Petition — Felton v. Commissioner

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Office - Supreme Court, U.S

83-1401 FILED

FEB 21 1984

ALEXANDER L. STEVAS.

CLERK

No.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1983

DONALD C. FELTON AND

MARIANNE V. FELTON, Petitioners

Vv.

COMMISSIONER OF INTERNAL

REVENUE, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

WILLIAM W. OLIVER

IU School of Law

Bloomington, IN

47405

812-335-3939

PATRICK LOUIS BAUDE

IU School of Law

Bloomington, IN

47405

QUESTION PRESENTED

Whether in determining the tax home

under Section 162, I.R.C., of a wife,

the wife should be treated the same as

an unmarried person: thereby ignoring

factors such as the employment situation

of her husband; their ownership for

thirteen (13) years of a residence in

the city where her husband is employed;

that it is feasible for her to perform

most (but not all) of her duties to her

employer in the city of the marital

residence; tnat it would cost five times

as much for her to live in an apartment

in the other city as to rent transient

facilities for the sixty (60) nights

each year that she had to stay overnight

in the other city; that she could not

obtain employment in her field of

expertise in the vicinity of the marital

residence; and that her husband could

not join her in a move of the marital

residence unless he resigned his

position, thereby suffering a dimunition

of retirement benefits.

ill

TABLE OF CONTENTS

Page

Question Presented ......e.-. i

Gpanione Belew .. « sé 6 6+ © 6 8 2

DEP SORICEILOR & 6.644 So 6 6 we 2

Constitutional and Statutory

Provesions Involved ..s+#-.«eeees 3

meeceeent. OF €he Caee ..s1tvees 4

Reasons for Granting Review ... 8

The Decision in This Case of the

Seventh Circuit is in Conflict

With a Decision of the Second

Circuit — . * a. *. . . . a > >. 8

This Case Presents an Appropriate

Vehicle to Reach the "Home"

Issue in a Limited Context .. 14

es ee

This Case Can be Disposed of

GUSGEAY 6 a4 +. 2. 4 eS 8 16

IV.

The Issue in the Case is

Smpeortent « « «ee + ee 6 20

Tnat This is a Small Tax Case

Merits Favorable Con-

ren ~ .« “o "aine. « 6 « -e

ES) ee a ey ae ee

INDEX TO APPENDICES

Appendix A. Order, Court of

Appeals for the Seventh

Casemst ss s+ « 2s «3s Cee. Pr

Appendix B. Opinion of the

United States Tax Court ...

Appendix C. Order. Petition

for Rehearing Denied ....

Appendix D. Excerpts from Briefs

TABLE OF AUTHORITIES CITED

Cases Page

Comm. v. Stidger, 386 U.S. 287, 87

Ct. 1065, 18 L Ed 2d 53

(1967) . . . . . . . . >. . . * 9

Daly v. Comm. 631 F.2d 351, (4th

Cats, 2000) ~s « « « 19,22,24 ,25

Flowers v. Comm., 326 U.S. 465,

66 S&S. Ct. 250, 90 L BA 203,

reh den 326 U.S. 812, 66 S.

Ct. 482, 90 L.Ed 496

ik ~~ 6-6 = = =. = «© « « Delbull

Peurifoy v. Comm., 358 U.S. 59,

79 S. Ct. 104, 3 L Ed 2d 30,

reh den 358 U.S. 913, 79 S.

Ct. 227, 3 L.Ed 2d 234

[ames « © & 6 & 6 ee © 8 ec 9

Rosenspan v. United States, 438

F.2d 905 (2d Cir. 1971),

cert. denied, 404 U.S. 864

(1971), reh'g denied, 404

ems See CEPrae « 6 6s ce ww eM

Six v. United States, 450 F.2d

con er. See 6 6 «¢..« « oh,

Statutes

Internal Revenue Code Sec. 162... 3

Miscellaneous

Brookiyh Law Review, 1285 (1972)

St. Johns Law Review 540 (1972)

South Carolina Law Review 829 (1983)

The Tax Lawyer 829 (1980-81)

Texas Law Review 645 (1977)

University of Florida Law Review 119

(1976)

122 University of Pennsylvania Law

Review 859, (1974)

Virginia Law Review 125 (1963)

Wake Forest Law Review 99 (1982)

a |

No.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1983

DONALD C. FELTON and

MARIANNE V. FELTON, Petitioners

Vv.

COMMISSIONER OF INTERNAL

REVENUE, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

The petitioners Donald C. Felton and

Marianne V. Felton respectfully pray

that a writ of certiorari issue to

review the judgment and unpublished

order of the United States Court of

Appeals for the Seventh Circuit entered

in this proceeding on October 21, 1983,

OPINIONS BELOW

The unpublished order of the Court

of Appeals appears as Appendix "A"

hereto. The Memorandum findings of fact

and Opinion of the United States Tax

Court appears as Appendix "B" hereto.

The order denying the Petition for

Rehearing appears as Appendix "C" nereto.

