Appendix — Peurifoy v. Commissioner
Supreme Court brief1958
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APPENDIX A
Constitutional Provision, Statutes and Regulations
(a) Constitution of The United States, Amendment
Thirteen.
Sec. 1. Neither slavery nor involuntary servitude,
except as a punishment for crime whereof the party
shall have been duly convicted shall exist within the
United States, or any place subject to their jurisdic-
tion.
(b) 26 U.S.C. (1952) Section 22(n), being Section 22(n)
of the Internal Revenue Code of 1939, as amended. En-
acted by Section 8, Individual Income Tax Act of 1944,
C. 210, 58 Stat. 231.
Sec. 22. Gross INCOME
(n) Definition of ‘‘ Adjusted Gross Income’’.—As
used in this chapter the term ‘‘adjusted gross income’?
means the gross income minus—
(2) Expenses of travel and lodging in connection
with employment.—The deductions allowed by section
23 which consist of expenses of travel, meals, and
lodging while away from home, paid or ineurred by
the taxpayer in connection with the performance by
him of services as an employee;
(ec) 26 U.S.C. (1952) Seetion 23(a)(1)(A), being See-
tion 23(a)(1)(A) of the Internal Revenue Code of 1939, as
amended. - Enacted by Section 121(a) of the Revenue
Act of 1942, C. 619, 56 Stat. 798.
See. 23. Depvuctions From Gross INcoMeE,
In computing net income there shall be allowed as
deductions :
(a) Expenses.—
(1) Trade ox business erpenses.—
(A) In General.—All the ordinary and necessary
expenses paid or incurred during the taxable year in
nein
2a |
carrying on any trade or business, including * * °;
traveling expenses (including the entire amount ex-
pended for meals and lodging) while away from home
in the pursuit of a trade or business; * * *
(d) 26 U.S.C. (1952) Section 24(a)(1) being Seetion 24
(a)(1) of the Internal Revenue Code of 1939, as amended.
Enacted by Section 127(b) of Revenue Act of 1942, C. 619,
56 Stat. 798.
See. 24. Irems Nor DEpwctIBLe. '
fa) General Rule.—In computing net income ne de-
duction shall in any ease be allowed in respect of—
(1) Personal, living, or family expenses, except
extraordinary medical expenses deductible under see-
tion 23(x);
(e) Treasury Regulation 118, Section 39.22(n)-1, pro-
mulgated under Internal Revenue Code of 1939, as
amended, 26 C.F.R. (1958 Revision) Section 39.22(n)-1.
See. 39.22(n)-1. Adjusted gross income.
(a) The term ‘‘adjusted gross income”? means the
gross income compnted under section 22 minus such
of the deductions allowable under section 23 as are
specified in section 22(n). * * *
(b) Section 22(n) does not create any new deduc-
tions, but merely specifies which of the deductions pro-
vided in section 23 shali be allowed in computing ad-
justed gross income. The circumstances that a par-
ticular item is specified in one of the clauses under
section 22(n) and is also embraced within the terms of
another of such clauses does not permit the item to be
twice deducted in computing adjusted gross income.
(c) The deductions specified in section 22(n) for the
purpose of computing adjusted gross income are: (1)
Deductions allowable under section 23, which are at-
tributable to a trade or business carried on by the
taxpayer not consisting of services performed as an
employee; (2) deductions allowable by section 23 which
constitute expenses of travel, meals, and lodging while
away from home, paid or incurred by the taxpayer in
on eterna
.
3a
connection with the performance by him of services as
an employee; (3) deductions allowable by section 23
(other than expenses of travel, meals, and lodging
while away from home) which consist of expenses paid
or ineurred in connection with the performance of serv-
ices as an employee under a reimbursement or other
expense-allowance arrangement with his employer;
* * #
(d) For the purpose of the deductions specified in
section 22(n) the performance of personal services
as an employee does not constitute the carrying on of
a trade or business. * * *
(f) Treasury Regulation 118, Section 39.23(a)-1, pro-
mulgated under Internal Revenue Code of 1939, as amended.
°6 (.F.R. (1953 Revision) Section 39.23 (a)-1.
See. 39.23(a)-1. Business expenses. Business ex-
penses deductible from gross income inelude the ordi-
nary and necessary expenditures directly connected
with or pertaining to the taxpayer’s trade or busi-
ness, except items which are used as the basis for a
deduction or a eredit under provisions: of law other
than subsection (a) of section 23. Double deductions
are not permitted. Amounts deducted under one pro-
vision of the Internal Revenue Code cannot again be
deducted under any other provision thereof. * * *
Among the items ineluded in business expenses are
* * * traveling expenses while away from home solely
in the pursuit of a trade or business * * *.
(¢) Treasury Regulation 118, Section 39.23(a)-2, promul-
vated under Internal Revenue Code of 1939, as aniended.
"6 CLF.LR. (1953 Revision) Section 39.25 (a)-2.
See, 39.23(a)-2. Traveling expenses. (a) Travel-
ing expenses, as ordinarily understood, include rail-
road fares and meals and lodging. If the trip is un-
dertaken for other than business purposes, the rail-
road fares are personal expenses and the meals and
lodging are living expenses. Tf the trip is solely on
business, the reasonable and necessary traveling ex-
penses, including railroad fares, meals, and lodging,
are business expenses.
a & & * *
ta
(f) Only such expenses as are reasonable and nee-
essary in the conduct of the business and directly at-
tributable to it may be deducted.
(x) A taxpayer claiming the benefit of the dedue-
tions referred to in this section must attach to his
return a statement showing (1) the nature of the busi-
ness in which engaged; (2) the number of days away
from home during the taxable year on account of busi-
ness; (3) the total amount of expenses incident to meals
and lodging while absent from home on busniess dur-
ing the texable year; and (4) the total amonnt of
other expenses incident to travel and claimed as a de-
duction.
(h) Claim for the deductions referred to in this
section must be substantiuted, when required by the
(« nmissioner, by evidence showing in detail the
amount and nature of the expenses ineurred.
(i) Commuters’ fares are not considered as busi
ness expenses and are not deductible.
APPENDIX B
Opinions and Judgments Below
Tax Court of the United States
James BK. Pevriroy, et au,’ Petitioner, vo Commissioner
of Internal Revenue, Respondent. Docket Nos. 55694,
6074, 56262. Filed October 31, 1956.
Deductions—Traveling Expenses.—Held, that the evi.
dence establishes that the employment of the petitioners
away from the places of their established residences was
temporary in character and that the costs of meals, lodg
ing and transportation constituted deductible traveling
expenses while away from home. Sections 22(n) and
23(a)(1)(A) of the Internal Revenue Code of 1939.
Daniel R. Dixon, Esq., for the petitioners.
Hubert E. Kelly, Esq., for the respondent.
' Proceedings of the following petitioners are consolidated here-
with: Paul V. Stines and Betty O. Stines, Docket No. 56074, and
John S. Hall and Doris D. Hall, Docket No. 46262.
a '
3a
The respondent determined deficiencies in| income tax
for the calendar vear 1953 as follows:
James E. Peurifoy $449.88
Paul V. Stines and Betty QO. Stines 492.12
John S. Hall and Doris D. Hall 369.06
The question presented is whether amounts expended
by James EK. Peurifoy, Paul V. Stines and John S. Hall,
hereinafter referred to as the petitioners, for beard and
lodging at a job site and for transportation therefrom to
their residences after termination of employment are
deductible pursuant to sections 22(n) and 23(a)(1)(A) of
the Internal Revenue Code of 1939, or whether they con-
stitute nondeductible personal expenditures under section
24(a) (1).
Findings of Fact
In the case of each petitioner some of the facts were
stipulated and are found as stipulated, the stipulations
being incorporated herein by this reference.
Returns were timely filed by the petitioners for the
calendar year 1953 with the distriet director of internal
revenue for the district of North Carolina.
The petitioner James bh. Peurifoy is a pipe welder.
Since August 13, 1951, he has been a member of Local No.
329, with headquarters in Wilmington, North Carolina, of
the trade union known as The United Association of
Journeymen and Apprentices of the Plumbing and Pipe
Fitting Industry of the United States and Canada (here-
inafter referred to as the union). The petitioner Stines
is a journeyman plumber and the petitioner Hall is a
welder. Since 1947 and 1952, respectively they have been
members of Local No. 785 of the same union, with head-
quarters at Raleigh, North Carolina. They all obtain
employment through their local unions which send them te
various work sites where they are then hired by the eim-
plover.
Members of local unions are often sent to other jurisdic-
tions for work. In the case of a large project Journeymen
workers, as distinguished from foremen or superintend-
ents, may be drawn from various states, Where a job ve-
quires more skilled craftsmen than a local union has avail-
able in the area, the local union will deal with other local
unions in the same state or other states in order to pro-
cure the necessary workers. Hf this does not produce
6a
sufficient workmen the national union will procure journey
men and apprentices from all over the country. A journey-
man craftsman working on construction projects may have
several different employers in the course of a year or even
though he may work for one employer throughout a year,
he may work at several different job sites. In the building
and construction industry, some construction jobs such as
the Atomic Energy projects, may run for a period of years,
but the general run of jobs is for a period of a few weeks
or fer a few months,
The petitioner Peurifoy is, and was during the year
1953, an umnarried individual. During the entire vear
1953, he owned and maintained a residence at Kure Beach,
North Carolina, which is about 20 miles from Wilmington.
