# Appendix — McCabe v. Commissioner

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1982
- **Citation:** 459 U.S. 906

## Text

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM 1982

Petitioner-Appellant
- against -
COMMISSIONER OF INTERAL REVENUE

Respondent-Appellee

APPENDIX

Paul S. Brenner

Attorney for Petitioner-Appellant
John Maguire, of counsel

LAW OFFICES OF RICHARD HARTMAN
252-00 Horace Harding

Little Neck, NY 11362

(423-1800)

App. 1

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

No. 646 - August Term, 1961

(Argued January 25, 1982 Decided April 14, 1982)
Docket No. 81-4175

DENNIS McCABE
Petitioner-Appellant,
- against -
COMMISSIONER OF INTERNAL REVENUE,
Respondent~-Appellee

Before:

MESKILL and CARDAMONE, Circuit Judges,
and HOLDEN, District Judge.*

Appeal from a decision of the United States
Tax Court (en banc), Raum, J., which denied
appellant a deduction taken under I.R.C.
Section 162.

Affirmed. Meskill, C.J., dissents.

PAUL BRENNER, New York, New York (RICHARD HARTMAN
Jeffrey S. Wasserman, Law Offices of Richare
Hartman, New York, New York, on the brief),
for Petitioner-Appellant.

STEVEN I. FRAHM, Attorney, Tax Division, Dept.
of Justice, Washington, D.C. (Glenn L. Archer
Jr.., Assistant Attorney General, Weshington,
D.C., Michael L. Paup, Chief, Appellate
Section, Tax Division, Department of Justice,
Washington, D.C., Jonathan S. Cohen,
Attorney, Tax Division, Department of
Justice, Washington, D.C., on the
brief), for Respondent-Appellee.

*Honorable James S. Holden, Chief Judge of the
United States District Court for the District of
Vermont, sitting by designation.

os

CARDAMONE, Circuit Judge:

The appellant, Dennis McCabe, a police
officer employed by the City of New York,
was required to carry his service revolver
at all times while in the City. To reach
his place of employment the most direct
route from his home to Suffern, New York is
through the State of New Jersey. New Jersey
will aliow an officer such as petitioner
to carry a weapon only by permit. Stating
that he could not expect to obtain a New
Jersey permit, appellant carried his service
revolver on his person and used his own
automobile as his mode of transportation
to and from work. As a result he claimed
an employee business deduction in the amount
of $2,950 for automobile expense on his 1976
tax return. The Commissioner of Internal
Revenue, appellee, disallowed the claimed
deduction and the Tax Court affirmed that
determination. Appellant appeals from that
aecision. We affirm for the reasons which

follow.

FACTS

The facts of this case were stipulated
and may be briefly stated. At the time he
filed his petition in 1976 appellant resided
in Suffern, New York. Suffern, a relatively
remote suburb of New York City, lies west
of the Hudson River and immediately adjacent
to the State of New Jersey. Appellant was
employed as a New York City police officer
assigned exclusively to Manhattan's Twenty-
Eighth Precinct. The regulations of the
New York City PoliceDepartment then in effect
required police officers to be armed at all

times when, in the City, unless otherwise
directed The State of New Jersey, through

which petitioner would travel were he to
commute to work by the most direct route,
permits officers employed by governmental
agencies outside the State to carry weapons
in New Jersey only while engaged in official
duties and upon prior notification to local
police authorities. See N.J. Stat. Ann.
Section 2A: 151-43(a) (West 1969) (repealed
1979) (Current version of N.J. Sta. Ann.

Section

New York City police officers carrying a

service revolver through New Jersey either

by public or private conveyance would be

in violation of New Jersey law without a

New Jersey gun permit. Generally, New

Jersey authorities issue gun permits only

to those persons whose job requirements

necessitate that they be armed in New Jersey

or to persons able to establish urgent need*.
Throughout 1976 appellant used his

personal automobile as his exclusive means

of commuting to and from his duty station

at the Twenty-Eighth Precinct. While com-

muting he carried his service revolver on

his person and did not modify his automobile

to accommodatethe gun. Therefore, the

cost of operating the vehicle by carrying

a revolver was the same as it would have

been had he commuted to his job by auto-

mobile without the revolver. But the

record clearly established that appellaic's

commuting costs could have beenreduced had

he been able to travel through New Jersey.

The record further shows that ample public

transportation existed from Suffern to New

York eter Since much of the convenient
public transportation went through New
Jersey, appellant would have again been
faced with the need for a New Jersey gun

permit.

On his 1976 income tax revurn appellant
claimed $2,950 in automibile expenses as
a deduction on Form 2106, Employee Business
Expenses. This deduction represented the
commuting.costs of driving 17,600 miles
between Suffern and New York City, which
included bridge and thruway tolls. The
Commissioner of Internal Revenue disallowed
the entire deduction and the Tax Court affirmed.

DISCUSSION

At issue before us is when the ordinary

and necessary business deduction embodied

in Internal Revenue Code (I.R.C.) section

6
162 (a) (1976) may properly be claimed.

We first analyze this issue to determine
whether it is one of fact or law. In
Commissioner v. Heininger, 320 U.S. 467
(1943), the Supreme Court stated that
“(w)hether an expenditure is directly

related to a business and whether it is
ordinary and necessary are doubt’.ess pure
questions of fact in most instances.

Expect where a question of law is unmis-~
takably involved a decision of the Board

of Tax Appeals [presently the United States
Tax Court] on these issues...should not be

reversed by the federal appellate courts.”

Id. at 475 (emphasis supplied) (footnote

omitted). See, e.g., Sibla v. Commissioner,

299 F.2d 48 (7th Cir. 1962); Chenango Textile

Corp. v. Commissioner, 148 F.2d 296 (2d

Cir. 1945); Geo. J. Haenn v. Commissioner,

147 F. 2d 682 (3d Cir. 1945); see also,

7
Dobson v. Commissioner, 320 U.S. 489 (1943).

As we recognized in Chenango the
determination of whether a question is one
of law or one of fact is not alwayseasy.
This is particularly true where the lower court
cites appellate court opinions to justify
its conclusion, since it then becomes
difficult to determine whether that court
exercised its own independent judgment.
In Chenango we resolved this dilemma by

placing particular emphasis on the Supreme
Court's language in Heininger. "(S]ince
there is not a'‘quesion of law...unmistakably
involved’ we shall assume that the decision
was the result of a determination of fact

- « «" Chenango, 148 F.2d at 298.

Here we are asked to rule on the
ordinary and necessary business deduction.~
This is a factual inguiry and one which
has been answered by the Tax Court. How-
ever, as in Chenango, the lower court relied
on appellate court opinions to justify
its conclusion. Because it cannot be said
that a question of law is not unmistakably
involved, we employ the Chenango rule and
assume that the Tax Court's decision was
the result of a determination of fact. In
the context of a question of fact it will
be necessary to determine only whether the
Tax Court's decision was clearly erroneous,
i.e., not adequately supported by the
evidence, which will be discussed at II,
infra.