JURISDICTION

The order of the Court of Appeals

for the Seventm Circuit was entered on

October 21, 1983. A timely Petition for

Rehearing with Suggestion for Rehearing

in banc was denied on November 22, 1983,

and this petition for certiorari was

filed within 90 days of that date. This

Court's jurisdiction is invoked under 28

U.S.C, @ 1254(1).

STATUTORY PROVISIONS INVOLVED

I.R.S. § 162. Trade or business expenses

(a) In general. - There shall i

allowed as a deduction all the ordinary

and necessary expenses paid or incurred

during the taxable year in carrying on

any trade or business, including -

(1) a reasonable allowance for

salaries or other compensation for

personal services actually rendered;

(2) traveling expenses (including

amounts expended for meals and

lodging other than amounts which are

lavish or extravagant under the

circumstances) while away from home

in the pursuit of a trade or

business; and

(3) rentals or other payments

required to be made as a condition

to the continued use or possession

for purposes of the trade or

oes

business, of property to which the

taxpayer has not taken or is not

taking title or in which he has no

equity.

For purposes of the preceding sentence,

the place of residence of a Member of

Congress (including any Delegate and

Resident Commissioner) within the State,

congressional district, or possession

which he represents in Congress shall be

considered his home, but amounts

expended by such Members within each

taxable year for living expenses shall

not be deductible for income tax

purposes in excess of $3,000.

STATEMENT OF THE CASE

Appellant Marianne V. Felton (her

Ph.D. in Economics almost completed) in

1978, could not find employment as an

economist in or within commuting

aBn

distance of Bloomington, Indiana, where

she and her husband owned a residence in

which they had lived with their children

for about 13 years. She accepted

employment in 1978 in New Albany,

Indiana (about 100 miles away), at

Indiana University Southeast (a regional

campus), only after her employer-to-be

agreed her classes would be bunched so

she would need stay overnight in New

Albany only two nights each week, so

that she could return to Bloomington

where most of her work (class

preparation, research and reading to

keep current) was done and where she

could use the superior library and

computer facilities at the main campus

of Indiana University. She did not

teach in the summer, and worked many

more hours in Bloomington than in New

Albany.

elles

Her husband had held a staff

position at the main campus of Indiana

University in Bloomington, Indiana,

since 1965, and if he resigned in 1978

to move to New Albany before completing

15 years of service he would have

suffered a diminution in retirement

benefits. During the period in

controversy (August 15, 1978 to December

31, 1978), Mrs. Felton slept as a

transient in New Albany for 30 nights (2

nights for each of 15 weeks) and the

rest of the time she lived at the

established marital residence in

Bloomington, Indiana.

In New Albany she paid five dollars

($5.00) a night to a widow for sleeping

privileges in one of the bedrooms in the

widow's residence. It would have cost

at least five times as much for Mrs.

Felton to have rented, furnished and

maintained an apartment in New Albany.

afte

The petitioners deducted the

traveling expenses to New Albany for the

period August 15 through December 31,

1978 on their federal income tax

return. The Commissioner disallowed the

deduction of these expenses, and the

petitioners sought a redetermination of

that disallowance in a petition to the

U.S. Tax Court.

The U.S. Tax Court found that the

petitioners' tax home was in New Albany

during the period August 15, 1978

through December 31, 1978 and that as a

result the traveling expenses for that

period could not be deducted. The Court

of Appeals for the Seventh Circuit

affirmed in an unpublished Order. The

petitioners are placed at some

disadvantage in stating the question

presented by the fact that neither the

Tax Court nor the Seventh Circuit

answered their arguments. The Tax Court

did in its footnote 6 say "While

petitioner's (sic] point (problem of

families with spouses employed in

different cities] perhaps is appealing

sociologically, it has no basis in

law." In the Appendix "D" there are a

few excerpts from arguments made in

briefs filed in this case to show that

the question presented to this Court was

presented to the Tax Court and the

Seventh Circuit.

REASONS FOR GRANTING REVIEW

I. THE DECISION IN THIS CASE OF THE

SEVENTH CIRCUIT IS IN CONFLICT WITH

A DECISION OF THE SECOND CIRCUIT.

The unpublished order of the Seventh

Circuit acknowledged this conflict. At

page 4 the order states, "For purposes

of the travel expense deduction, a

taxpayer's ‘home' is the place of his or

her business rather than the place of

residence.

This is footnote 4: “We note that

the Supreme Court has never decided this

guestion and that the Second Circuit

disagrees with this court's position on

the issue of the location of a

taxpayer's ‘home.' See Six v. United

States, 450 F.2d 66 (2d Cir. 1971);

Rosenspan v. United States, 438 F.2d 905

(2d Cir. 1971), cert. denied, 404 U.S.

864 (1971), reh'g denied, 404 U.S. 959

(1971).

Indeed this Court itself has on

three occasions recognized the conflict

between the circuits about the

definition of "home," Flowers v. Comnm.,

326 U.S. 465, 472 (1946); Peurifoy v.

Comm., 358 U.S. 59, 60 (1958); and Comm.

v. Stidger, 386 U.S. 287, 291 (1967).

However, in each of these cases the

Court decided the case on other grounds,

nie

and did not have to try to formulate a

definition for the word "home" in Sec.

162.