Hie actually resides there when he is employed in the
vicinity of Wilnington and returns to this residence on
week ends if the place of employment is within a reason.
able distance. He uses his own automobile for transpor-
tation.
He was first employed by The Piping Equipment Com.
pany with main offices in Greensboro, North Carolina, to
work on a paper mill at Aeme, North Carolina. He worked
on this project from about August 13, 1951 until about
March 10, 1952.
He was next employed by The Grinnell Company of
Charlotte, North Carolina, to work on the duPont. plant
at Kinston, North Carolina. He worked on this project
from Mareh 16, 1952 until November 20, 1953. While se
employed he roomed and boarded near Kinston and from
January 1, 1953 through Nevember 20, 1953, he expended
for room and board the sum of $496. The distance from
hix home in Kure Beach to the duPont plant is approxi.
mately 122 miles. The cost to him of driving his automo-
bile from Kinston to Kure Beach after termination of
this employment was $8.54.
He was next employed by The Grinnell Company to
work on the Carolina Light and Power Company plant at
Mount Misery, North Carolina, situated about seven mile.
from Wilmington. He worked on this project from No
vember 30, 19523 through Mav 14, 1955, and while he
worked on this project he resided in his residence at Kure
Beach. Thereafter, in 155 he worked at Cherry Point,
North Carolina, for three months, at Acme, North Caro
lina, for two weeks, and at Barberton, Ohio, for about one
week,
7a
In his return for 1953, he deducted the amount. of
$1,920.80 from gross income as ‘Subsistence and tempo-
rary quarters necessary for earning income, not reim-
bursed by employer.’? The respondent disallowed the en-
tire claimed deduction on the ground that payment thereof
had not been proven and that even if paid the expenditure
represented personal and living expenses,
The ‘too peret pe Paul V. Stines and Betty O. Stines,
are husband and wife. Betty O. Stines appears as a peti-
tioner by virtue of having joined in the filing of the income
tax return for 1953. During the entire vear 1953 they
maintained a residence in Raleigh, North Carolina, and
had maintained such residence since sometime in) 1952.
fetty O. Stines and the petitioners’ minor child actually
resided in such residence during the entire vear 1953.
Since 1947, when he became a member of the union, the
petitioner Paul V. Stines has had about 30 jobs ranging in
duration from two weeks to over a vear. He worked for
one employer for over two vears but on different jobs in
different locations. Tle was employed by the Grinnell
Company of Charlotte, North Carolina, to work on the
duPont plant at Kinston, North Carolina, from March 26,
1952 until about April 10, 1953, when he was discharged.
While so employed, he rented a room at Kinston, North
Carolina, and ate his meals in restaurants. During 1953 he
expended $262.50 for room and board. The distance from
Raleigh to Kinston by automobile is’ approximately 78
niles and the distanee from Kinston to the plant site is
approximately an additional eight miles. He drove his
car or rode with others from his residence in Raleigh to
his rooming house in Kinston and returned once a week.
The cest to him, under his car pool arrangement, for
transportation from Kinston to Raleigh upon termination
of his work in Kinston was $1.09. While emploved at
Kinston he reeeived 14.8 cents per hour greater than the
normal union scale in accordance with the agreement be-
tween the Grinnell Company and the union. All union
emplovees received this additional amount regardless of
where they were living. This extra amount was intended
to compensate the employees for time expended in going
from the town of Kinston to the job site and return.
He was next employed by Carl B. Mims of Raleigh from
about April 13, 1953 to about April 28, 1953, to work in
and around the environs of Raleigh.
Sa
He then worked for A, L. Wright and Company, Ine. of
Portsmouth, Virginia, from about May 6, 1953 to about
June 25, 1953, when he quit for personal reasons. This
work was performed on the Westinghouse plant near
Raleigh.
His next employment was with Markowitz Bros., Ine. of
Miami, Florida, to work on an air base near Charleston,
South Carolina. He worked there from about June 23,
1953 to about July 15, 1953. He went to Charleston by
driving his car. The distance from Rale ‘igh to Charleston
_is approximately 300 miles and the distance from his
boarding house in Charleston to the plant site is approxi-
mately 11 miles. While at Charleston the petitioner ex-
pended $57 for room and board. The expenses inburced
for driving his car from Raleigh to Charleston and return
was $42.
He was next emploved by Biemann and Rowell of
Raleigh, North Carolina, from August 1, 1953) through
December 31, 1953. While so emploved he was waned by
his employer to Garrison and Hopkins Company, Ine., of
Charlotte, North Carolina, to work on the S. Hf. Kress
Company job in Raleigh, and to Cooper and Goodwin of
Raleigh to work from December 9, 1953 throagh December
30, 1953 in and around the environs of Raleigh. He also
worked for Garrison and Hopkins Company, Inc., at Fort
Bragg, North Carolina, for approximately seven and one-
half weeks during 1953. While there he expended $155.63
for room and board. The distance from Raleigh to Fort
Bragg is approximately 50 miles. The cost of his trans-
portation for the round trip to Fort Bragg was approxi-
mately $7,
In their return for the vear 1953, the petitioners, Paul
V. and Betty O. Stines, deducted the amount of $2,480
from gross income for ‘*Subsistence and quarter [sie] non
reimbursable by employer necessary to earning income."’
The respondent disallowed the deduction for the same
reasons as in the case of the petitioner Peurifoy.
The petitioners, John S. Hall and Doris D. Hall, are
husband and wife. They have three minor children. ‘Dur-
ing the entire year 1953 they maintained a residence in
Raleigh, North Carolina. They maintained such residence
for approximately four vears ending in the early part of
1954. Doris D. Hall and the three children actually re-
sided there during the entire vear 1953.
a
The petitioner John S. Hall was first employed in) 152
by the Grinnell Company of Charlotte, North Carolina, to
work on the Burlington Mills plant at Neuse, North Caro-
lina, and worked on this project until it was completed in
that vear.
He was next employed by the Grinnell Company to work
on the duPont plant at Kinston, North Carolina, and
worked on this project from October 27, 1952 through July
10, 1953. He resigned for personal reasons. While work-
ing on the duPont plant at Kinston, he expended $530.18
for room and beard during the period January 1, 1953
through July 10, 1953. During this time he returned to
Raleigh on weekends. The cost to him of his transporta-
tion from Kinston to Raleigh after termination of his
employment was $2.01. While he was employed on this
project he received 14.8 cents per hour greater than the
normal union seale, as explained hereinabove.
He was next employed by A. L. Wright and Company,
Inc., of Portsmouth, Virginia, to work on the Westinghouse
plant under construction in Raleigh. He worked on this
project from July 13, 1953 until the project was completed
on Mareh 5, 1954.
Thereafter, in 1954 and 1955, he worked at Portsmouth,
Ohio, for about three and one-half months, at Aiken, South
Carolina, for about two weeks, at Hopewell, Virginia, for
about seven months, at Tarboro, North Carolina, for one
month, and at Moncure, North Carolina, on two successive
Jobs of three months each.
The petitioners, John S. Hall and Doris D. Hall, filed
separate individual income tax reurns for the year 1953.
In his return for 1953 the petitioner John S. Hall deducted
from gross income the amount of $1,556.60 as ‘Subsistence
and quarters non reimbursable by employer necessary to
earning income.’’ The respondent disallowed the claimed
deduction of $1,566.60 for the same reasons as in the case
of the other petitioners herein, Although the petitioner and
his wife filed separate returns for 1953 the respondent, in
his notice of deficiency, gave the petitioner the benefit of
joint filing by including in the notice of deficiency an ad-
justment for salary income earned by Doris D. Hall in
the amount of $270.54. No error has been assigned re-
garding this adjustment.
The employment of the petitioners at the duPont plant
at Kinston was temporary and the expenses incurred by
10a
them fdr food and lodging while there and for transporta-
tion therefrom to their residences upon termination of such
employment were incurred while away from their homes
in the pursuit of their trade,
Opinion
Arkins, Judge:
The question presented is whether the expenses ineurred
by the petitioners for meals and lodging while engaged in
work at the duPout plant at Kinston, and the cost of re-
turning therefrom, upon termination of their employment,
to the places of their residence, constitute allowable dedue-
tions under the provisions of sections £2(n) and 23(a)(1)
(A) of the Internal Revenue Code of 1939,* or whether they
are non-deduetible personal, living or family expenses
within the meaning of section 24(a)(1)*.
There remains no controversy as to the amounts of any
of the expenditures. The stipulation fixes some of the
amounts and the parties on brief agree as to others. The
= Sec. 22(n). Definition of ** Adjusted Gross Income.’’—-As used
in this chapter the term ‘‘adjusted gross income’’ means the gross
income minus—
(1) Trade and Business Deductions.—The deductions allowed
by section 23 which are attributable to a trade or business carried
on by the taxpayer, if such trade or business does not consist of
the performance of services by the taxpayer as an employee ;
' (2) Expenses of Travel and Lodging in Connection with Em-
ployment.—The deductions allowed by section 23 which consist of
expenses of travel, meals, and lodging while away from home, paid
or incurred by the taxpayer in connection with the performance
by him of services as an employee ;
Sec, 23. Depuetions From Gross INCOME.