Internal Revenue Code section 162 is

concerned with expenses incurred as a direct

result of engaging in business. For
appellant to prevail he must establish that
his expense falls within the general pro-
visions of section 162(e) - ordinary and
necessary expenses of carrying on a trade
or business. We agree with the determination
of the Tax Court that petitioner failed to
meet his burden in this regard.

For section 162 purposes “ordinary”

means normal and expected; “necessary” means

appropriate and helpful.. Commissioner v.

Heininger, 320 U.S. at 471. Thus, the

question becomes whether petitioner's
additional expenses were appropriate, help-
ful, normal and expected under the circum-
stance or so personal in nature as to be
nondeductible under I.R.C. Section 262
(1976).

One well-established rule in tax law
is that expenses incurred as a result of
commuting from home to work are personal and
not deductible under Section 162. Treasury
Regulation Section 1.162-2(e) provides that

"([clommuters' fares are not considered as

business expenses and are not deductible."

,

Treas. Reg. Section 1.162-2(e) (1958).
See also, Treas. Reg. Section 1.262~1(b)
(5) (1972). The controlling precedent on

this issue is Commissioner v. Flowers,

326 U.S. 465 (1946).

In Flowers the Court was faced with
a case involving a taxpayer who lived in
Jackson, Mississippi and worked in Mobile,
Alabama. The taxpayer tried to deduct the
pone expenses incurred in his excursions
between the two tities and also claimed his
expenditures for meals and hotel accomodations
while in Mobile. The Supreme Court ruled
that the additional expenses, including
the commuting expenses, were not deductible.
Although Flowers was concerned mostly with
what is now I.R.C. Section 162(a) (2),
the Court's general analysis of Section
162 sheds illumination on the question
before us. In setting forth the final
prong of a three-part test of travel expense
delnckshshite = the Court stated that the
“expense must be incurred in pursuit of

business. This means that there must be

a direct connection between the expendi-

10
ture and the carrying on of the trade or
business of the taxpayer or of his employer.
Moreover, such an expenditure must be neces-
sary Or appropriate to the development and
pursuit of the business or trade.” 326 U.S.
at 470. The Court concluded that the travell-
ing expenses were "not incurred in pursuit
of the business of the taxpayer's employer.”
Id.at 473. Further, the added costs were
said to be “unnecessary and inappropriate”
to the development of the employer's bus-
iness. Id. The Court was of the view that
the sole cause of the expense was the tax-
payer's personal desire to reside in Jackson,
"a factor irrelevant to the maintenance and
prosecution of the [employer's] legal bus-
iness." Id. Thus, personal convenience
cannot be the motivating factor behind a
Section 162(a) deduction. Where one chooses
to live is generally a matter of personal
convenience. See, e.¢g., Hitt v. Commissioner,
55 T.C.: 628 (1971); Gilberg v. Commissioner,
55 T.C. 611 (1971).

An exception to the commuting rule

appears in Fausner v. Commissioner, 413 U.S.

1l
838 (1973). Fausner acknowledged that

woumlrecting expenses are not deductible.
"Congress has determined that all tax-
payers shall bear the expense of commuting
to and from work without receiving a
deduction for that expense. We cannot

read Secticn 262 of the Internal Revenue
Code as excluding such [commuting] expense[s]
from ‘personal’ expenses because by happen-
stance the taxpayer must carry incidentals
of his occupation with him.” 413 U.S. at
839 (footnote omitted). The brief per
curiam states, however, that "[(a]dditional
expenses may at times be incurred for trans-
porting job-requested tools and material

to and from work. Then an allocation of
costs between ‘personal’ and ‘business’
expenses may be feasible.” Id. (footnotes
omitted). While the Court provides little
or no guidance as what kind of circumstances
should trigger such an allocation, its
spacific reference to the commuter rule
would indicate that the requirements of
Section 162(a) - ordinary and necessary -

must first be established before reaching

12
the reaching the additional step of allo-

cating.

The Internal Revenue Service in Revenue
Ruling 75-380, 1975-2 C.B. 59 sought to
explain Fausner. It stated that for
additional expenses to be deductible the
taxpayer must first establish “the necessity
of transporting work implements to and from
work." 1975-2 C.B. at 60. Giving the word
“necessity” its usual meaning in tax law,
it again appears that the taxpayer must
establish that the additional expenses
were appropriate and helpful to the
employer's legal bus.iness and not personal
in nature.

II

With this background in mind we may
resolve the case presently before us.
Appellant has argued that he may deduct
the additional travellingexpense incurred
by reason of the use of his automobile in
transporting his police revolver. However,
a majority of the Tax Court ruled, sitting

en banc:

13
that petitioner's additional
commuting expenses were not
directly connected with the
pursuit of his employer's
business, but were principally
the result of his decision to
reside in a comparatively remote
suburb adjacent to New Jersey.
Accordingly, petitioner is
entitled to no deduction for
his commuting expenses under
section 162(a), I.R.C. 1954,
since such expenses were not
necessary for the conduct of
his employer's business.

McCabe v. Commissioner, 76 T.C. 876, 881
(1981).

We turn now to the applicable scope
of appellate review on an appeal from the
Tax Court. This standard is set forth in
26 U.S.C. Section 7482(a) (1976) which
states that "(t]he United States Court of
Appeals shall have exclusive jurisdiction
to review the decisions of the Tax Court...
in the same manner and to the same extent
as decisions in the district courts in
civil actions tried without a jury...”
Federal Rule of Civil Procedure 52(a)
states that findings of fact shall not be
set aside unless clearly erroneous. "A
finding is ‘clearly erroneous’ when although

there is evidence to support it, the review-

14
ing court on the entire evidence is left

with the definite and firm conviction
that a mistake has been committed."

United States v. United States Gypsum Co.,
333 U.S. 364, 395 (1948). See, e@.g.,

Commissioner v. Duberstein, 363 U.S. 278,

291 (1960). While Taylor v. Lombard, 606
F.2d 371, 372 (2d Cir. 1979), citing both

Smith v. Regan, 583 F.2d 72, 76 (2d Cir.

i978) and United States ex rel Lasky v.

LaValleem 472 F.2d 960, 963 (2d Cir. 1973),

indicates the "clearly erroneous" standard
applies only when live testimony and credi-
bility factors are involved, the standard
also extends to findings derived from in-
ferences drawn from documents or undisputed

facts. United States Gypsum Co., supra,

333 U.S. at 394. See also United States v.

Florida, 482 F.2d 205, 208 n. 8.

We are persuaded that the critical
finding of the Tax Court, as set out above,
is adequately based on permissible inferences
derived from the stipulated facts. Since

the record does not generate a definite

15
and firm conviction that a mistake has been

committed, we must affirm the Tax Court.

The New York City requirement that police
officers be armed within city limits
presented a problem for appellant simply
because of the location of his home. Had

he lived almost any place else in the New
York City metropolitan area of New York

State he would not have had to travel through
the neighboring state of New Jersey. The
Police Department required that officers

be armed within New York City limits; it

did not require them to be armed otherwise.
Thus, the added expense incurred by appellant
did not further the New York City Police
Deparment's business of preventing crime
within the City itself.