Not only has this Court recognized

the existence of this conflict about the

meaning of the word "home," but also

commentators have often discussed this

conflict in legal periodicals, see,

e.g., 38 Brooklyn L.R. 1285, (1972); 122

U. Pa. L.R. 859, 922 (1974); 46 St.

Johns L.R. 540, 541 (1972); 29 U. Fla.

L.R. 119, 126-8 (1976); and 49 Va. L.R.

125, 161 (1963).

Petitioners could cite many cases on

each of the respective sides of the

question, is home, home or place of

business under Sec. 162, I.R.C.

Petitioners choose not to do so.

Compilations of cases can be found at 29

U. Fla. L.R. 119, 126-8 (1976) and 49

Va. L.R. 125, 131-6 (1963). As will be

seen in the argument below, petitioners

ali«

rely primarily upon the conflict between

circuits on the meaning of home in the

context of spouses employed in different

cities. Petitioners promise (if

certiorari is granted) not to advance in

the argument any attempted all

encompassing definition of "home" under

Sec. 162.

The failure to grant certiorari in

Rosenspan is no reason for denying

certiorari in this case. Rosenspan and

Six present two different contexts about

the relationship of home to place of

business. In Rosenspan the taxpayer was

an unmarried traveling salesman who

traveled almost constantly, had no home,

and wanted to call his employer's place

of business his home. The appeal of the

taxpayer's plight in Rosenspan is very

limited: while he incurs transient type

expenses, having no home, those expenses

are not duplicative and, if he prevails,

éi@e

almost all his costs during a year fcr

meals and lodging become deductible.

Six presents a context of a wite

employed away from an established

marital residence, as does the present

case. In that case, Ethel Merman (a

famous actress) had in 1953 married Mr.

Six, President of Continental Airlines,

with headquarters in Denver. They

purchased jointly a residence in the

Denver area, which was the single

marital residence at least through

1958. On December, 1958 she went to New

York City to perform in a play,

"Gypsy." Her expenses in New York City

in the taxable year 1959 were at issue.

The district court had decided the

refund suit before the Second Circuit

had adopted its "home is home" test in

Rosenspan and accordingly the Second

Circuit remanded for further proceedings

and findings in light of Rosenspan. The

oi) 3=

citations do not reveal any furtner

Opinions in Six, and clearly this Court

has not denied certiorari in a case

involving a conflict about the meaning

of home in the context of spouses

employed in different cities.

While the Second Circuit did not

decide the factual guestion of where the

home was in Six, it is clear it believed

marriage counts, for it mentioned "her

marriage to Mr. Six, who continued to

live in the Englewood home" as a

relevant factor. 450 F.2d 66, 70.

There can be no reasonable doubt that

the petitioner would have prevailed

before the Second Circuit in an appeal

from the Tax Court. If that court

remanded for further proceedings and

findings about where her home was,

despite the fact Mrs. Six had a one year

lease in New York, spent only a few days

in June, 1959 at the marital residence,

aha

and was divorced from Mr. Six in

December of the next year, then a

fortiori, it would decide a finding that

Mrs. Felton's home was in New Albany,

Clearly erroneous, when she spent only

60 nights in 1978 in New Albany as a

transient and had a home the rest of the

year with her husband in Bloomington and

at the time of the trial (if I may go

outside the record, to the present time)

she and her husband were devoted to each

other.

II. THIS CASE PRESENTS AN APPROPRIATE

VEHICLE TO REACH THE "HOME" ISSUE IN

A LIMITED CONTEXT.

As noted in the first reason for

granting the writ (conflict between

circuits), this Court has had before it

three cases in which it acknowledged the

conflict about the meaning of "home, "

but decided the case on another ground

at S..

without reaching the issue as to the

meaning of “home."

Petitioners believe that this case

is one in which the "home" issue,

limited to the context of two earner

families, will have to be reached if

certiorari is granted. Both courts

below have decided the case on the "nome

is place of business" premise. If the

Commissioner decides to avoid an

argument before this Court on "home" in

this case because he prefers to argue it

in a future case on a record in which

the wife rents an apartment in the other

city for the academic year, he may try

to shift the argument and ask that this

case be decided on an "exigencies of the

business "test" i.e., the third test in

Flowers, supra. The petitioners' answer

to that argument, if made, will be: She

is married, and you must look at the

employments of both husband and wife and

aie

their joint efforts as man and wife to

produce a flow of income to support the

consumption and the savings, if any, of

a family unit and its members.

Thus it appears this case presents a

record on which, if the writ is granted,

this Court will have to face the

relevance of marriage to travel expense

cases, whether it be under the second or

third tests of Flowers, supra. Further,

petitioners have difficulty seeing how

marriage could be relevant to one of the

tests, without also being relevant to

both.

III. THIS CASE CAN BE DISPOSED OF

QUICKLY.

Leading cases such as Flowers,

Supra, arose at a time when husbands

were usually gainfully employed and

wives were infrequently employed outside

the home. In a case where only the

husband was employed, it is natural to

refer to the exigencies of "his" job.

