employee held to be in a trade or business for purposes of section 162
How later courts described this case
- employee held to be in a trade or business for purposes of section 162
- employee held to be in a trade or business for purposes of sec. 162
- fee in order to secure employment held deductible
Written by the judges who cited it.
The opinion
TaNNENWAld, /., concurring: I am in full agreement with the result reached by my colleagues in the majority and with much of the reasoning in Judge Sterrett’s careful and lucid analysis and his apparent rejection of the subtle distinctions which seem to be developing in this area. To me, the drawing of distinctions based upon the difference between “seeking” and “securing” employment, upon whether the fee of the employment agency is contingent or payable in any event, or upon whether the agency’s efforts are successful or unsuccessful simply adds unnecessary confusion and complexity to a tax law which already defies understanding even by sophisticated taxpayers. I would similarly reject any attempt to import a capitalization of expenditure concept into a situation such as is involved herein. That concept has generally been confined to cases of acquisition of tangible assets or intangible assets, sucli as a license or goodwill of a going business, or preparation for engaging in a new field of endeavor. Compare Morton Franke, 20 T.C. 511 (195B) (prospective acquisition of newspaper businesses) ; Manhattan Co. of Virginia, Inc., 50 T.C. 78 (1968) (goodwill) ; Arthur E. Ryman, Jr., 51 T.C. 799 (1969) (admission to the bar of a second State); Nathanial A. Denman, 48 T.C. 439 (1967) (preparation for a new field of endeavor). By way of contrast, current deductibility bas normally 'been permitted for advertising expenditures and for educational expenditures to improve one’s skills utilized in existing employment, even though there were indications that some general benefit would in all probability last beyond the year of expenditure. E.g., Consolidated Apparel Co., 17 T.C. 1570, 1582 (1952), affirmed in part and reversed in part on other issues 207 F. 2d 580 (C.A. 7, 1953) (advertising expenses); Cosimo A. Carlucci, 37 T.C. 695, 701 (1962) (educational expenses). Compare Harold Haft, 40 T.C. 2 (1963).
Certainly, in the ordinary affairs of life, common understanding would clearly encompass the fee paid to the employment agency herein as “ordinary and necessary expenses in carrying on any trade or business” (sec. 162) within the “usual, ordinary and everyday meaning of the term.” See Old Colony R. Co. v. Commissioner, 284 U.S. 552, 561 (1932). I think that the judicial interpretation of the term should be the same. “Common understanding and experience are the touchstones of the revenue laws.” See Helvering v. Horst, 311 U.S. 112, 117-118 (1940).
In cases of the instant type, I would adopt the simple test of comparing the position which the taxpayer occupied before and after the change. Perhaps the categorization of corporate executive will not always be applicable, but, in this case, petitioner was at all times a financial corporate executive. By any reasonable standard of application, he ought to prevail.
I am not concerned that such a test will open up a Pandora’s box of unjustified deductions. The courts are not wanting in capability of separating the wheat from the chaff and, at the same time, exhibiting sufficient flexibility not to proliferate taxpayers’ difficulties unnecessarily. Such a task is simply a normal attribute of judicial life.
FoRresteR, Fay, and DawsoN, JJ., agree with this concurring opinion.