Finally, appellant's argument that he
falls with the ambit of Fausner is fatally
defective. Although concededly he incurred
additional expense, in order to deduct it
he must first show that it was ordinary and
necessary. As noted, the location of one's

home is personal and did not serve to further

16
the business of the taxpayer's employer in

this case.

The judgment is affirmed.

17
FOOTNOTES

1
Patrol Guide Section 105-1, which so provided,

has since been amended so that police officers
are no longer required to carry a firearm
while “off duty.”

2
It is not clear from the stipulated facts

whether the Commissioner concedes that had
appellant actually applied for a New Jersey
“gun permit, such application would have been ~
turned down. Appellant claims that this

was the intent of the language included in
the stipulation. Since the government may
have misleadappellant into believing that

he need not apply for the New Jersey gun
permit, we find it desireable to reslove
whatever ambiguity may exist in apppellant's
favor so as to allow for a determination

of this case. We do not mean to suggest
that the general rule requiring exhaustion
of administrative remedies is to be lessened.

3
A daily round trip was approximately

eighty miles via New York highways with
toll costs of two dollars per day and

took appre~imately seventy-five minutes

18
one way. Were appellant to have driven

through New Jersey his toll costs would have
been onedollar and fifty cents per day, the
distance traveled would have been approximately
fifty miles and travel time approximately
forty-five minutes one way.

4
The Shortline Sus Company provides weekday

departures. from Suffern to New York City
at least as frequently as every fifteen
minutes between 6:00 a.m. and 8:09 a.m.

in the morning. In the evening between
4:00 p.m. and 6:10 p.m. weekday departures
left New York City for Suffern at least

as frequently as every twenty minutes.
Appellant's tour of duty during 1976 con-
sisted of working weekdays from 8:00 a.m.
to 4:00 p.m.

5
Appellant no longer seeks a deduction in

the amount of $2,950. Instead the dispute
concerns only a portion of that sum - the
difference between the cost of driving
through New York and the cost of public

transportation passing through New Jersey -

19
which has not been given a dollar amount in

the record before us.

6
Section 162(a) provides that 4

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...
I.R.C. Section 162(a) (1976).

7
For discussions on the scope of appellant

review of a Tax Court decision, see

generally, Commissioner v. Idaho Power Co.,

418 U.S. 1 (1974) (Douglas, J., dissenting);

Commissioner v. Duberstein, 363 U.S. 278

(1960); Burton-Sutton Oil Co. v. Commissioner,

328 U.S. 25 (1946) (Prankfurter, J., Concurring);
Commissioner v. Wilcox, 327 U.S. 404 (1946);

John Kelley Co. v. Commissioner, 326 U.S.

521 (1946); Trust of Bingham v. Commissioner,

325 U.S. 365 (1945) (FPrankfurter, J., con-
curring).

8
Section 162(a), see note 6, supra, provides

the general rule on the deductability of

business expenses. The list of specific

20
deductions found in paragraph (a) (1)
through (a) (3) is exemplary only. For
instance (a)(1) deals with salaries and
compensation, while (a) (3) concerns rent
and other payments required for possession
of business property. Paragraph (a) (2)
deals with travel expenses incurred "while
away from home," a phrase which has been
“held to apply only to overnight trips
or to travel requiring sleep or rest.”

Gilberg v. Commissioner, 55 T.C. 611, 614

(1971). See, United States v. Correll, 389

U.S. 299 (1967). Nowhere in the record has
appellant contended that he incurred expenses
“while away from home.” Thus for appellant

to prevail he must establish that he is
covered by the general provisions of section
162 (a).

9
"Except as otherwise expressly provided in

this chapter, no deduction shall be allowed
for personal, living, or family expenses.”
I.R.C. Section 262 (1976).

10
See note 8, supra.

21

1l
The first two prongs which must be satisfied

before a travelling expense deduction may
be taken under section 162(a)(2) are:
(1) -The expense must be a reasonable
and necessary travelling expense, as that
term is generally understood. This includes
such items as transportation getee éné food
and lodging expenses incurred while travelling.
(2) The expense must be incurred “while

away from home." Commissioner v. Flowers,

326 U.S. 465, 470 (1946).

22

#81-4175
McCabe v. C.1I.R.

MESKILL, Circuit Judge (dissenting):

I respectfully dissent.

I cannot agree with the majority's
conclusion that McCabe's additional commuting
costs were entirely a result of his personal

choice of residence. In Fausner v. Commis-

sioner, 413 U.S. 838 (1973) (per curiam),
the Supreme Court disallowed a deduction

for commuting costs where the taxpayer, a

commercial airlines pilot, claimed that his
"automobile expenses were incurred to
transport his flight bag and overnight bag
and thus constituted ordinary and necessary
. business expenses." Id. at 838. Because the
taxpayer would have driven to work via the
same route in any event, the Court found
that no “allocation of costs between
‘personal’ and ‘business' expenses" was
feasible. Id. at 839. The Internal Revenue

Service has construed Fausner:

Rev.

to allow an ordinary and necessary
business expense deduction for only
the portion of the cost of transporting
the work implements by the mode of
transportation used which is in
excess of cost of commuting by the
same mode of transportation without
the work implements. The fact that
a taxpayer might have or would have
used a less expensive mode of trans-
portation if it had not been neces~
sary to carrying the work implements
is immaterial.

Rul. 75-380, 1975-2 C.B. 59, 50.

This case is factually distinguishable

from Fausner. Had McCabe driven to work

without his firearm, he could have travelled

through New Jersey. As a result of his

alleged inability to secure a New Jersey

gun permit, however, McCabe was forced to

take a circuitous route, adding fifty cents

in tolls and fifteen miles to his commute.

Compare Stipulated Facts, Paragraphs 13-14

with Stipulated Facts, Paragraphs 30-31.

Certainly, these additional costs were

caused by his employer's requirement that

he carry his firearm at all times while

within New York City and can be allocated

as “business” expenses under Fausner.

The majority's reasoning, that “the

location of one's home is personal and in

23

24
this case does not serve...to further

the business of the taxpayer's employer[,]”
Maj. Op. at 8, drawn to its logical extreme,
would disallow or render meaningless almost
all Fausner-type deductions. A taxpayer
can almost always reduce or eliminate his
excess commuting costs by living closer to
his work location. The real issue is
whether, given the location of McCabe's
residence and his selection of « reasonable
mode of travel, he incurred additional
“ordinary and necessary" commuting cost

“in the pursuit of the business of the

taxpayer's employer.” Commissioner v.

Flowers, 326 U.S. 465, 473 (1946). To the
extent that McCabe's change in route of
travel was necessary to satisfy his employer's
requirement that he carry his iene while
in New York City, I believe that he is
entitled to a deduction under section 162(a)
of the Internal Revenue Code.