One facet of the petitioners'

argument that in a two earner family,

you must look at “their” employments

because they are engaged jointly in an

effort to earn income to support the

family as a consumption unit (and to the

extent there are savings, an investing

unit) and combine with that a

fundamental aspect of our society: we

favor a wife and her husband living

together in a single residence.

Petitioners believe it to be self

evident that consideration of marriage

and the legitimate employment concerns

of one's spouse is relevant to a

traveling expense issue. Perhaps the

decisions of tne two courts below can be

explained by a reluctance to be the

first court to draw a new distinction

between one earner and two earner

-18-_

couples, faced with a host of cases

referring to "his" job and "his" place

of business in situations where only tne

husband was employed. Furthermore, tne

failure to respond to the petitioners'

arguments may be explained by a

reluctance to be in a position to be

quoted as saying "marriage doesn't

count." But this Court is under no

restraints in drawing a distinction

between one earner and two earner

families, and if this Court should

reverse, a pro family posture would

enhance the image of the Court.

If this Court grants certiorari,

this case should not reguire much of

this Court's time if it concludes as a

rule of law that marriage is relevant in

a case of two spouses employed in

different cities and then that it was

clearly erroneous to decide in this case

that Mrs. Felton's "tax home" was in New

a} 9-

Albany. The lower courts could on a

case by case basis develop a body of

“two earner traveling expense” law with

this Court probably not having to join

the issue again.

One nuance in the proceedings below

was sympathy for the petitioners'

plight. The Tax Court footnote saw

their argument "appealing

sociologically," and there is this

sentence from the brief of the appellee

before the Seventh Circuit, "Although we

sympathize with taxpayers' plight and

that of similarly situated families, any

relief in this regard, as pointed out by

Judge Murnaghan in his concurring

Opinion in Daly, can only come from the

Congress."

This is tantamount to an argument

that the courts have painted themselves

into a corner so that “marriage doesn't

count," even though the courts below

«25a

were reluctant to state that

explicitly. This Court can obviously

Say that marriage is relevant in a two

earner traveling expense case, for the

law about traveling expenses is of

judicial origin. Assuming for purposes

of argument that some Courts of Appeal

(but not the Second Circuit) believe

they are in corner, this Court is the

perfect tribunal to disabuse those

courts of the belief that marriage is

irrelevant in a two earner traveling

expense issue.

IV. THE ISSUE IN THE CASE IS IMPORTANT.

Two trends in our society make the

issue in this case one of inecennine

importance. First, an increasing

percentage of wives work and second, an

increasing percentage of women have

specialized qualifications for which

=2) =

employment is not readily available in

almost every area, in contrast to

employments such as secretaries,

waitresses, elementary school teacners,

and store clerks. Indeed the facts in

this case are likely to emerge as the

typical case, i.e., the wife witn a

bachelor's degree whose husband has an

established position and who goes back

for an advanced degree. Once she has an

advanced degree she may have to 100k to

another geographical area for employment

utilizing her ee education.

Recent articles, comments and notes

in legal periodicals reflect the

importance of the traveling expense

deduction in the context of two earner

family. In Popkin, "Deduction of the

Traveling Expenses by the Two Worker

Family," 55 Texas L. Rev. 645 (1977),

the author starts his article with this

sentence, “As it has become more common

=%2~

for both spouses to work, an ability to

deduct additional expenses tnat result

from the decision of both husband and

wife to work has increased in

importance." He suggests (for married

persons) as a test for the deductibility

of traveling expenses “what could

reasonably be expected of a married

individual." One of his premises is

that the usual life style of married

persons is to live together and that

this is recognized by various provisions

in the Internal Revenue Code.

Some recent writing about the two

earner family has been a reaction to

Daly v. Comm., which, while

distinguishable, has some similarity to

this case. There were two Daly

Opinions, the first, 631 F.2d 35l, (4th

Cir., 1980) by a three judge panel and

the second after a rehearing en banc.

The similarity of Daly to this case is

o§Ga

that Mr. Daly obtained a sales territory

which did not include the site of the

Marital residence. His wife had a

sestvion as manager of a store in the

general vicinity of the marital

residence. Thus Mr. Daly faced a

problem similar to Mrs. Felton in the

present case -- whether to move away

from the existing marital residence.

Both Mr. Daly and Mrs. Felton

accommodated to the spouse's employment

and kept a single marital residence,

rather than setting up a separate,

second home. Mr. Daly did some office

work at the marital residence, but

unfortunately for him the selling could

be done only in the territory -- and the

hours worked in the territory were at

least twice as many as the hours of work

at the marital residence. Mrs. Felton,

Since she could do her research, class

preparation, and reading to keep current

in her field in the vicinity of the

Marital residence, worked more than

twice as many hours at the marital

residence as she dia in New Albany.

One aspect of the Daly case was that

the husband did not argue that "his

wife's legitimate employment concerns

should play a role in determining where

his tax home should be fixed." We do

make the argument here that her

husband's legitimate employment concerns

must be considered in determining Mrs.

Felton's tax home.