In computing net income there shall be allowed as deductions:
(a) Expenses-—
(1) Trade or Business Expenses.—
(A) In General.—® * * traveling expenses (including the entire
amount expended for meals and lodging) while away from home in
the pursuit of a trade or business; * * *
(3) See, 24. [tems Nor DepveTisie.
(a) General Rule.—In computing net income no deduction shall
in any case be allowed in respect of—-
(1) Personal, living. or family expenses, except extraordinary
medical expenses deductible under section 23(x); * * *
- aie
lla
amounts of expenditures which we lave set forth in our
Findings of Fact are limited to the amounts now clsinied
hy the petitioners on briel, they having therein waived
any claim of deductibility of certain expenditures,
Ordinarily the cost of meals and lodging is personal and
therefore not deductible in arriving at net ineome, Con
eress has specifically provided in section 24(a) (1) that per
sonal, living or family expenses are not deductible. And
commuting expenses to and from work have always beer
treated as nondeductible. Frank H. Sulvan, 1 BeTOA. 995.
Thus, it has been held that if a taxpayer chooses for rea
sons personal to him to maintain bis residence ata place
other than the place of his employment, his personal or
living expenses at the place of employment do not lose
their character es nondeductible personal expenditures.
Commissioner v. Flowers, 326 U.S. 465 [34 ATR Son[.
See also Barnhill v. Commissioner (CLA. 4), 148 FB. 2d $15
[33 AFTR 1203]; Ford v. Commissioner (CLA, 4), 227 F. 2d
207: and Jndrews ve Commissioner (CLA, 4), 179 Bit one
[38 AF TR 1328], each affirming a decision of this Court,
In the Flowers case, supra, the Supreme Court stated
that ‘‘business trips are to be identified in relation to lus
ness demands and the traveler's business headquarters.
The exigencies of the business rather than the personal
conveniences and necessities of the traveler must be the
motivating factors."’ The Supreme Court there also stated
that whether particular expenditures fulfil the conditions
so as to entitle a taxpayer to a deduetion ts purely a ques
tion of fact in most instances, In the Baruhdl ease, supra,
the Court stated:
It ix clear in the first place that Congress, in) pre
seribing the rules for the computation of net teanme,
intended to confine the deduetions for business ex
penses to those which are ordinary and necessary, and
to prohibit the deduction of personal living or family
expenses. It was recognized that the taxpayer inst
maintain a heme for his family at his own expense
even when he is absent on business, and thar his per
sonal expenses during his absenee on business may
fairly be regarded as expenses of the business, But it
ix not reasonable to suppose that Congress intended
to allow as a business expense those outlays whieh: are
not caused by the exigencies of the business, but by
the action of the taxpayer in having his home, for his
12a
own convenience, at a distance from his business. Such
expenditures are not essential to the prosecution of
the business and were not within the contemplation of
Congress which proceeded on the assumption that a
business man would live within reasonable proximity
to his business. * * *
ne we view the situation here, we do not have the case
of a taxpayer who for personal reasons, as distinguished
from the requirements of his business, maintains his resi-
dence at a place other than that of his actual employment.
Kach of the petitioners before us is a construction worker
and each maintained a residence at a particular place.
Peurifoy at Kure Beach, near Wilmington, North Caroliiia,
and Stines and Hall at Rale igh, North Carolina. Hach of
them belonged to a local union at or near the place of his
residence and each obtained employment) through that
union. The stipulated faets show that throughout a number
of years, including the taxable year before us, they have
worked at various job sites both at or near their residences
and at distant points, sometimes in other states, for vary-
ing periods of time. There was no particular place here
any one of them principally had employment, although each
of them at times worked at or near the place where he
maintained his residence.. The record indicates that each
Was accustomed to return to the place of his residence upon
the completion of a job. Impelling reasons for the ac-
ceptance of employment away from the place of residence
readily come to mind, such as the availability of work, the
current pay scale, or working conditions.
In this situation we are of the opinion that when any of
the petitioners accepted temporary employment away from
the places of their residence, they reasonably could not have
been expected to establish a residence at the places of em-
ployment. In those instances the expenses incurred at the
place of employment are considered as being due to the
exigencies of the (rade or business. That was the situation
in Harry F. Schurer, 3 T.C, 544, and E, G. Leach, 12 T.C.
20, in which we held traveling expenses to be deductible.
Tha respondent recognizes that this is the proper view and
conéedes that the employment of the ‘petitioner Paul VY.
Stines at Charleston South Carolina, for about 3 weeks and
3! Fort Bragg, North Carolina, for about 74% weeks was
femporary and that expenses incurred by him in traveling
3a
to those places to accept employment and returning to Ra-
leigh and the cost of board and lodging while at those places
are deductible.
On the other hand, he contends that the expenses incurred
by cach of the petitioners in connection with employment
at the duPont plant at Kinston, North Carolina, are not
deductible. He argues that that job was not temporary,
but was of indefinite or indeterminate duration, relying
principally upon the jength of time the petitioners were
employed there, Peurifoy for about 204 months, Paul V.
Stines for about 1242 months, and John S. Hall for about
Sts months, portions of which periods fell within the tax-
able year. He relies upon the line of cases in which the
position has been taken that if the employment is of in-
definite duration, the additional living costs and the irans-
portation costs incurred because of failure to bring té-
gether the place of residence and the place of employment
are deemed to have been occasioned by reasons of personal
choice or convenicnce, resulting in the nondeductibility of
the expenses. See Willard S. Jones, 13 T.C. 880; Beatrice
H, Albert, 13 T.C. 129; Commission v, Andrews, supra;
and Ford v. Commissioner, supra,
The principal factor upon which these cases turned was
the nature of the employment. In the Albert case we said
that the employment ‘*was not the sort of employment in
Which tc:mination within a short period could be foreseen,
as was the situation in //arry F. Schurer, 3 T.C. 544, and
E.G, Leach, 12 T.C. 20.” In the Jones case the taxpayer
Was required to work for his employer until released and
he could not obtain other work without a release. In the
Andrews case the employment was ‘‘for the duration of
the war’? and was characterized by the court as being ‘‘of
indefinite tenure.’’ In the Ford case the taxpayer had a
regular and continuing employment with one employer over
a number of years as subforeman and later as piping super-
intendent.
The petitioners argue that any employment upon a con-
struction project is temporary in that by its very nature
it is terminabie, and that hence any expense in connection
therewith should be considered as deductible business ex-
pense. We think it obvious that sach a flat rule cannot be
adopted, Mach case must be decided upon the basis of its
own facts and circumstances, including those relating to the
known or contemplated duration of the work, the tax-
l4a
paver's intent with regard to the maintenance or establish-
ment of business headquarters, and any facts that develop
during the course of the employment. Employment which
may appear to be temporary in character at the start may
ripen into employment of indefinite duration. See Arnold
P. Bark, 6 TC. 851, Furthermore, employment may be of
such relatively long actual duration as to indicate, in the
absence of evidence to the contrary, that the employment
was cither indefinite at the start or developed into indefinite
employment.
Upon the record in the instant cases, we think that the
employment at Kinston was of the same general nature as
that involved in the Schurer and Leach cases, supra, The
petitioner Hall testified that when they entered upon a joh
ata particular site, including the Kinston job, thev-were
not guarantecd the job for any specified time and did not
know how long they would be employed there, although
there was usually some hearsay information as to the dura-
tion of the work, Thus, as to all three of the petitioners,
there was no reason for them to believe that the nature of
the job would be any different from that of other jobs which
formed the general pattern of their employment. Kach of
the petitioners did, upon termination of his work at Kins-
ton, return to the place of his residence and take employ-
ment there. On these faets the employment in question is
properly to be considered as temporary in nature. In such
a situation it would not be reasonable to expect them to
shift their residences to the place of employmert or to
regard Kinston as their ‘home’? for tax purposes.
We conelude that the cost of board and lodging of each
of the petitioners at Kinston and the cost of ‘their trans-
portation from Kinston to Raleigh and Kure Beach, re-
spectively, upon termination of this particular employ ment
constitute traveling expenses incurred while away from
home in the pursuit of his trade within the intendment of
section 25¢a)(1)(C.A), and that they are deductible under
section 22(n). See Carroll B. Mershon, 17 T.C. 861,
Reviewed by the Court.
Decisions will be entered under Ride 50.
CoMMISSIONER OF TNtrernan Revenve,
Petitioner,
VERSUS
James BE. Pecrioy, Paci Ve Stixes and Berry O. Stixes,
Jous S. Hare and Doris D. Tans,
Respondents.
Ox Perrrioxs ro Review rite Decisions oF tie Tax Cours
of THE UNtrep STATES
(Argued October 18, 1957. Decided Novenber 11, 1957)
Before Soren axp Hayxsworrn, Circuit) Judges, and
Tompson, District Judge.
Kexvetu BE. Levin, Attorney, Department of Justice,
(Cnarnes K. Rice, Assistant Afforney: General, and
Lee A. Jackson, Afrorney, Department of Justice, on
»
brief) for Petitioner, and Dasxien KR, Dixox for Re
spondents.