The record does not indicate, however,
whether McCabe ever applied for a New Jersey
gun permit or demonstrated the futility of
such an application. McCabe's inability

25
to obtain a permit is critical to his

argument that his additional commuting
costs are deductible as “ordinary and
necessary" business expenses pursuant to
Section 162(a). The sole factual Stipulation
concerning his attempt to obtain a permit
states:
Generally, New Jersey authorities
issue gun permits only to those
individuals with job requirements
necessitating that they be armed
in that state or to individuals who
can establish other urgent need.
Applications for gun permits are
evaluated on their own merits..
Stipulated Facts, Paragraph 9. I would
therefore remand this case to the Tax
Court for a determination of what efforts,
if any, McCabe made to acquire a permit.
If the Tax Court determined that McCabe
never applied for a permit or that he failed
to demonstrate the futility of an application,
the Court should disallow his deduction
for failure to meet the threshold showing
that the added commuting expenses incurred
were necessary. If the Court were satisfied,

however, that McCabe could not obtain a

permit, it should allow his deduction

27
76 T.C. No. 76

UNITED STATES TAX COURT
DENNIS MCCABE, Petitioner v. COMMISSIONER
OF INTERNAL REVENUE,
Respondent

Docket No. 1536-78 Filed June 3, 1981.

T, a New York City police officer, is
required to carry his revolver at all times
while in New York City. T lives ina
relatively remote suburb of New York west
of the Hudson River and immediately
adjacent to New Jersey. The most convenient
and direct routes to T's post of duty in
New York City require travel through New
Jersey, the statutes of which prohibit T
from carrying his revolver while in that
state. Accordingly, T drives to work by
the way of the more circuitous New York
highways, although he would otherwise use
the more convenient public transportation
through New Jersey and incur less commuting
expenses but for the necessity of carrying
his revolver. T seeksto deduct the
difference between the cost of driving

through New York and thecost of public

28

transportation passing through New Jersey.
Held, Petitioner is entitled to no

deduction for his commuting expenses

because they were not directly connected

with his employer's business, but were

personal expenses incurred as a result

of petitioner's choice of the location

of his residence.

Paul S. Brenner, for the petitioner.

Robert J. Alter, for the respondent.

29
OPINION

RAUM, Judge: The Commissioner determined a
$908 deficiency in petitioner's 1976 income

tax. The only remaining issue is whether
petitioner is entitled to deduct some
portion of his automobile expenses in
transporting himself and his service
revolver to and from his place of employment
as a police officer. The case was submitted
on the basis of a stipulation of facts.

During 1976, and at the time he filed
his petition herein, petitioner resided in
Suffern, New York. Suffern is a relatively
remote suburb west of the Hudson River and
is immediately adjacent to the State of
New Jersey. In 1976, he was employed as
a New York City police officer assigned
exclusively to the 28th Precinct at 2271
Eighth Avenue, New York, New York. Pet-
itioner's tour of duty during 1976 consisted
of working 243 weekdays from 8:00 a.m. until
4:00 p.m. only.

The regulations of the New York

Police Department require police oitficers

30
to be armed at all times when in the
City of New York unless otherwise directed.
However, New Jersey, through which petitioner
would travel if he commuted to work by
driving over the most direct route or
taking a bus, permits officers employed
by governmental agencies outside the
State of New Jersey to carry weapons in
New Jersey only while engaged in official
duties and upon prior notification to
local police authorities. See N.J. Stat.
Ann. sec. 2a:151-43(s) (West 1969) (repealed
1979) (current version at N.J. Stat. Ann.
sec. 2C:39-6(b) (1) (West 1980)). New
York City police officers carrying a
service revolver through New Jersey by
either public or private conveyance would
be in violation of the New Jersey law if
they did not have a New Jersey gun permit.
Generally, New Jersey authorities issue
gun permits only to those person with job
requirements necessitating that they be
armed in that state or to person who can

establish other urgent need. Applications

for gun permits are evaluated on their
own merits.

During 1976, petitioner used his
personal automobile as his exclusive’
means of commuting to and from his post
of duty at the 28th Precinct. Petitioner
did not use his own automobile during his
work day. When petitioner commuted to
his job by automobile, he carried his
service revolver on his person and did
not modify his automobile in any way in
order to carry the revolver. Petitioner
incurred no added expense in the cost of
operating his vehicle by carrying his
revolver above that which he would have
incurred if he had commuted to his job
by automobile without the revolver. In
travelling by automobile to and from the
28th Precinct from his home, petitioner
traveled approximately 40 miles each
way via New York highways. His route
generally took 75 minutes to drive; toll
costs were $2 per day. If petitioner had

driven through New Jersey in commuting

31

to work, his toll costs would have been
$1.50 per day, the distance would have
been approximately 25 miles one-way, and
travel time would have been approximately
45 minutes.

During 1976, a bus service provided
by the Shortline bus company traveled
from Suffern, New York, to the Port
Authority Bus Depot in New York City.
However, this bus traveled through New
Jersey. If petitioner had taken the
bus to New York City, he would have boarded
the bus at a stop located two blocks from
his home in Suffern. Between 6:00 a.m.
and 8:00 a.m., weekday departures from
Suffern for New York City occurred at
least as frequently as every 15 minutes;
in the evening, between 4:00 and 6:00 p.m.,
weekday departures from New York City for
Suffern occurred at least as frequently
as every 20 minutes. Travel time by bus
from petitioner's home to the Port Authority
Bus Terminal was approximately one hour.
The one-way fare between Suffern and the

bus terminal in Manhattan was $2.70;

33
however, a 50-trip bus ticket cost $76.60

from January 1 through October 27, 1976,
and $82.75 for the remainder of 1976.
From the Port Authority Bus Depot,
petitioner would have to have taken an
approximately 15 minute subway ride to
the 28th Precinct. During 1976, petitioner
could have ridden the subway without
charge due to his police officer status.
Petitioner could also have used
public transportation that did not pass
through New Jersey. Petitioner could
have driven 16 miles to Tarrytown, New
York, on the east side of the Hudson River,
and taken the Hudson line of Conrail to
Grand Central Station in New York City.
The drive to Tarrytown would have required
approximately 30 minutes; round trip tolls
between Suffern and Tarrytown would have
been $1.50 per day, and parking at the
Tarrytown train station would have cost
$90 per year. The time from Tarrytown
to Grand Central Station ranged from 38
to 54 minutes, depending upon which train

was utilized. A monthly commuting ticket

od
;

34
cost $58.75. The route that petitioner

actually took in driving his automobile
from Suffern to this post of duty in New
York City passed through Tarrytown.

On his 1976 income tax return,
petitioner claimed $2,950 in automobile
expenses as a deduction on form 2106,
Employees Business Expenses. This
ded'us:tion represented the commuting costs
for 17,600 miles plus bridge and thruway
tolls by virtue of petitioner's use of
an automobile rather than a bus or train
to travel between his home in Suffern,
New York, ard his job in New York City.

The Commissioner disallowed the entire
deduction.

