction for 1941. The respondent disallowed the deduction.

OPINION.

LEECH, Judge:

Petitioner contends she is entitled to the claimed deduction either as an ordinary and necessary expense in carrying on a trade or business, or as a nontrade or nonbusiness expense incurred for the production or collection of income. Petitioner concedes that the case of Henry C. Smith, 40 B.T.A. 1038; affd., 113 Fed.(2d) 114, without opinion, which respondent relies upon, is analogous. Petitioner argues we should reconsider the Smith case in the light of Bingham Trust v. Commissioner, 325 U.S. 365.

Sec. 23(a)(1)(A) and (a)(2), I.R.C., as amended by sec. 121 of the Revenue Act of 1942, made applicable to tax years beginning after December 31, 1938.

In the Smith case, both petitioners, husband and wife, made expenditures for the same purposes as those here. These expenditures there enabled petitioners to both engage in gainful employment. Despite that fact, we held that the disputed expenses were ‘personal‘ and not ‘business‘ expenses. Their deduction was accordingly denied under the explicit provisions of section 24(a)(1) of the Internal Revenue Code. Then in Ralph D. Hubbart, 4 T.C. 121, involving a contested deduction of automobile traveling expenses, including the taxpayer's own travel between home and office, evening social use, and his wife's trips in the daytime, under the same statutory provision controlling here (see footnote 1), we said:

* * * Personal expenses are not deductible, even though somewhat related to one's occupation or the production of income. See Henry C. Smith, 40 B.T.A. 1038; affd. (C.C.A.,2DCir.), 113 Fed.(2d) 114. And the prohibition of deductions for personal expenses remains unaltered. Sec. 24(a)(1).

There is no suggestion here that petitioner's occupation was not his ‘trade or business,‘ and hence the scope of the 1942 amendment does not extend to his situation at all. * * *

That is the present situation. In fact, it seems clear that petitioner's ‘trade or business‘ was that of teaching school.

Since the disputed deduction at bar was a ‘personal‘ expense, therefore it is not deductible. sec. 24(a)(1), I.R.C. The case of Bingham Trust v. Commissioner, supra, of course, did not affect the prohibition in that section.

Decision will be entered for the respondent.