Hayxswortu, Crrenit Judge:
We have for review a decision of the Tax Court! which
held that the Commissioner had improperly assessed) de-
ficiencies of income tax to three construction workers. The
claimed deficiencies arose upon the disallowance by the
Commissioner of living expenses of the three workers
while each was employed upon a construction project at
Kinston, North Carolina, and of the travel expense of
each when, upon the termination of his employment. he
returned to his residence.
1 James E. Pourifoy, et al v. Commissioner, 27 ToC. VA8.
l6a
The taxpayer, Peurifoy, an unmarried individual, main-
tained a residence at Kure Beach near Wilmington, North
Carolina. He resided in this. house when employed in the
vicinity of Wilmington and, at other times, used it on
week ends if the place of his employment was not unrea-
sonably distant.
Peurifoy was first employed as a pipe welder in the con-
struction of a paper mill at Aeme, North Carolina. After
apprximately seven months, he left that employment. to
work on a new plant for the duPont company under con-
struction near Kinston, North Carolina. He was employed
on that project for approximately 20% months ending
November 20, 1953. Thereafter he was employed for ap-
proximately 171% months in the construction of an electric
generating plant at Mount Misery, North Carolina, for
approximately 3 months in construction work on the
Marine Base at Cherry Point, North Carolina, for two
weeks on a paper mill project near Aeme, North Carolina,
and for one week in Barberton, Ohio. The reeord does
not indicate whether any of these employments were ter-
minated for cause, in consequence of completion of the
work or for reasons personal to the taxpayer.
The taxpayer, Stines, is married and, beginning some-
time in 1952 maintained a residence for his family in
Raleigh, North Carolina. A journeyman plumber, he has
had approximately thirty jobs since 1947 ranging in dura-
tion from two weeks to more than a year. On March 26,
1952, he was employed to work on the duPont plant near
Kinston and left 12'% months later, on April 10, 1953. It
is stipulated that he left this employment for personal
reasons.”
The taxpayer, Hall, is married and about 1950 aequired
a house for his family in Raleigh, North Carolina. He
sold this house in the latter part of 1953, but his family
*Stines testified that the ‘personal reasons’ for his leaving was
that he was discharged after walking off the job during working
hours to attend to a personal errand.
ee ST
l7a
continued to reside there until early in 1954. At the time
of the stipulation, he was a resident of Knightsdale, North
Carolina.
After working for approximately a year in the construc-
tion of a textile plant at Nouse, North Carolina, he was
employed as a welder in the construction of the duPont
plant near Kinston. This employment began October 21,
1952, and ended on July 10, 1953, when he resigned for
reasons personal to him. Subsequently, he was employed
in the construction of (1) a factory at Raleigh, North
Carolina, for 7% months. (2) an atomic energy plant at
Portsmouth, Ohio, for 344 months, (3) an atomie energy
plant near Aiken, South Carolina, for 2 weeks, (4) a chemi-
‘al plant at Hopewell, Virginia, for 7 weeks, (5) a textile
plant at Tarboro, North Carolina, for 1 month, (6) and
electrie generation plant at Moneure, North Carolina, for
3 months and (7) the same Moncure plant (for a different
contractor) in which work he was engaged at the time of
the stipulation. He resigned for personal reasons from
his jobs at Portsmouth, Aiken and Hopewell as well as
from that at Kinston.
While employed at the duPont plant near Kinston,
Peurifoy boarded at a house, approximately 1 mile from
the plant site, though he went to Kure Beach on weeks
ends. The boarding house is approximately 122) miles
from his house at Kure Beach and approximately 102
miles from Wilmington which he claims as his tax home.
During the period of their employment at the duPont
plant, Stines and Hall rented rooms in Kinston, though
on week ends they went to Raleigh where their families
resided. Kinston is approximately 78 miles from Raleigh.
The record does not show when the construction of the
duPont plant near Kinston began or when it was com-
pleted. Nor does it disclose the period of employment of
welders, pipe welders or plumbers, the trades practiced
by these taxpayers. It dees reveal that Peurifoy and
Stines were employed on this project in Mareh 1952. Hall
was not employed there until October 1952, but he had
18a
been engaged in other employment until then. We are
informed that when Stines and Hall quit their jobs at
Kinston in April and July 1953, respectively, they did so
for personal reasons, not because work for people of their
trades was no longer available. The reason for Peurifoy's
leaving in November 1953 is not mentioned. It would ap
pear from these facts, however, that it was a construction
project of some size and of substantial duration.
The only testimony bearing upon the duration of the
work was that of Hall who testified that on all construetion
jobs, including that at Kinston, they were not guaranteed
a job for any specifie period ner were they told by the
employer how long the work was expected to last. There
was talk among the workers of the probable duration of
the work. He did not mention, however, what his, or their,
expectation was with respect to the duPont project near
Kinston.
The only other circumstance considered by the Tay
Court as relevant was the membership of Peurifoy ina
union local with headquarters in Wilnington and of Stines
and Tlall in a union loeal with headquarters in’ Raleigh.
the fact that each received referrals from his local union
and the general preference of each for employment in the
Vicinity to employinent at more distant points. But i!
subjective considerations of personal preference have ans
bearing upon the problem, it is difficult to find in’ thes«
considerations any distinction between the case of tie
construction worker, who, without the assistance of a loca!
union, seeks and obtains employment preferably in’ the
Vicinity of the residence of his family but at other time-
at more distant points. It is stipulated that a union re
ferral ix not tantamount to cmployvinent and = that the
individual worker must apply to the contractor at the jel
site for employment. Upon that application, he is en
ployed or not depending upon the needs and preference.
of the emplover.
Upon these facts, ve think the Tax Court was in error
in finding that the employment of these taxpavers on the
19a
duPont project at Kinston was temporary and in conclud-
ing that their maintenance expense while there and the
expense of travel at the termination of their employment
was deductible under section 23(a)(e)(A) of the Internal
Revenue Code.’
Work in the heavy construction industry, by its very
nature, has a degree of impermanence, Kimployment. is
usually for each job only and lasts no longer than the
need at that project for the particular skill-of the indi-
vidual employee. Epon many of the larger projects, how-
ever, such need, and the actual emplovinent of an_ indi-
vidual, may last for several, even many, vears. Other
projects may be of comparatively short duration. Ht is
also a characteristic of the industry, as shown ins the
stipulations in this case, that upon larger construction
projects outside the larger metropolitan centers, the loca!
supply of the necessary skills must be greathy augmented
by workers coming from other places. Work in the indus
try, therefore, is, te xome extent, transient as well as im
permanent.
Construction workers are not the only ones, however,
who find it necessary or profitable to move or seek em-
plovment from place to place, and the Tax Court, in its
opinion in these cases, recognizes that the transient and
permanent aspect of work in heavy ¢ struction does
not itself distinguish construction work | rom other em.
ployment or hold the answer to our problem. Indeed
these characteristics of the industry tend to strip from
See 23. Deduetions from gross income. In computing net
neome there shall be allowed as deductiots ;
(a) Expenses.
‘T) Trade or business eX Denises,
(A) In general. All the ordinary and necessary expenses paid
or incurred during the taxable vear in carrying on any trade or
business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered; traveling
expenses Cinchiding the entire amount expended for meals and
lodeving) while away from home in the pursuit of a trade or busi-
¢
Thess 3 e
a remote residence elements essential to its status as the
sole ‘‘tax home.”’
When a taxpayer accepts employment at a place re-
moved from the residence he maintains for his family, his
travel end maintenance expense is not usually deductible
under See. 23(a)(1)(A). Commissioner v. Flowers, 326
U.S. 465, 66 S. Ct. 250, 90 L. Ed. 203. Indeed under the
rule of Commissioner v. Flowers the expense, in order to
be deductible, must be ‘ requized by the exigencies’? of the
employer’s business, not those of the calling of the em-
plovee. ‘The job, not the taxpayer’s pattern of living,
must require the travel.’’) Carragan vy. Commissioner, 2
Cir, 197 Fo 2d 246,249. That an emplovee for reasons
personal to himself and his family maintains a home at a
distance from his business does not serve the business of
the emplover and ordinarily his travel expense and the
expense of his maintenance at either place is not de-
ductible. Commissioner v. Flowers, supra., Barnhill v.
Commissioner, 4 Cir., 148 F. 2d 913, 159 A. L. R. 1210.