It is well settled that a taxpayer's
cost of conmuting between his residence
and his place of employment is a non-
deductible personal expense. Sections
1.162-2(e) and 1.262-1(b) (5), Income Tax
Regs.; see, e.g., Fausner v. Commissioner,
413 U.S. 838, 839 (1973): Commissioner v.
Flowers,326 U.S. 465, 473 (1946); Donnelly v.
Commissioner, 262 F. 2d 411, 412, (2d Cir.

35
1959); Feistman v. Commissioner, 63 T.C.
129, 134 (1974), appeal dismissed 587 F.
24 941 (9th Cir. 1978); Anderson v.
Commissioner, 60 T.C. 834, 835 (1973).
However, an exception to this rule has
been recognized with respect to employees
who are required by their employer to
transport job related tools to and from
work and thereby incur expenses in addition
to the ordinary commuting costs they

otherwise would incur.

Ie
.

In computing the deduction for auto-
mobile expenses, petitioner determined the
annual mileage driven by multiplying the
80 mile daily trip distance by 220 days.
According to the stipulation, petitioner in
fact worked 243 days in 1976, but he has

presented no claim for an increased deduction.

See Fausner v. commissioner, supra, 413 U.S.
at 839; Kallander v. United States, 526 F.
24 1131, 1136 (Ct. Cl. 1975); Coker v.

Commissioner, 487 F. 2d 593, 594 (2d Cir.
1973), cert. denied 414 U.S. 1130 (1974);

36
Feistman v. Commissioner, supra, 63 T.C.

at 135; Gilberg v. Commissioner, 55 T.C.

611, 618-619 (1971); Hitt v. Commissioner,
55 T.C. 628, 632-633 (1971). If such
additional expenses are incurred, they are
deductible as “ordinary and necessary"
business expenses pursuant to Section 162(a)
I.R.C. 1954.

Petitioner claims that but for the
necessity of carrying his gun, he would have
taken the bus and subway to work, and thereby
avoided the greater expense incurred in
driving to work. Although petitioner's
return claimed a deduction for his entire
isaelideaie incurred in driving to work, he
now claims, in his petition and on brief,

a deduction for only the excess of this
automobile expenses over the costs thar he
would have incurred in commuting by bus
and subway.

The Government contends first that
any add-tional commuting expenses petitioner

ingurred as a result of petitioner's personal

37

choice of the location of his residence,
and did not arise out of his employer's
requirement that he carry his gun while
within New York City. The Government
further disputes petitioner's assertion
that he would have taken public trans-
portation to work but for the necessity

of carrying his gun; it argues that if
petitioner desired to take public trans-
portation to work, he would have driven

to Tarrytown (which was on his actual

route to New York City) and taken Conrail
to Grand Central Station. Finally, relying
on Rev. Rul. 75-380, 1975-2 C.B. 59, 60,
the Government contends that the basic

cost of commuting, whether by automobile

or public transportation, is a nondeductible
personal expense, and that petitioner is
therefore entitled to no deduction because

he incurred no tool-carrying expenses beyond

But note l, supra.

38
the basic cost of commuting to work.

It is stipulated that if petitioner
had been called to testify in this case,
he would have stated that he would have
taken the bus and subway to work were it
not for his having to commute carrying his
service revolver. Because this case was
submitted under Rule 122, we had no oppor-
tunity to observe petitioner's credibility
as a witness. Petitioner's assertion that
he would have preferred to commute by bus
and subway is supported by the facts that
the bus stopped only two blocks from his
residence and that the commuting time by
bus and subway was not substantially
greater than the commuting time driving
over New York highways. We accordingly
fined as a fact that petitioner would have
commuted to work by using the bus and subway
but for the necessity of carrying his service
revolver. To be sure, the Government disputes
petitioner's commitment to public trans-
portation by noting that petitioner could
have taken public transportation by driving
to Tarrytown and boarding a Conrail train.

39
However, this method of cammuting would

have required the use of petitioner's
automobile and would have taken more time

than driving wholly through New York State

or commuting by bus and subway. In the
circumstances, we find credible petitioner's
assertion that he would have taken the bus

and subway to work if he had not been required
to carry his service revolver.

Despite our conclusion that petitioner
would have utilized public transportation to
commute to work but for the necessity of
carrying his service revolver, we find that
petitioner's additional commuting expenses
were not directly connected with the pursuit
of his employer's business, but were
principally the result of his decision to
reside in a comparatively remote suburb
adjacent to New Jersey. Accordingly,
petitioner is entitled to no deduction for
his commuting expenses under section 162(a),
I.R.C. 1954, since such expenses were not
necessary for the conduct of his employer's

business.

40

In order to qualify for a deduction
of transportation expenses under the |
general provisions of Section 162(a), petitioner
must demonstrate that such expenses were
directly connected with the pursuit of his
employer's business and were not commuting
expenses incurred solely for personal

reasons. See Commissioner v. Flowers, supra,

326 U.S. at 470, 472-474; Gilberg v. Commissioner,

Supra, 55 T.C. at 614; Bunevith v. Commissioner,

52 T.C. 837, 841 (1969), affd. 70-1 USTC
par. 9414, 25 AFTR 2d 70-935 (lst Cir. 1970).

cf. Carragan v. Commissioner, 197 F. 2d 246,

249 (2d Cir. 1952). Petitioner has not met
this burden. It is true that Petitioner
would have incurred no additional expenses
but for his employer's requirement that he
carry his service revolver while within

the City of New York. However, this re-
quirement presented difficulties for
petitioner only because he had chosen to
live near New Jersey so that the most direct
routes to his place of employment, either

by automobile or public transportation, re-

41
quired travel through that state. The

New York City Police Department required
only that petitioner be armed when inside

the City. The petitioner's added costs in

meeting this requirement were due to his
choice of a personal residence in Suffern
and New Jersey law which prevented him

from carrying his revolver through that
state. These costs were wholly unnecessary
and inappropriate for the conduct of the
New York Police Department's law enforcement
duties within the City of New York. Accord-
ingly, petitioner's added expenses in
avoiding travel through New Jersey, as well
as his basic commuting costs, are personal
in nature, and no deduction for such
expenses can be allowed. Section 262,
I.R.C. 1954.

We have reached our decision in this
case solely on the basis of the Government's
argument that petitioner's commuting expenses
were wholly personal in nature. We accord-
ingly express no opinion as to whether an

employee's additional commuting costs for

42
utilizing a more expensive mode of trans-

portation than he would otherwise have used
in order to carry job-required tools may
be considered deductible in appropriate
circumstances. See generally Rev. Rul.
75-380, supra, 1975-2 C.B. at 60.