Daly produced a sharp division among

the judges of the Fourth Circuit. The

first decision was for the taxpayer by a

2 to 1 vote. On the rehearing en banc

nine judges participated: five joined

in the majority opinion, Judge Murnaghan

concurred in an opinion that in some

ways reads more like a dissent, and

three judges dissented. If the position

=4S0

of Senior Circuit Judge Field, who voted

for the taxpayers in the first Daly

Opinion, but did not sit on the en banc

rehearing, is taken into account the

vote is five for the majority, one judge

concurring, and four judges in dissent.

"Comment - Daly v. Commissioner:

Effect of the Tax Home Rule Under

Section 162 on Two-Earner Families," 34

The Tax Lawyer 829 (1980-1) is a comment

on the first Daly opinion. The author

found shortcomings in the legal

analysis, but that "its outcome may be

justifiable on social policy grounds."

The conclusion of the author was "that

two-earner spouses who cannot avoid

working in different cities should be

granted traveling expense deduction...

In the Winn and Winn, "Till Death Do

We Split: Married Couples and Single

Persons under the Individual Income

=26<

Tax," 34 S. Car. L.R. 829, 864 the

authors see the first Daly as a case

"departing from settled rules, (but]

recogniz(ing] sociological and

demographic change."

A case note on the second Daly

Opinion, 18 Wake Forest L.R. 99 (1982)

sees tne result as involving “harsh

consequences" for a salesman with a

territory, instead of a single pjlace to

work.

V. THAT THIS IS A SMALL TAX CASE MERITS

FAVORABLE CONSIDERATION.

The amount of tax at issue in this

proceeding is slightly more than $700.

Such cases are likely to arise in the

academic world since much of the work of

a professor may be performed at any

place where there are adequate library

and other research facilities

available. The tax deficiencies will

typically be small, so that the cost of

litigation through to this Court will

typically be far greater than the amount

of the tax deficiency. If the Court

does not grant certiorari in this case

to address the conflict between circuits

in the context of a two earner family,

there may not be another opportunity for

the Court to resolve the conflict until

a case arises involving spouses in top

tax brackets, such as a famous actress

and the president of a large corporation.

CONCLUSION

For these reasons, a writ of

certiorari should issue to review the

judgment and unpublished order of the

Seventh Circuit.

Respectfully submitted,

WILL W. OL R

IU School of Law

Bloomington, IN 47405

APPENDIX A

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

Submitted: September 7, 1983*

Octoper 21, 1983

Before

Hon. Richard D. Cudahy, Circuit Judge

Hon. John L. Coffey, Circuit Judge

Hon. Joel M. Flaum, Circuit Judge

DONALD C. FELTON and Appeal from

MARIANNE V. FELTON, the United

Petitioners-Appellants, States Tax

Court

No. 82-1540 vs. No. 3120-80

William M,

COMMISSIONER OF INTERNAL Fay, Judge.

REVENUE,

Respondent-Appellee.

This is an appeal from a decision of

the United States Tax Court upholding

the appellee Commissioner's disallowance

of certain travel expenses deducted by

the appellant, Marianne V. Felton,

for the taxable year 1978. Felton v.

Commissioner, 43 T.C.M. (CCH) 278

(1982). We affirm.

Ii.

During the period in question, the

Feltons resided in Bloomington,

Indiana. Mr. Felton worked in

Bloomington and his wife was completing

her Ph.D. in economics at Indiana

University. During the academic years

1976-1977 and 1977-1978, Mrs. Felton

worked on a temporary basis as a

visiting lecturer at Indiana University

Southeast (IUSE), located in New Albany,

Indiana. New Albany is approximately

100 miles from Bloomington. The Feltons

lived in Bloomington while Mrs. Felton

was a visiting lecturer at IUSE. @ For

the 1978-1979 academic year, appellant

accepted a permanent, tenure-track

position at IUSE, after unsuccessfully

attempting to find satisfactory

employment closer to Bloomington.

Appellant did not move to New Albany,

Dut continued to reside in Bloomington.

Mrs. Felton's duties as a professor

included teaching classes, preparing for

Classes, holding office hours to meet

with students and doing research. The

university provided appellant with an

office and a classroom in New Albany to

perform her duties. To minimize the

expense of traveling to New Albany,

appellant arranged her schedule so that

her classes and office hours were on

Monday nights, Tuesday mornings,

Wednesday nights and Thursday mornings.

Mrs. Felton stayed overnight in New

Albany on Mondays and Wednesdays and

Spent the rest of the week in

Bloomington. Appellant calculated that

She worked 22 hours a week in New Albany

and 30 hours a week in Bloomington.

The researcn facilities available in

Bloomington were more extensive than

those in New Albany. Many of the

materials available in Bloomington could

be acquired by the New Albany library

using the inter-library loan system, but

certain journals and books were

unavailable through inter-library loan.

Economics professors at IUSE generally

traveled to Bloomington three or four

times a year to use the research

facilities there. A computer center was

also located in Bloomington, wnich Mrs.

Felton considered essential to her work.

From August, 1978 tnrough December,

1978, appellant incurred expenses of

$1,701.03 in traveling between

Bloomington and New Albany and in

securing overnight lodging twice a

week. The Tax Court held that the

expenses were nondeductibdble commuting

costs. The court found that Mrs.