Where, however, an individual, who has a well estab-
lished tax home, accepts temporary employment of short
duration away from his tax home, it has been held that
hix travel and maintenance are allowable deductions under
See. 23(a)(1)(A) and are not ‘personal, living or family
expenses’? within the meaning of See. 24(a)(1) even
though such expenses are not incurred for the benefit of
the employer. Coburn v. Commissioner, 2 Cir., 138 F. 2d
763, Schurer v. Commissioner, 3 T.C. 544, Leach vo Com-
misstoner, 12 T.C. 20. If we assume the validity of this
exception to the rule of Commissioner vy. Flowers as ap-
plied to one not self-employed, it is essential that the em
ployment away from the established tax home shall be tem-
porary in contemplation at the time of its acceptance and
not indeterminate ir fact as it develops. However justified
he may be from a subjective or personal point of view in
maintaining a residence away from his post of duty, his
travel and maintenance expense at his post of duty is
not an ordinary and necessary business expense within the
— — 5
2la
meaning of See. 28(a)(1)(A) if. the employment is of
substantial or indefinite duration. Commissioner v. Flow-
ers, 326 U.S. 465, 66S. Ct. 250, 90 L. Ed. 203, Ford v. Com-
missioner, 4 Cir., 227 F. 2d 297, Carragan vy, Commissioner,
» Cir. 197 F. 2d 246, Andrews v. Commissioner, 4 Cir.,
179 F. 2d 502; Ney v. United States, 8 Cir, 171 F. 2d 449;
Bercaw v. Commissioner, 4 Cir., 165 F. 2d 521.
When the taxpayers in these cases went into the Tax
Court, carrying the burden of showing that the Commis-
sioner’s determination was incorrect, they produced noth-
ing to show that their employment on the duPont project
was not of indefinite duration, Ut is clear that two of
them left that employment for personal reasons when
work was still available, while the third left after 204,
months for an undisclosed reason. For aught that ap-
pears, work might have been available there for all three
for much longer than 204 months, While each of them
may have accepted other employment at other times which
was temporary, that does not tend to prove that this
employment was temporary and not of substantial or in-
definite duration. And though subjective consideration of
the reasonableness of their moving their residences to
their post of duty may have some bearing in determining
the applicability of Sec. 24(a)(1), it does not establish
the deductibility of maintenance expenses under See, 25
(a)(1)(A). Bercaw v. Commissioner, supra.; Warren v.
Commissioner, 13: T.C. 205; Whitaker vo Commissioner, 24
T.C. 750.
The question of deductibility of such expenses is ordi-
narily one of fact. When the conclusionary finding that
the work was temporary and maintenance expense deduc-
tihle was clearly erroneous, however, it is our right and
duty to reverse it.
REVERSED.
22a
APPENDIX C
Conflicting Opinions
The Supreme Court of the United States
Commissioner of Internal Revenue v. Flowers.
No. 145.
Argued Dee. 11, 12, 1945.
Decided Jan. 2, 1946.
Rehearing Denied Jan. 28, 1946.
See 326 U.S. 812, 66 S. Ct. 482.
e * * & eo e * * *. 7
Mr. Justice RerLepee dissenting.
On Writ of Certiorari to the United States Cireuit Court
of Appeals for the Fifth Circuit.
Certiorari by Commissioner of Internal Revenue to re-
view a judgment of the Circuit Court of Appeals, 148 F.
2d 163, reversing a decision of the Tax Court of the United
States, redetermining income tax deficiencies for 1989 and
1940 of J. N. Flowers, imposed by the Commissioner of
Internal Revenue.
Judgment reversed.
Mr. J. Louis Monarch, of Washington, D. C., for peti-
tioner,
Mr. J. N. Ogden, of Mobile, Ala., for respondent.
Mr. Justice Mureny delivered the opinion of the Court.
This case presents a problem as to the meaning and
application of the provision of § 23(a)(1)(A) of the Inter-
nal Revenue Code! allowing a deduction for income tax
126 U.S.C. §23(a) (1) (A), as amended, 56 Stat. 819, 26
US.C.A. Int. Rev. Code, $23 (a) (1) (A).
**$ 23. Deductions from gross income.
‘*In computing net income there shall be allowed as deductions:
‘*(a) Expenses.
‘*(1) Trade or business expenses.
‘*(A) In general. All the ordinary and necessary expenses paid
or incurred during the taxable year in carrying on any trade or
business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered; traveling
23a
purposes of ‘‘traveling expenses (including the entire
amount expended for meals and lodging) while away from
home in the pursuit of a trade or business.’’
The taxpayer, a lawyer, has resided with his family in
Jackson, Mississippi, since 1908. There he has paid taxes,
voted, schooled his children and established social and re-
ligious connections. He built a house in Jackson nearly
thirty years ago and at all times has maintained it for
himself and his family. He has been connected with sev-
eral law firms in Jackson, one of which he formed and
which has borne his name since 1922,
In 1906 the taxpayer begun to represent the predecessor
of the Gulf, Mobile & Ohio Railroad, his present employer.
He acted as trial counsel for the railroad throughout Mis-
sissippi. From 1918 until 1927 he acted as special counsel
for the railroad in Mississippi. He was elected general
solicitor in 1927 and continued to be elected to that posi-
tion each year until 1930, when he was elected general
counsel. Thereafter he was annually eleeted general coun- -
sel until September, 1940, when the properties of the pred-
ecessor company and another railroad were merged and he
was elected vice president and general counsel of the
newly formed Gulf, Mobile & Ohio Railroad.
The main office of the Gulf, Mobile & Ohio Railroad is in
Mobile, Alabama, as was also the main office of its prede-
cessor. When offered the position of general solicitor in
1927, the taxpayer was unwilling to accept it if it required
him to move from Jackson to Mobile. He had established
himself in Jackson both professionally and personally and
was not desirous of moving away. As a result, an arrange-
ment was made between him and the railroad whereby he
expenses (including the entire amount expended for meals and
lodging) while away from home in the pursuit of a trade or busi-
ness; and rentals or other payments required to be made as a
condition to the continued use or possession, for purposes of the
trade or business, of property to which the taxpayer has not taken
or is not taking title or in which he has no equity.”
24a
could acc@t the position and continue to reside in Jackson
on condition that he pay his traveling expenses between
Mobile and Jackson and pay his living expenses in both
places. This arrangement permitted the taxpayer to de-
termine for himself the amount of time he would spend in
each of the two cities and was in effect during 1939 and
1940, the taxable years in question.
The railroad company provided an office for the tay.
payer in Mobile but not in Jackson. When he worked in
Jackson his law firm provided him with office space, al-
though he no longer participated in the firm's business or
shared in its profits, He used his own office furniture and
fixtures at this office, The railroad, however, furnished
telephone service and a typewriter and desk for his sec-
retary. It also paid the secretary’s expenses while in
Jackson. Most of the legal business of the railroad was
centered in or conducted from Jackson, but this business
was handled by local counsel for the railroad. The tay-
payer’s participation was advisory only and was no
different from his participation in the railroad’s legal busi-
ness in other areas.
The taxpayer’s principal post of business was at the
main office in Mobile. However, during the taxable years
of 1939 and 1940, he devoted nearly all of his time to
matters relating to the merger of the railroads. Since it
was left to him where he would do his work, he spent most
of his time in Jackson during this period. In connection
with the merger, one of the companies was involved in
certain litigation in the federa! eourt in Jackson and the
taxpayer participated in that litigation.
During 1939 he spent 203 days in Jackson and 66 in
Mobile, making 33 trips between the two e'ties. During
1940 he spent 168 days in Jackson and 102 in Mobile, mak-
ing 40 trips between the two cities. The railroad paid all
of his traveling expenses when he went on business trips to
points other than Jackson or Mobile. But it paid none
25a
of his expenses in traveling between these two points or
while he was at either of them.
The taxpayer deducted $900 in his 1939 ineome tax. re-
turn and $1,620 in his 1940 return as traveling expenses
incurred in making trips from Jackson to Mobile and as
expenditures for meals and hotel accommodations while
in Mobile? The Commissioner disallowed the deductions,
which action was sustained by the Tax Court. But the
Fifth Cirenit Court of Appeals reversed the Tax Court's
judgment, 148 F.2d 163, and we granted certiorari because
of a conflict between the decision below and that reached
by the Fourth Cireuit Court of Appeals in Barnhill v. Com-
missioner, 148 F.2d 912.
[1, 2] The portion of § 23(a)(1)(A) authorizing the de-
duction of ‘traveling expenses (including the entire amouut
expended for meals and lodging) while away from home
in the pursuit of a trade or busizess’’ is one of the specific
examples given by Congress in that section of ‘‘ordinary
and necessary expenses paid or incurred during the tax-
abie year in carrying on any trade or business.’’ It is to
be contrasted with the provision of § 24(a)(1) of the In-
ternal Revenue Code, 25 U.S.C.A. Int. Rev. Code, § 24(a) (1),
disallowing any deductions for ‘* personal, living, or family
expenses.’’ And it is to be read in light of the interpreta-
tion given it by See. 19.23(a)-2 of Treasury Regulations
103, promulgated under the Internal Revenue Code. This
interpretation, which is precisely the same as that given to
identical traveling expense deductions authorized by prior
and successive Revenue Acts,* is deemed to possess implied
“No claim for deduction was made by the taxpayer for the
wmounts spent in traveling from Mobile to Jackson. He alse took
trips during the taxable years to Washington, New York, New
Orleans, Baton Rouge, Memphis and Jackson (Tenn.), which were
apparently in the nature of business trips for which the taxpayer
presumably was reimbursed by the railroad. No claim was made
in regard to them.