We emphasize that we do not pass
upon the application of the concept

suggested in Fausner v. Commissioner, supra,

413 U.S. at 838 -- i.e., that an allocation

of costs might be appropriate where additional
expenses are incurred for transporting
job-required tools and material to and

from work. That concept is inapplicable

here because petitioner has failed to

satisfy the threshold condition that any
deductible expenses must be incurred in
pursuit of business and not as the result

of personal requirements. This threshold

condition was plainly indicated in Commissioner

v. Flowers, supra, 326 U.S. at 473:

The added costs in issue, moreover,
were as unnecessary and inappropriate
to the development of the railroad's
business as were his personal and
living costs in Jackson. They were
incurred solely as the result of

43
the taxpayer's desire to maintain
a home in Jackson while working in
Mobile* * *. It simply asked him
to be at his principal post in
Mobile as business demanded* * *.
Similarly here, the City of New York
did not require petitioner to travel from
Suffern to his post of duty and to have his
service revolver with him at all times
in New York. It did not require him to
carry that revolver through New Jersey.
It was petitioner's personal choice to
2seside in a place where the most convenient
route to his post of duty was through
New Jersey. This case is quite unlike
those ~ases where a taxpayer is required

to incur additional expenses for trans-

porting job-related tools to work regardless

of where he lives. The possible allowance

of deduction of the extra cost of such
transportation is not a matter that is
in issue or decided herein.

Due to the Government's concession
of another issue,

Decision will be entered under

Rule 155.

Reviewed by the Court.

44
SCOTT, J., concurring: I agree with

the majority that petitioner is not entitled
to any deduction for travel between his
home and place of employment since it

was for personal reasons that he chose

his place of residence. However, I do

not agree with any implication that

might be present in the majority opinion
that under certain circumstances petitioner
would be entitled to a deduction because

of the requirement that he have his

service revolver with him at all times

when he was in New York City.

Accepting the fact as found by the
majority that because of New Jersey law
petitioner could not carry his pistol
through that state,- I do not consider

that this
1

Although I am willing to accept the
conclusion of the trial judge even in a
fully stipulated case such as this, I
have great difficulty in understanding
why petitioner was prohibited by New
Jersey law from carrying a revolver ‘
through New Jersey. The parties stipulated
that "New Jersey permits officers employed
by governmental agencies outside the
State of New Jersey to carry weapons
in New Jersey only while engaged in
official duties and upon prior notification

ed

45

to local police authorities” and "generally,
New Jersey authorities issue gun permits
only to those individuals with job re-
quirements necessitating that they be
armed in that state or to individuals

who can establish other urgent need.
Applications for gun permits are evaluated
on their own merits.” This stipulation

is obviously the stipulation of a legal
conclusion. The parties did not “stipulate
whether in fact petitioner had applied for
a permit and whether the state authorities
had denied the application.

Sec. 2A: 151-43 of the New Jersey
Statutes Annotated as applicable to the
year here involved contains numerous
exceptions to the prohibition against
the possession and carrying of a pistol
without a permit. The section of this
statute to which the parties obviously
had reference in their stipulation is
subsection(s) which provides:

case falls within the "tool" reference made

in Fausner v. Commissioner, 413 U.S. 838

(1973). The Fausner case (at 839) states,
insofar as here pertinent, as follows:

As the Court of Appeals indicated,
Congress has determined thatll taxpayers
shall bear the expense of commuting to and
from work without receiving a deduction
for that expense. We cannot read Section
262 of the Internal Revenue Code as ex-
Cluding such expense from "personal"
expenses because by happenstance the
taxpayer must carry incidentals of his
occupation with him. Additional expenses
may at times be incurred for transporting
job-required tools and material to and
from work. Then an allocation of costs
between “personal” and "business" expenses
may be feasible. But no such allocation
can be made here. [Fn. ref. omitted.]

46
tn my view the reference to "additional

expenses" being incurred for transporting
"job-required tools and material"

Footnote 1--continued

Law enforcement officers employed
by governmental agencies outside of the
State of New Jersey who are engaged in their
official duties provided that they have
first notified the chief law enforcement
officer of the municipality or the county
prosecutor of the county in which they are
engaged or the superintendent.

However, subsection (d) of this same statute
provides an exception to the prohibition
against carrying weapons without a permit

as follows:

The regularly employed members,
including detectives, of the police department
of any county or municipality or of any State,
interstate, municipal or county park police
force or of any county boulevard police
force at all times, while within the State
of New Jersey * * *.

I would conclude from this statute,
and have found nothing in the New Jersey
law to persuade me to the contrary, that
without any necesgity of obtaining a permit
from New Jersey a regularly employed police
officer of New York City, such as petitioner,
would be exempt from the prohibition against
carrying a pistol wathin the State of New
Jersey.

in the Fausner case was to the cost of
transporting the tools where an additional
cost such as excess baggage or trailer
rental was incurred. It does not relate

to requiring a determination of the mode

of transportation a taxpayer contends he
may have used but rather to the mode of

transportation that he actually did use..

47

48
FAY, J., dissenting: I respectfully

dissent from the majority's conclusion that
petitioner's expenses were “whclly personal."
I agree with Judge Sterrett that contained
within petitioner's expenses of travelling

to and from work is a portion in excess of
what petitioner would have otherwise
necessarily incurred in commuting, and that
excess is directly related to a requirement
imposed by petitioner's EE See

Fausner v. Commissioner, 413 U.S. 838, 839

(1973).

The majority opinion expressly de-
clines to “pass upon the applicability of
the concept suggested in Fausner***."
Majority supra at ll. In my view, the
Fausner question should have been addressed
fully, and, furthermore, should have been
resolved in petitioner's a” We have
never, before today, ended our inquiry in
this type of case with the conclusion that
a taxpayer requirement-based excess travel

costs. See, for example, the analysis in

Hitt v. Commissioner, 55 T.C. 628 (1971)

“

49

and in Gilberg v. Commissioner, -55 T.C. 611
(1971).

I base my dissent upon the facts as
found by the majority including their finding
that petitioner could not have obtained a
permit to carry a gun through New Jersey.

2

In fact, the parties briefed this
case almost exclusively on the Fausner
issue. LSA

It is obvious to me that petitioner
incurred excess travel costs and that the
excess was caused by his employer's require-
ment. True, the amount of that excess will
be a function of petitioner's choice of
residence, but that is always the case
when such excess travel costs present them-
selves. For example, if a construction
worker living 30 miles from his jobsite
were required to tow a trailer of tools,
would not his excess be less if he moved
20 miles closer to his jobsite, or completely
eliminated if he moved into a house adjacent
to the jobsite? The majority opinion,

supra at 12, seeks to distinguish the long

50
line of "tool" cases as applying only to
“additional expenses for transporting job-
related tools to work regardless of where

[the taxpayer] lives." However, as my

example above illustrates, the “additional
expense" could be eliminated or greatly
reduced in almost every "tool" case. Thus,
I remain unpersuaded that this case is
eeteiet. Petitioner's "additional
expenses," those over and above his

reasonable commuting expenses, were caused

by his employer's requirement that petitioner

have his gun with him when he entered New York city’.

z

I am also unconvinced by Judge Scott's
concurrence. In this case it is not the
mode of travel but rather the route of travel
which is mandated by the employer's requirement.
If a true excess cost exists, it is irrelevant
whether that excess exists due to mandated
routes of travel or mandated means of travel.
However, I do not necessarily agree with
Judge Sterrett that we look to the taxpayer's
"preferred means of transportation in order
to calculate any excess.

Where he lived does not alter that requirement;
it merely affects the amourtof the excess

which could range from zero, see Coker v.