Felton's tax "home" was New Albany, not

Bloomington. The expenses at issue

could not be deducted, the court ruled,

because Mrs. Felton was not away from

“home" when they were incurred. This

appeal followed.

kids

The starting point for analyzing the

deductibility of traveling expenses

under § 162(a) of the Internal Revenue

Code” is Commissioner v. Flowers, 326

U.S. 465 (1946). The Supreme Court set

forth three conditions which must be

satisfied before travel expenses are

deductible: (1) the expense must be

reasonable and necessary; (2) tne

expense must be incurred wnile away from

home; and (3) the expense must be

incurred in the pursuit of business.

Id. at 470. The taxpayer must meet all

three requirements for the expense to be

deductible. The purpose of the

deduction for business travel expenses

is "to mitigate the burden of the

taxpayer who, because of the exigencies

of his trade or business, must maintain

two places of abode and thereby incur

additional and duplicate living

expenses." Kroll v. Commissioner, 49

TeC. 557, 562 (1968).

Whether or not a particular

expenditure satisfies all three

conditions "is purely a question of fact

in most instances. And the Tax Court's

inferences and conclusions on such a

factual matter, under established

principles, should not be disturbed by

an appellate court." Flowers, 326 U.S.

at 470 (citations omitted). See also

Michel v. Commissioner, 629 F.2d 1071,

1073 (5th Cir. 1980); Coombs v.

Commissioner, 608 F.2d 1269, 1274 (9th

Cir. 1979); 4A Mertens, Law of Federal

Income Taxation § 25.93 (1979). The Tax

Court's findings will not be disturbed

on appeal unless clearly erroneous.

Fed. R. Civ. P. 52(a); 26 U.S.C. y

7482(a); see Commissioner v. Duberstein,

363 U.S. 278, 291 (1960). The Tax

Court's findings in the instant case are

supported by the record.

For purposes of the travel expense

deduction, a taxpayer's “nome" is the

place of his or her business rather than

the place of residence. Weiberg v.

Commissioner, 639 F.2a 434, 437 (8th

Cir. 1981); Michel v. Commissioner, 629

F.2d at 1073; Markey v. Commissioner,

490 F.2d 1249, 1253 (6th Cir. 1974);

England v. United States, 345 F.2d 414,

417 (7tn Cir. 1965), cert. denied, 3382

U.S. 986 (1966). Cf. Daly v.

Commissioner, 662 F.2d 253 (4th cir.

1981); Jones v. United States. 648 F.2d

1081 (6th Cir. 1981); Hantzis v.

Commissioner, 638 F.2d 248 (lst Cir.

1981), cert. denied, 452 U.S. 962

(1981); Coomos v. Commissioner, 608 F.2d

1269 (9th Cir. 1979).

Appellant claims that her "nome"

during the taxadle year in question,

within the meaning of I.R.C. 9

162(a)(2), was Bloomington. Her

argument is based primarily upon her

claim that she performed more work in

Bloomington (30 hours per week, on tne

average) than in New Albany (22 hours

per week). But it is not the place

where work is performed, but rather the

requirements of the taxpayer's business

as to where the taxpayer must work that

is determinative in ascertaining the

be:

nin

location of a taxpayer's "home." "The

exigencies of business rather tnan the

personal conveniences and necessities of

the traveler must be the motivating

factors." Flowers, 326 U.S. at 474. In

this case, the only location where

appellant was required to work was in

New Albany, where she taught classes and

neld office hours for students. Her

decision to do work in Bloomington was

ba.ed primarily upon personal

convenience, not upon business

necessity. Her husband was working in

Bloomington and the Feltons had a home

there. Appellant's employer did not

require her to live in Bloomington nor

did it reguire that she work in

Bloomington. Compare United States v.

Blanc, 278 F.2d 571 (5th Cir. 1960)

(state supreme court justice required by

law to live in one community and work in

another).

o1O=

Appellant asks this court to adopt a

"reasonableness to move" test. Under

the proposed approach, the deductibility

of the travel expenses at issue would

depend on whether it was reasonable to

expect Mrs. Felton to move ner residence

to New Albany after accepting the

permanent position at IUSE. We decline

to adopt this argument for the reasons

stated in Kasun v. United States, 671

F.2d 1059, 1062 (7th Cir. 1982).

Tnere was sufficient evidence for

the Tax Court to find that Mrs. Felton's

tax "home" was New Albany. The expenses

at issue in this case are not deductible

under § 162(a)(2) because appellant was

not away from that "nome" when those

expenses were incurred. Appellant's

expenses were nondeductible commuting

expenses.

For the foregoing oneuden, the

decision of the Tax Court is AFFIRMED.

-ll-

*After preliminary examination of the briefs,

the court notified the parties tnat it nad

tentatively concluded that oral argument would

mot be helpful to tne court in tnis case. The

motice provided that any party might file a

"Statement as to Need of Oral Argument." See

Rule 34(a), Fed. R. App. P. (effective Aug. 1,

1979); Circuit Rale 14(£). Petitioner-appellants

nave filed such a statement and requested oral

argument. Upon consideration of that statement,

the briefs, and the record, the request for oral

argument is denied and the appeal is submitted on

the briets and record.

lappellant, Donald C. Felton, husband of

Marianne V. Felton, is a party to this action

because he and his spouse filed a joint federal

income tax return for the year in question.