* Article 23(a)-2 of Regulations 101, 94, 86; Article 122 of
Regulations 77 and 74; Article 102 of Regulations 69 and 65:
Article 101(a) of Regulations 62.
legislative proposal and to have the effect of law. /Helver-
ing v. Wimmill, 305 U.S. 79, 59 S.Ct. 45, 83 L.Ed. 52; Boehm
v. Commissioner, 326 U.S. 287, 66 S.Ct. 120. In pertinent
part, this interpretation states that ‘‘Traveling expenses,
as ordinarily understood, include railroad fares and meals
and lodging. If the trip is undertaken for other than busi-
ness purposes, the railroad fares are personal expenses
and the meals and lodging are living expenses. If the
trip is solely on business, the reasonable and necessary
traveling expenses, including rilroad fares, meals, and
lodging, are business expenses. ~*~ * Only such expenses as
are reasonable and necessary in the conduct of the business
and directly attributable to it may be deducted. * * * Com-
muters’ fares are not considered as business expenses and
are not deductible.”’
[3] Three conditions must thus be satisfied before a
traveling expense deduction may be made under § 23(a)
(1)(A):
(1) The expense must be a reasonable and necessary
traveling expense, as that term is generally understood.
This includes such items as transportation fares and food
and lodging expenses ineurred while traveling.
(2) The expense must be ineurred ‘‘while away from
home.’’
(3) The expense must be ineurred in pursuit of busi
ness. This means that there must be a direet connection
between the expenditure an. the carrying on of the trade
or business of the taxpayer or of his employer. Moreover,
such an expenditure must be necessary or appropriate to
the development a..i pursuit of the business or trade.
[+] Whether particular expenditures fulfill these three
conditions so as to entitle a taxpayer to a deduction is
pt. rely a question of fact in most instances. See Commis-
stoner Vv. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 254, |
L.Ad. 171. And the Tax Court’s inferences and pine
sions on such a factual matter, under established) prince’
ples, should not be disturbed by an appellate court. Com-
2ia
missioner v. Scottish American Co., 323 U.S. 119, 65 S.Ct.
169; Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239,
88 L.Ed. 248.
In this instance, the Tax Court without detailed elabora-
tion concluded that ‘‘The situation presented in this pro-
ceeding is, in prineiple, no different from that in which
a taxpayer’s place of employment is in one city and for
reasons satisfactory to himself he resides in another.’’ It
accordingly disallowed the deductions on the ground that
they represent living and personal expenses rather than
traveling expenses incurred while away from him in the
pursuit of business. The court below accepted the Tax
Court’s findings of fact but reversed its judgment on the
basis that it had improperly construed the word ‘‘lhome’’
as used in the second condition precedent to a traveling ex-
pense deduction under § 23,(a)(1)(A). The Tax Court,
it was said, erroneously construed the word to mean the
post, station or place of business where the taxpayer was
employed—in this instance, Mobile—and thus erred in con-
cluding that the expenditures in issue were not incurred
“while away from home.’’ The Court below felt that the
word was to be given no such ‘funusual’’ or ‘‘extraordi-
nary’? meaning in this statute, tht it simply meant ‘‘that
place where one in fact resides”? or ‘*the principal place
of abode of one who has the intention to live there perma-
nfithy.’’? 148 F.2d at page 164.) Since the taxpayer here
admittedly had his home, as thus defined, in Jackson and
since the expenses were incurred while he was away from
Jackson, the deduction was permissible.
The meaning of the word ‘home’ in § 283(a)(1) CA) with
reference to a taxpayer residing in one city and working
in another has engendered much difficulty and litigation.
+ Mertens, Law of Federal Income Taxation (1942) § 25,82.
Jeu
The Tax Court ‘ and the administrative rulings * have con-
sistently defined it as the equivalent of the taxpayer's place
of business. See Barnhill v. Commissioner, supra, 4 Cir.
On the other hand, the decision below and Wallace v. Com-
missioner, 9 Cir., 144 F.2d 467, have flatly rejected that
view and have confined the term to the taxpayer’s actual
residence. See also Coburn v. Commissioner, 2 Cir., 13%
F.2d 763.
[5] We deem it unnecessary here to enter into or to de-
cide this conflict. The Tax Court’s opinion, as we read it,
was grounded neither solely nor primarily upon that
ageney’s conception of the word ‘‘home.’’ Its diseussion
was directed mainly toward the relation of the expendi-
tures to the railroad’s business, a relationship required
by the third condition of the deduction. Thus even if the
Tax Court’s definition of the word ‘tiome’’ was implicit
in its decision and even if that definition was erroneous,
its judgment must be sustained here if it properly con-
cluded that the necessary relationship between the expendi-
tures and the railroad’s business was lacking. Failure to
satisfy any one of the three conditions destroys the travel.
ing expense deduction.
‘Bixler vo Commissioner, 5 B.T.A. 1181; Griesemer v. Commis.
sioner, 10 B.TLA. 386; Brown v. Commissioner, 13 B.TLA. soe:
Duncan v. Commissioner, 17 B.T.A. 1088; Peters v. Commissioner.
19 B.TLA. 901; Lindsay v. Commissioner, 34 B.T A. 840; Powel!
v. Commissioner, 34.1.7 A. 655; Traey v. Commissioner, 39 B.TA
978; Priddy vy. Commissioner, 43 B.T.A. 18; Schurer v. Commis.
sioner, 3° T.C. 544; Gustafson v. Commissioner, 4 TC. 998.
* Section 19.23(a)-2 of Treasury Regulations 103 does not at-
tempt to detine the word ‘“‘home’’ although the Commissioner
argues that the statement therein contained to the effect that com
muters’ fares are not business expenses and are not deductibl-
‘necessarily rests on the premise that ‘home’ for tax purposes is
at the locality of the taxpayer's business headquarters."’ Other
administrative rulings have been more explicit in treating the
statutory home as the abode at the taxpayer's regular post of
duty. See eg. OLD. 102105 Cum. Ball. 174 (1921); LT. 164, F-1
Cum. Bull. t22 (1922): 0-7. 3314, 1939-2 Cum. Bull. 152; G.C0M.
2672. 143 Cum. Bull. 66.
29a
[6] Turning our attention to the third condition, this
case is disposed of quickly. There is no claim that the Tax
Court misconstrued this condition or used improper stand-
ards in applying it. And it is readily apparent from the
facts that its inferences were supported by evidence and
that its conclusion that the expenditures in issue were non-
deductible living and personal expenses were fully justified.
The faets demonstrate clearly that the expenses were
not incurred in the pursuit of the business of the taxpayer's
employer, the railroad. Jackson was his regular home.
Had his post of duty been in that city the cost of maintaing
his home there and of commuting or driving to work con-
cededly would be non-deductible living and personal ex-
penses lacking the necessary direct relation to the prosecu-
tion of the business. The character of such expenses is
unaltered by the circumstance that the taxpayer’s post of
duty was in Mobile, thereby increasing the costs of trans-
portation, food and lodging. Whether he maintained one
abode or two, whether he traveled three blocks or three
hundred miles to work, the nature of these oxpenditures
remained the same.
The added costs in issue, Moreover, Were as Unnecessary
and inappropriate to the dev lopment of the railroad’s
business as were his personal and living costs in Jackson,
They were incurred solely as the result of the taxpayer’s
desire to maintain a home in Jackson while working in
Mobile, a factor irrelevant to the maintenance and prosecu-
tion of the railroad’s legal business. The railroad did not
require him to travel on business from Jackson to Mobile
or to maintain living quarters in both cities. Nor did it
compel him, save in one instance, to perform tasks for it in
Jackson. It simply asked him to be at his principal post
in Mobile as business demanded and as his personal con-
venience was served, allowing him te devide his business
time between Mobile and Jackson as he saw fit. Except
for the federal court litigation, all of the taxpayer's work
in Jackson wonld normally have been performed in’ the
headquarters at Mobile. The fact that he traveled tre-
quently between the two cities and incurred extra living
30a
expenses in Mobile, while doygg much of his work in Jack-
son, was occasioned Solely by his personal propensities.
The railroad gained nothing from this arrangement except
the personal satisfaction of the taxpayer.
[7] Travel expenses in pursuit of business within the
meaning of § 23(a)(1)¢{A) could arise only when the rail-
road’s business forced the taxpayer to travel and to live
temporarily at some place other than Mobile, there advanc-
ing the interests of the railroad. Business trips are to be
identified in relation to business demands and the traveler’s
business headquarters. The exigencies of business rather
than the personal conveniences and necessities of the
traveler must be the motivating factors. Such was not the
case here.
It follows that the court below erred in reversing the
judgment of the Tax Court.
Reversed.
Mr. Justice Jackson took no part in the consideration or
decision of this case.
Mr. Justice RurLevcer, dissenting.
I think the judgment of the Court of Appeals should be
affirmed. When Congress used the ‘thome’’ in § 23 of the
Code, I do not believe it meant ‘* business headquarters.”’
And in my opinion this case presents no other question.
Congress allowed the deduction for ‘‘traveling expenses
(including the entire amount expended for meals and lodg-
ing) while away from home in the pursuit of a trade or
business.’? Treasury Regulations 103, § 19.23(a)-1, are to
the same effect, with the word ‘‘solely’’? added after
‘thome.’’ Section 19.23(a)-2 also provides: ‘*Commuters’
fares are not considered as business expenses and are not
deductible.’”’ By this decision, the latter regulation is al-
lowed, in effect, to swallow up the deduction for many sit-
uations where the regulation has no fit application.