51

Commissioner, 487 F.2d 593(2d Cir. 1973),
cert. denied 414 U.S. 1130 (1974), on up.

I express no opinion as to the amount
of petitioner's deductible travelling
expenses. Although I would certainly reach
the issue were I writing for the majority,
I see no reason to enter into a laborious

analysis of calculating

4

In my view, petitioner's excess travel
costs were caused by his employer's re-
quirement even though the New Jersey law
also affected petitioner's route of travel.
If it were not for the employer's require-
ment, the New Jersey law on carrying guns
would be irrelevant to petitioner.

Consider the case of a construction
worker who must travel one of two equal
distance roads to his jobsite. He chooses
Road 1 because using Road 2 would necessitate
paying $l/day toll charge. Suppose my
worker's employer imposes a requirement
requiring that worker to carry his tools
to and from work, which, in turn, necessitates
that worker's towing a trailer to and from
work. Pursuant to that requirement and
state law prohibiting trailers on Road l,
petitioner must travel Road 2 and incur the
$l/day toll charge. Would not that $1.00
be deductible? I conclude that it would.
When a combination of an employer requirement
and an outside force causes an employee to
incur expenses greater than his ordinary,
reasonable commuting expenses, the excess
should be deductible by the employee if the
outside force's applicability to the employee
is caused by the employer's requirement.

footnote 4 continued 52

In fact, in almost every tool case it
Will be a combination of factors which lead
to the employee's incurring additional
expenses. For example, if an employer
requires a worker to have tools at the
jobsite but the employer provides no tool
storage place, it is both the employer's
requirement and the worker's desire to
have his tools left unexposed to weather
and thieves that make the worker transport
his tools to and from the jobsite.

the excess amount at this time. It is
clear from the record that no matter what
bases of comparison are used, such as
driving through New York versus driving
through New Jersey or using public trans-
portation through New York versus driving
through New wvaden petitioner did incur

additional costs. Accordingly, I would

hold that petitioner is entitled to some

part of his claimed travel expenses deduction.

5

However, I note that respondent, on
brief, argued that if we held petitioner
incurred deductible travel expenses, the
deductible amount should be limited to
the difference in cost between taking
public transportation through New Jersey
and taking public transportation, as much
as possible, through New York. See also
Rev. Rul. 75-380, 1975-2 C.B. 59, at 60.

y

53

STERRETT, J., dissenting: I respect-
fully dissent from the ultimate conclusion
reached by the majority.

In so ‘doing I proceed from the same
basic premise as did the majority: namely,
"a taxpayer's cost of commuting between
his residence and his place of employment
is « »ndeductible personal expense."

While the Supreme Court in Fausner v.

Commissioner, 413 U.S. 838, 839 (1973),

emphasized that hornbook rule of tax law,
it added the following postscript:
Additional expenses may at times be
incurred for transporting job-required
tools and material to and from work.
Then an allocation of costs between
"personal" and "business" expenses
may be feasible. But no such allo-
cation can be made here.
The facts in the instant case are a perfect
illustration of when such an allocation can,
and should, be made.
The circumstances are ideal because
a revolver is to a policeman what a hammer
is to a carpenter. A carpenter is required
by his employer to bring his toolbox to

work at his own expense. A policeman is

54
required by the New York City Police

Department to have his revolver on his
person at all times while in the City.
In each case the requirement is imposed
by the employer as a condition of employ-
ment. There is no personal element to
the requirement; it is purely job-related.

Once the business necessity of an
employee taking something with him to work
is established, then any “additional expense"
(over his preferred means of transportation)
incurred solely by reason of that necessity
should, under the Supreme Court's holding
in Fausner, be deductible.

It is, of course, the taxpayer's burden
to show the increment in the cost of commuting
to work attributable to the job-related
requirement. The precise nature of the
added expenditure is of no moment as long
as the expenditure can be characterized
as “ordinary and necessary." Thus, it
matters not whether the incremental cost
is attributable to buying a trailer for the
car to carry the tools or is attributable

to taking a different route to work because

55
of circumstances beyond the taxpayer's control,
Here, the taxpayer was prevented from taking
the most direct and least expensive means
of commuting to work by reason of New
Jersey re I can envision a similar
circumstance where a truck, carrying
inflammable material, is limited by state
law to the use of certain specific roads,

thereby incurring additional expense. I

would hold, therefore, that the peti-
tioner incurred additional expense

1

We assume that the taxpayer could not
get a permit to carry his revolver while in
New Jersey.

in getting to work due to a condition of
his employment rather than his choice of
where to live.

No doubt the question of determining
the exact amount of the incremental job-
related cost could be troublesome in many

cases. See Coker v. Commissioner, 487 F.2d

593 (2d Cir. 1973). Here that presents no
problem since the majority has found as a

fact “that petitioner would have commuted

to work by using the bus and subway but

for the necessity o -arrying his service
revolver." It appears that in this case
the cost of using the bus and subway to
and from work would have approximated
$3.20 per day. I would allow petitioner
to deduct any expense in excess of that
amount incurred in commuting to work.
Section 162, I.R.C. 1954.

WILES and WILBUR, JJ., agree with this

dissenting opinion.

REVENUE RULING 75-380 37

The Internal Revenue Service has re-
considered Rev. Rul. 56-25, 1956-1 C.B. 152,
and Rev. Rul. 63-100, 1963-1 C.B. 34, in
view of the decision by the Supreme Court

of the United States in Fausner v. Commissioner,

413 U.S. 838 (1973), 1974-2 C.B. 42, affirming
per curiam the decision of the Court of Appeals
for the Fifth Circuit, 472 F. 2d 561 (1973),
which in turn affirmed per curiam the decision
of the United States Tax Court, 30 CCE Tax

Ct. Mem. 1187 (1971).

Rev Rul. 56-25 holds that expenses in-
curred by an employee in using his automobile
for commuting between his place of abode
and his principal or regular place of
work represents nondeductible commuting
expenses within the scope of section 262
of the Internal Revenue Code of 1954, not-
withstanding the fact that the automobile
is also used to transport tools used by
the employee in his work. In so holding,

Rev. Rul. 56-25 states that the expenses

incurred in going to and from work were not

58
increased by reason of the fact that the

tools used by the employee in his work were
also transported in the automobile.

Rev. Rul.56-25 was modified by Rev.
Rul. 63-100 to remove the implication
that such transportation expenses would
not be deductible even if the employee would
not have used his automobile on such trips
"but for" the necessity of taking his
tools with him. Rev. Rul. 63-100 holds that
where it is necessary for a musician to
use his automobile to transport his musical
instruments between his residence and his
place of work because they are too bulky
to be carried otherwise, and he would not
use his automobile on such trips "except
for" that reason, the entire amount of his
transportation expenses are deductible under
Section 162 of the Code. The Revenue Ruling
states that such expenses are deductible
ordinary and necessary business expenses
because they are occasioned primarily by
the necessity for transporting bulky musical

instruments, and that whether transportation

59
expenses are incurred primarily for business

or personal reasons is a question of fact
to be determined in each case.