Further references to "appellant" are to Mrs.

Felton.

2For the academic years 1974-1977 and

1977-1978, the Commissioner allowed taxpayer to

deduct travel expenses between Bloomington and

New Albany because her job was "temporary."

Those expenses are not at issue in the instant

appeal.

3section 162(a)(2) of the Internal Revenue

Code of 1954, as amended, provides as follows:

§ 612. Trade or business

expenses

(a) 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, including--

-l2-

(2) traveling expenses

(including amounts expended

for meals and lodging other

than amounts which are lavisn

Or extravagant under the

circumstances) while away from

home in the pursuit of a trade

or business.

4We mote that the Supreme Court nas never

decided this question and that the Second Circuit

disagrees with this court's position on the issue

of tne location of a taxpayer's "nome." See Six

v. United States, 450 F.2d 66 (2d Cir. 1971);

Rosenspan v. United States, 438 F.2qa 905 (2a Cir.

1971), cert. denied, 404 U.S. 864 (1971), ren'g

denied, 404 U.S. 959 (1971).

«130

APPENDIX B

QQ IR”

~ Wana

UNITED STATES TAX

DONALD C. FELTON and MARIANNE V. Felt

Petitioners

V. COMMISSIONER OF INTERNAL REVENUE

~ Respondent

Docket No. 3120-80.

William W. Oliver, for the petitioner

Deborah Gehring, for the

MEMORANDUM FINDINGS OF FAC’ AND OPINION

FAY, Judge: Respondent determined

deficiencies of $1,354.00 and $1,429.63

in petitioners' Federal income tax for

1977 and 1978, respectively. The only

issue for decision is whether certain

travel expenses incurred in 1978 are

non-deductible personal expenses or

«lé@-

Ordinary and necessary business expenses

deductible under section 162.2

FINDINGS OF FACT

Some facts have been stipulated and

are found accordingly.

Petitioners, Donald C. Felton and

Marianne V. Felton, were residents of

Indiana when they filed their petition

in this case.

In 1961, Donald C. Felton retired

from the army, and petitioners moved to

Bloomington, Ind., so he could attend

Indiana University. After obtaining a

degree, he accepted employment with

Indiana University in Bloomington and

remained in that position through the

years in issue.

In 1968, Marianne V. Felton

(hereinafter petitioner) enrolled in

Indiana University in Bloomington and

received her Master's degree in 1971.

-15-

Her specialty is cultural economics.

She was unable to find satisfactory

employment in that field in the

immediate Bloomington area. For a

while, she taught part-time in

Indianapolis, which is about 50 miles

from Bloomington.

During «he academic years 1976-1977

and 1977-1978, petitioner was employed

On a temporary basis as a Visiting

Lecturer in Economics at Indiana

University Southeast in New Albany,

Ind. While New Albany is approximately

100 miles from Bloomington, petitioner

did not move her personal residence to

New Albany.”

For the academic year 1978-1979

{August 15, 1978, to May 15, 1979),

petitioner obtained a full-time,

permanent position at Indiana University

Southeast in New Albany. From August

through December 1978, she was a

=16«

Lecturer. Effective January 1979, sne

became an Assistant Professor of

Economics--a promotion which carried not

Only the benefits of a salary increase

but the benefits of tenure credit as

well. Her promotion resulted from her

successful completion of a Ph.D. in

Economics at Indiana University in

Bloomington in December 1978.

Although petitioner's employment in

New Albany became permanent in August

1978, she still did not move her

personal residence there. Petitioner

arranged her schedule whereby she taught

on Monday nights, Tuesday mornings,

Wednesday nights and Thursday mornings,

and she maintained office nours in New

Albany on those days. With that

schedule, petitioner was able to limit

her nights in New Albany to two each

week. Thus, she would drive to New

Albany on Monday, return to Bloomington

ni Pa

on Tuesday, drive to New Albany on

Wednesday, and return to Bloomington on

Thursday. On the nights sne stayed in

New Albany, petitioner rented a room.

Petitioner calculates that she spent an

average of 22 hours each week working in

New Albany.

As a lecturer at Indiana University

Southeast, petitioner was expected to do

scholarly research as well as to teach

classes.” Some of her preparation and

most of her research was done in

Bloomington. By petitioner's

calculation, she spent an average of 30

hours each week working in Bloomington.

Petitioner's research was aimed at

tnree related goals: (1) keeping

abreast of developments in her field;

(2) completing her doctorate

dissertation; and (3) preparing

scholarly articles and papers. The

library facilities at Bloomington are

=16~

more expansive than tnose at New

Albany. While materials could be

obtained by the New Albany library from

the Bloomington library through

inter-library loan, some journals and

reference books were unavailable through

that system. There was also a computer

center in Bloomiagton which petitioner

considered essential to her work. In

general, professors in the Indiana

University Southeast Economics

Department made three or four trips to

Bloomington each year to use the

facilities there.