Respondent’s home was in Jackson, Mississippi, in every
sense, unless for applying § 23. There he maintained his
family, with his personal, political aad religious connec-
tions; schooled his children; paid taxes, voted, and resided
over many years. There too he kept hold upon his place
al
sla
a lawyer, though not substantially active in practice
R therwise than to perform his work as general counsel for
the railroad. This required his presence in Mobile, Ala-
bama, for roughly a third of his time. The remainder he
spent in Jackson at the same work, except for the time he
was required to travel to points other than Mobile.
The company’s principal offices were there, including
one set aside for respondent’s use. But the bulk of its
trackage was in Mississippi and much of its legal work,
with which he was concerned, was done there. His choice
to keep his home in Jackson must have been affected by
this faci, although it was motivated chiefly by more purely
personal considerations. It is doubtful indeed, though
perhaps not material, whether by not moving to Mobile he
did not save the Government from larger deductions on
account of traveling expense than those he claimed.
There is no question therefore but that © ‘spondent’s
home was in Jackson for every purpose, un'*ss. for the
single one of applying §23. Nor is it in doubt that he
traveled from Jackson to Mobile and return, as he claimed,
or that he spent the sums deducted for that purpose, in-
cluding meals and lodging. Neither is it denied, as matter
of fact, that his sole reason for going to Mobile was to per-
form his work as it required his presence there or that he
returned to his home in Jackson periodically when his
duties no longer required him to be in Mobile.
I think this makes a case squarely within the statute and
the regulations. But the Tax Court ruled that the claimed
deductions were ‘personal, living, or family expenses.’
Because the taxpayer elected to keep his home in Jackson,
rather than move to Mobile, and beeause his employer did
not undertake to pay these expenses, it viewed the ease as
being the same as if he had moved to Mobile. In that event,
it said, he would have been required to bear the expenses
of his own meals and lodging. This is obvious, even though
the -‘as if’? conclusion does not follow. The court went on,
however, to give the further reason for it: “The situation
** * is, in principle, no different from that in which a tax-
payer’s place of employment is in one city and for rea-
32a
sons satisfactory to himself he resides in another."’ It
seems questionable whether, in so ruling, the Tax Court
has not confused the taxpayer's principal place of em-
ployment with his employer's. For on the facts Jackson
rather than Mobile would seem more appropriately to be
found his business headquarters. But, regardless of that,
the authorities cited! and the Government's supporting
arguinent show that the case was regarded as in essence
the commuter’s, excepted by the regulations.
Apart from this ruling, the Tax Court made no finding,
of fact or law, that respondent was not engaged ‘tin the
pursuit of a trade or business’’; that he was not ‘‘awas
,
from home’’; that the expenses were not ‘business ex
penses’’ or ‘‘business traveling expenses"’; or that) they
were not ‘ordinary and necessary."’ Yet by a merry-go
round argument,’ which always comes back to rest on the
' Frank H. Sullivan, 1 B.T.A: 93; Mort L. Bixler, 5 B.T.A. 1181;
Jennie A. Peters, 19 B.T.A. 901; Walter M. Priddy, 43 B.T.A. 1
The Sullivan case illustrates the typical commuter. situation
The Peters case illustrates the extension of that ruling to greater
distances and irregular travel.
Recent decisions, however, where the traveling distance is great.
appear to go on the theory, presented in the instant case, that the
word ‘‘home’’ within the meaning of §23(a) (1) means‘ principal
place of business.’’ See Tax Court Memorandum Opinion, Dec
Ps.85:(M), 1 CCH. Tax Serv. 1945, p. 1268. Thus, Mertens sav.
that the disallowance of traveling expenses to one’s place of busi
hoa “is based primarily on the requirement that the traveline
expenses inclide only amounts expended ‘while away from home.’
4 Mertens, Law of Federal Income Taxation, 47s.
* Thus, the assertion that the deductions were ‘not even ‘busi
ness” expenses” is brought back to the meaning of ‘Shome’* by the
viven reason that ‘‘th maintenance of more than one dwelline
place manifestly is not essential to the prosecution of a business”
And this, in turn, completes the circle by resting on the conehision
that the taxpayer had two dwelling places, one in Mobile ‘pre
sumably the hotel or hotels where he stopped) “‘where he resided
during th periods the living expenses in question were dnenrred,
the other in Jackson “‘where he resided during other periods”
Likewise, the conclusion that the deductions were not ‘ordinary
ated Necessary expenses.”” see note 8, depends on the view that
Jackson was not “Shome’’ but Mobile was. So with the assertion
that the ** Mobile livirg expenses” were not “business traveling
eX penses,
j3a
idea that ‘Shome’’ means ‘‘business headquarters,’’ the
Government secks to inject such issues and findings, ine,
cluding a Dobson v. Com’r, 320 U.S. 489, 64 S.Ct. 239, 88 —
L.Ed. 248, contention, into the Tax Court’s determination.
I think there was only one issue, a question of law requir-
ing construction of the statute as to the meaning of the
word ‘“‘home’’ and, if that is resolved against the Govern-
ment, the Tax Court’s judgment has no other foundation
on which to stand. Every other contention falls when this
one does. All stand if it is valid.
i agree with the Court of Appeals that if Congress had
meant ‘business headquarters,’’ and not ‘‘home,’’ it would
have said ‘‘business headquarters.’’ When it used ‘*home’’
instead, I think it meant home in everyday parlance, not
in some twisted special meaning of ‘‘tax home’’ or ‘‘tax
headquarters."’* | find no purpose stated or inptied in————
the Act, the regulations or the legislative history to sup-
port such a distortion or to use § 23 as a lever to force
people to move their homes to the locality where their
emplover’s business headquarters may be, although their
own work may be done as well in major part at home. The
only stated purpose, and it is clearly stated, not in words
of art, is to relieve the tax burden when one is away from
home on business.
The Government relies on administrative eenstruction,
by the Commissioner and the Tax Court, and says that
unless this is accepted the Act creates tax inequality. If
so, it is inequality created by Congress, and it is not for
the Commissioner or the Tax Court, by administrative re-
construction, to rewrite what Congress has written or to
correct its views of equality. Moreover, in my opinion,
the inequity, if any, comes not from the statute or the
regulation but from the construction which identities peti-
tioner with a commuter,
“Cf. Cox v. Latt, 12 Wall. 204, 20 L. Ed. 370: Addison v. Holly
Hill Co. 822 US. 607, G17, GIS, G48 Ct 11S, et 8s LK
lisse.
24a
That word too%as, limitations unless it also is made a
tool for rewriting the Act. The ordinary, usual conno
tion, cf. 27 1.C.00428; Pennsylvania R. Co. v. Towers,
U.S. 6, 12, 38 S.Ct. 2, 4, 62 L.Ed. 117, L.R.A.1918C, 475,
does not include irregular, although frequent journeys of
350 miles, requiring Pullrian accommodations and some
twelve to fifteen hours, one way.
Congress gave the deduction for traveling away from
home on business. The commuter’s case, rightly confined,
does not fall in this class. One who lives in an adjacent
suburb or city and by usual modes of commutation can
work within a distance permitting the daily journey and
return, with time for the day’s work and a period at home,
clearly can be exeluded from the deduction on the basis of
the section’s terms equally with its obvious purpose. But
that is not true if ‘‘commuter”’ is to swallow up the deduc-
tion by the same sort of construction which makes ‘‘home”’
mean ‘‘business headquarters’? of one’s employer. If the
line may be extended somewhat to cover doubtful cases, it
need not be lengthened to infinity or to cover cases as far
removed from the prevailing connotation of commuter as
this one. Including it pushes ‘‘commuting’’ too far, even
for these times cf rapid transit.*
Administrative construction should have some bounds.
It exceeds what are legitimate when it reconstructs the
statute to nullify or contradict the plain meaning of non-
technical terms not artfully employed. Moreover, in this
case the matter has been held in suspension by litigation
* Conceivably men soon may live in Florida or California and fl
daily to work in New York and back. Possibly they will be re
garded as commuters when that day comes. But, if se, that is net
this case and, in any event, neither situation was comprehended
lin Congress when § 23 Was enacted.
ees ee
35a
with varying results * and apparent qualification by the
Tax Court consequent upon some of the decisions.®
By construing ‘*home’’ »s ‘business headquarters”’; by
reading ‘‘temporarily’’ as ‘‘very temporarily’? into § 23;
by bringing down *‘ordinary and necessary”? from its first
sentence into its second;’ by finding ‘‘inequity’’? where
Congress has said noice exists; by construing ‘*commuter’’
to cover long-distance, irregular travel; and by conjuring
from the ‘‘statutory setting’? a meaning at odds with the
plain wording of the clause, the Government makes over
understandable ordinary English into highly technical tax
jargon. There is enough of this in the tax laws inescap-
ably, without adding more in the absence of either com-
pulsion or authority. The arm of the taxgatherer reaches
far. In my judgment it should not go the length of this
case. Congress has revised § 23 once to overcome nig-
gardly construction.* It should not have to do so again.