In Fausner the taxpayer, an airline
pilot, who regularly traveled by private
automobile from home to his place of
employment and back again, sought to deduct
the entire cost of his commuting expenses
under Section 162(a) of the Code on the
theory that his automobile expenses were
incurred to transport his flight bag and
overnight bag and thus constitute ordinary
and necessary business expenses. It was
not disputed that the taxpayer would have
commuted by private automobile regardless
of whether he had to transport his two bags.
The Supreme Court of the United States, re-
ferring to Section 262, held that the tax-
payer was not entitled to any deduction with
respect to the cost of transporting his
flight and overnight bags in his automobile
while commuting to and from his work. In
addition the Court, citing Rev. Rul. 63-100,
stated that additional expenses may at times

be incurred for transporting job-required

60
tools and material to and from work and

then an allocation of costs between “personal”
and “business” expenses may be feasible.

In view of Fausner questions have
arisen as to (1) whether the “primary
purpose" or “but for” test of Rev. Rul.
63-100 is still valid, and (2) what is the
amount of a taxpayer's deduction, if any,
for transporting costs incurred in carrying
job-required tools and material between
the taxpayer's residence and place of work
where the taxpayer (a) would have used the
same mode of commuting irrespective of
carrying such implements or (b) would not
have used the same mode of commuting
irrespective of commuting "but for”
carrying such implements.

With respect to question (1), the
Tax Court, the Fifth Circuit, and the
Supreme Court in the Fausner case have
all used an “additional expense” approach
in determining whether the costs incurred
by a taxpayer in transporting work implements

to and from work are deductible. Thus, where

61
a taxpayer can prove that transportation

costs were incurred in addition to the
ordinary, nondeductible commuting expenses,
and these additional costs are attributable
solely to the necessity of transporting

work implements to and from the work location,
the taxpayer will be entitled to deduct

such additional costs under Section 162

of the Code, regardless of whether the
"primary purpose” or “but for” test set forth
in Rev. Rul. 63-100 is satisfied.

In determining the deductibility of
expenses in Rev. Rul. 63-100, and Rev. Rul.
56-25, as modified by Rev. Rul. 63-100, the
sole focus is placed on the fact that the
taxpayer would not have used the automobile
for commuting purposes “but for” the need
to take the tools. Those Revenue Rulings
do not focusonwhether the taxpayer incurred
additional expenses for tool-carrying. The
“additional expense" approach to deductibility
of toc‘-carrying expenses referred to by the
Supreme Court in Fausner focuses solely upon

whether a taxpayer incurs expenses for

4 . = Ss

transporting job-required tools and material

to and from work in addition to the non-

deductible personal expense of commuting
to and from such work.

Under the Supreme Court's “additional
expenses" approach in Fausner, even though
a taxpayer satisfies the “but for” test in
Rev. Rul 63-100, the taxpayer is still not
entitled to a transportation expense
deduction unless it can be established that
additional expenses were incurred because
of the necessity of transporting work im-
plements to and from work and the amount of
such additional expenses can be accurately

determined. On the other hand, even though

a taxpayer is unable to satisfy the "but for"

test in Rev. Rul. 63-100, a transportation
expense deduction may still be allowable if
the taxpayer is able to establish that

such accurately determinable additional
expenses were incurred because of the
necessity of transporting work implements
to and from work. Accordingly, the “but

for" test, set forth in Rev. Rul. 63-100,

62

63
is no longer valid.

With respect to question (2) copeeding
the amount of a taxpayer's deduction, the
principles set forth above apply in that
the deduction does not depend om determining
whether the mode of transportatiom that
the taxpayer used in carrying work implements
to and from work was different than the mode
of transporation the taxpayer would have
used to commute without such implements,
but is dependent on the taxpayer's establishing
that the expense in transporting the work
implements to and from work were incurred

in addition to otherwise nomdeductible

personal commuting expenses.

The Court in Fausmer states that
allocation of costs between perscmal and
bwsiness expenses may be feasible in an
“additional expense” situation. Therefore,
the “alli-or-mothing” positign regarding
the amount of 4 taxpwyer’s deduction in
Rev. Rul. 63-100 is mot within the plain
meaning of the term “allocation” used by
the Court in Fausner. Absent a showing of
additional expenses -acurred for transporting

64
work implements to and from work, a tax-

* payer's carrying of such items will not alter
the nondeductibility of transporting expenses
to and from work.

Therefore, in sitwations where a
taxpayer cam establish that additional
expenses were incurred for transporting
work implements to and from work, a reasonalbe
and feasible method of allocation within
the scope of the Supreme Court's opinion
in Pausner would be to allow an erdinary
and necessary busimess expense deduction
for only the portion of the cost of trans-
porting the work implements by the mode of
transporting used which is in excess of
cost of commuting by the same mode of
transportation without the work implements.
The fact that a taxpayer might have or
would have used a less expensive mode of
transportation if it had not been necessary
to carrying the work implements is immaterial.

The following example illustrates the
“feasible” allocation approach. A taxpayer

4 commuted to and from work by public trans-

portation before the taxpayer had to carry

Be.
— el a, bs 7 — ~~ - =

65
necessary work implements. It cost $2 per

day to commute to and from work. When it
became necessary to carry the implements
to and from work, it cost $3 per day to
drive a car and an additional $5 per day
to rent a trailer in which the implements
were carried. The allowable deduction
would be the $5 per day additional expense
that the taxpayer incurred in renting the
trailer to carry the work implements.

Rev. Rul. 56-25 is superseded and Rev.
Rul. 63-100 is revoked. Pursuant to the
authority contained in Section 7805(b) of
the Code, the conclusion of this Revenue
Ruling will not be applied to taxpayers who
gualified under Rev. Rul. 63-100 for the
deduction of transportation expenses paid

or incurred prior to January l, 1976.

66
REVENUE RULING 63-100

Where it is necessary for a musician
to use his automobile to transport his
musical instruments between his residence
and his place of work because they are too
bulky to be carried otherwise, and he
would not use his autcm®bile on such trips
except for that reason, his transportation
expenses are deductible under Section 162
of the Internal Revenue Code of 1954.

Such transportation expenses are
ordinary and necessary expenses paid or
incurred in carrying on his trade or business
because they are occasioned primarily by
the necessity for transporting bulky
musical instruments even if such expenses
would otherwise be nondeductible commuting
expenses.

Whether transportation expenses are
incurred primarily for business or personal
reasons ic a question of fact to be determined
in each case.

Revenue Ruling 56-25, C.B. 1956-1, 152,

states that expenses incurred by an employee
in using his automobile for commuting between 7

67
his place of abode and his principal or

regular place of work repiesent nondeductible
personal expenses notwithstanding the fact
that the automobile is also used to trans-
port tools used by the employee in his

work. That ruling is hereby modified to
remove the implication that such trans-
portation expenses would not be deductible
even if the employee would not have used

his automobile on such trips but for the

necessity of taking his tools with him.

- ae i ON Be

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0396%3A2. Public record. Not legal advice.