From August 1978 through December

1978, petitioner incurred expenses of

$1,701.03 traveling between New Albany

and Bloomington. In his statutory

notice of deficiency, respondent

disallowed the deduction of those

expenses.”

o19~

OPINION

The issue presented is whether

expenses incurred by petitioner Marianne

V. Felton in traveling between

Bloomington and New Albany from August

1978 through December 1978 are section

162 ordinary and necessary ousiness

expenses or section 262 nondeductible

personal expenses.

Respondent contends petitioner's

“tax home" was New Albany, and the

expenses she incurred were nondeductible

commuting expenses. Respondent also

maintains since petitioner's choice to

live in Bloomington was personal, the

expenses were not incurred in the

pursuit of a trade or business.

Petitioner contends Bloomington was her

"tax home," and her expenses are

deductible as “away from home" traveling

expenses under section 162(a)(2).

Additionally, petitioner argues the

«30=

deduction should be allowed, because it

was unreasonable to expect ner to move

her personal residence to New Albany.

Section 162({a)(2) permits a taxpayer

to deduct traveling expenses, including

meals, lodging, and transportation,

incurred while “away from home" in the

pursuit of a trade or business. See

also Commissioner v. Flowers, 326 U.S.

465, 470 (1946). The purpose of that

deduction is “to mitigate tne burden of

the taxpayer who, because of tne

exigencies of his trade or business,

must maintain two places of abode and

thereby incur additional and duplicate

living expenses." Kroll v.

Commissioner, 49 T.C. 557, 562 (1968)

(emphasis added). Thus, it is the

expenses arising from business

considerations that fall within section

162(a)(2). With that in mind, this

Court has consistently interpreted

=Zi«

"home," as it is used in section

162(a)(2), as referring to the vicinity

of a taxpayer's principal place of

business, rather than to the taxpayer's

personal residence. Mitchell v.

Commissioner, 74 T.C. 578 (1980);

Montgomery v. Commissioner, 64 T.C. 175

(1975), affd. 532 F.2d 1088 (6th Cir.

1976); Coerver v. Commissioner, 36 7.c.

252 (1961), affd. 297 F.2d 837 (3d Cir.

1962).

In determining a taxpayer's "home,"

an objective test applies. Foote v.

Commissioner, 67 T.C. 1 (1976). While

that test has occasionally been stated

as an inguiry into whether it would be

reasonable for a taxpayer to move his

personal residence to the vicinity of

the business location under

consideration, that does not mean that

subjective elements, such as personal

preference or family location, come into

play. See generally Tucker v.

Commissioner, 55 T.C. 783 (1971). See

also Frederick v. United States, 603

F.2d 1292 (8th Cir. 1979).

In the case before us, we find

petitioner Marianne V. Felton's tax

"nome" was in New Albany during the

period in issue. The focal point of a

university lecturer's duties is teacning

in the classroom and dealing with

Students. Those duties take place

almost exclusively on campus. While

research is an integral part of the job,

in most cases it can be accomplished

principally on campus. We are

unconvinced this case is any different.

Petitioner's teaching and interaction

with students occurred in New Albany.

While some of her research necessarily

was done in Bloomington, most of it

could have been done in New Albany. It

appears to us petitioner chose to center

“23

her researcn activities in Bloomington

for personal reasons. Those reasons can

play no part in the determination of her

tax "home." As the Circuit Court of

Appeals for the Eighth Circuit said,

"The job, not the taxpayer's pattern of

living, is the crucial matter."

Frederick v. United States, supra at

1295.

Having found petitioner's tax "home"

was New Albany, the expenses at issue

herein cannot be deducted under section

162(a)(2) simply because petitioner was

not away from that "home" when those

expenses were incurred.’ Viewed as

expenses of traveling from Bloomington

to New Albany, petitioner's expenses are

nondeductible costs of commuting.

Commissioner v. Flowers, supra.

To reflect concessions and the

foregoing,

Decision will be

entered under Rule 155.

24-

lall section references are to the Internal

Revenue Code ot 1954, as amended.

during tne academic years 1970-1977 and

1977-1978, petitioner incurred expenses of

$5,128.53 traveling between Bloomington and New

Albany. For purposes of this case, respondent

concedes that during those years petitioner's

employment was temporary, and her travel expenses

are thus deductible.

3Petitioner's dissertation was completed in

early November 1978 and successfully defended on

December 4, 1978.

l . . . .

*There were also some minor administrative

duties attached to petitioner's employment.

2In his statutory notice of deficiency,

respondent also disallowed the deduction of

travel expenses incurred by petitioner during the

academic years 1976-1977 and 1977-1978. As

previously noted, respondent now concedes the

deductibility of those expenses because

petitioner's employment during those years was

temporary.

Sas part of her “reasonable to move"

argument, petitioner argues that failure to

consider personal elements in a case such as hers

puts undue strain on two job families. While

petitioner's point perhaps is appealing

sociologically, it has no basis in law. See

Foote v. Commissioner, 67 T.C. 1, 6-7 (1976);

Tucker v. Commissioner, 55 T.C. 783, 788 (1971).