. sd * * * * . . *
*See Wallace v. Commissioner, 9 Cir., 144 F. 2d 407; Coburn
v. Commissioner, 2 Cir., 138 F. 2d 763; and the decision now in
review, 5 Cir, 148 F. 2d 163, with whie ‘h compare Barnhill v.
Commissioner and Winborne v. Commissioner, 4 Cir., 148 F. 2d 913.
"See Harry F. Sehurer, 3 T.C. 544; Charles G. Gustafson, 3 'T.C.
“us: Mortimer M. Mahony, C.C LH. Tax Ct. Serv., Dee. 14, 508(M),
April 10, 1945; Charles J. MeLennan, C.CLH. Tax Ct. Serv., Dee.
14,644(M), June 25, 1945; Robert S. Shelley, deceased, C.CLH.
Tax Ct. Serv., Dee. 15,642(M), June 25, 1945.
*The language is: ‘All the ordinary and nevessary expenses
pail or incurred during the taxable year in carrying on any trade
or business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered; traveling
expenses (including the entire amount expended for meals and
lodging) while away from home in the pursuit of a trade or
business; ® * #7’ §$23(a)(1) (1) (A), Internal Revenue Code,
26 US.CLA. Tit. Rev. Code, $ 23(a) (1) (A).
.
“The Treasury Regulations in force in 1920 allowed deduction
of only the excess of the cost of meals and lodging away from
home over the cost at home: and under earlier regulations none
of this expen was allowed. Congress inserted the words ‘‘all"’
amd “entire’’ in the 1921 Act to overcome this ruling.
36a
Wallace v. Commissioner of Internal Revenue (two cases).
Nos. 10547, 10548.
Cireuit Court of Appeals, Ninth Circuit.
July 17, 1944.
* * * * Sad * * * © .
Upon Petitions to Review Decisions of the Tax Court
of the United States. *
Petition b., William R. Wallace, Jr., and by Ina Claire
Wallace to review decisions of the Tax Court of the United
States redetermining deficiences in income taxes imposed
by the Commissioner of Internal Reverue.
Decisions reversed.
W. R. Wallace, Jr., of San Francisco, Cal., for petitioner
Ina Claire Wallace.
W. R. Ray, of San Francisco, Cal., for petitioner W. R.
Wallace, Jr.
Williamson & Wallace, of San Francisco, Cal., for peti-
tioners,
Samuel O. Clark, Jr., Asst. U.S. Atty. Gen., and Sewall
Key, Bernard Chertcoff, Robert N. Anderson, and Harry
Baum, Sp. Assts. to Atty. Gen., for respondent.
Before Witsur and Garrecut, Circuit Judges, and Me-
Cormick, District Judge.
McCormick, District Judge.
These are two petitions for review of decisions of the
Tax Court which sustained rulings of the respondent-
commissioner disallowing deductions claimed by _ peti-
tioners, respectively, and in Consequence adjudging de-
ficiencies against the respective petitioners in their income
taxes for the year 1939,
The petitions have been consolidated and heard upon a
single printed record and this opinion will suffice to deter-
mine both reviews.
The total amount of deductions in controversy, one-half
of which has been claimed by each of the petitioners on his
or her separate federal income tax return for the calendar
vear 1939, is not in dispute, nor is any question raised
37a
as to the right of petitioners to treat combined earnings
after their marriage on March 16,, as community
income and to file separate returns’ | all proper
and allowable community deductions 4 separately
taken by the spouses,
The contentica of the commissioner, sustained by the
tax court, relates solely to the household expenses of Mrs.
Wallace incurred at Beverly Hills during the period from
March 16, 1939, to September 15, 1939, the time when
Mrs. Wallace was employed by Loew’s, Inc., under the
terms of a contract for her personal services as an actress.
The decisions under review, while determining under
the facts that petitioners’ domicile or legal residence after
their marriage on March 16, 1939, was San Freneisen,
nevertheless substantially held that Mrs. Wallace was not
‘“‘away from home in the pursuit of a trade or business’”’
during the time that she was fuifilling her professional
engagements as an actress in Hollywood from March 16,
1939 to September 15, 1939, under contract with a motion
picture company. The tax court concluded that ‘‘home’’
as the term is used in Section 23(a)(1)' of the Internal
Revenue Code, 26 U.S.C.A. Int.Rev.Code, 9 23(a)q1),
means the taxpayer Mrs. Wallace’s place of business, em-
ployment, or the post or station at which she was em-
ployed and that Hollywood being such place she was not
away from ‘‘home’’ in the pursuit of business and conse-
quently the claimed deductions fer her househoid expenses
from March 16 to September 15, 19389 were not aliowable.
1**See, 23.) Deductions from gross income, * * *
(a) Expenses. (1) In general. All the ordinary and neces-
sary expenses paid or incurred during the taxable vear in carrying
on any trac) or business, including a reasonabie allowance for
salaries or other compensation for personal services actually ren-
dered; traveling expenses (incliding the entire amount expended
for meals and lodging) while away from home in the pursuit of
a trade or business; and rentals or other payments required to be
made as a condition to the continued use or possession, for pur-
poses of the trade or business, of property to which the taxpayer
has not taken or is not taking title or in which he has no equity.”"
38a
The question for decision is therefore aptly stated in
the brief of respondent, as follows: ‘* Whether taxpayers, a
husband and wife, domiciled in San Francisco, California,
are entitled under section 23(a)(1) of the Internal Rev-
enue Code to deduct as traveling expenses ‘while away
from home’ amounts expended by the wife for food, rent
and similar living expenses at Hollywood, California,
while she was employed there during 1939 as a motion pic-
ture actress?’’
From the memorandum opinion of the Tax Court which
embodies the only findings of fact in the record and from
the undisputed evidence in the record before us the follow-
ing pertinent factual situation is disclosed:
Petitioners are husband and wife and were married
Mareh 16, 1939. Petitioner Ina Claire Wallace is a well-
known actress whose professional activities have been
extensive and versatile in many plays on the ‘‘legitimate”’’
stage and in motion pictures, both in England and _ in
America. Petitioner William R. Wallace, Jr., is a lawyer
and has lived and practiced his profession in San Fran-
cisco since the year 1927,
Upon their marriage the petitioners mutually agreed to
reside at San Francisco and the domicile or legal residence
of both petitioners after their marriage has been in San
Francisco. Mrs. Wallace came to California from her
home in New York City in November, 1938, for the purpose
of professionally participating in the making of a motion
picture under a written contract between herself and
Loew’s, Inc., dated November 18, 1938. This agreement
engaged her services as a motion picture actress and her
availability in performance thereof in Los Angeles at all
required times over a forty-week period beginning in
November, 1938, and ending in September, 1939, at com-
pensation to be based upon her normal theatrical season’s
earnings and to be payable at the rate of $2,000 per week.
Prior to leaving New York to fill the engagement with
Loew’s, Ine., Mrs. Wallace had been residing in a hotel
and had alse at about the same time taken a lease for three
all
oe
ee
39a
years on a completely furnished apartment in New York
City which she was getting ready to oceupy when she was
urged by telephone from the West Coast to accept the
Loew’s, Ine., engagement in California. When she ‘eft
New York she definitely intended to return there and live
in the furnished apartment which she had reserved at the
completion of her contract with Loew’s, Ine. This she
never did, as her marriage completely altered her plans.
Nevertheless, she kept the New York apartment for the
full three-year period, subletting it for a portion of the
term, which continued through the entire taxable year of
1939, and into 1942. Upon her arrival in Los Angeles to
perform under the contract with Loew’s, Ine., petitioner
lived at a hotel for a few weeks, then moved into a house
upon which she had taken a lease for three months, upon
the expiration of which she moved into another residence
in Beverly Hills, which before she had decided to marry
Mr. Wallace she had agreed to re:.: from March 15, 1939
to September 15, 1939, the approximate date when it was
anticipated that the motion picture in which she was to
appear and which professional engagement breught her to
California would be completed.
The commencement of the motion picture in’ which
petitioner was specially engaged to appear under tie con-
tract with Loew’s, Inec., was delayed until about May 1,
1939. Although the understanding was for her appearance
in the specific belated picture, nevertheless, being under
the contract from November, 1938, she agreed to and did
work in another cinema for Loew’s, Ine., for five or six
weeks immediately after her arrival in California, During
this period she resided in a hotel and in a house which she
had rented for a definite period in Beverly Hills, Cali-
fornia,
After their marriage in Salt Lake City, Utah, Mr. and
Mrs. Wallace went to San Francisco, which city they had
mutually decided to make their home, and, after a sojourn
there at a hotel, they mutually established their permanent
living quarters in San Francisco. Mrs. Wallace remained
ee ene ne es ee
40a
with her husband until about May 1, 1939, when she re-
turned under her contract to Los Angeles to work in the
picture which had been just started. She remained there
until about July Ist, returning to her husband in San Fran-
cisco where she stayed most of the month of July, then
again going to Los Angeles to continue her professional
commitment with Loew’s, Ine., and remaining until the
motion picture was finished about the first of September.
She then returned to her domicile and residence in San
Francisco and has continued to permanently reside there
with her husband ever sinec, although petitioners have
both been outside of the State of California on profes-
sional pursuits or business, sometimes together and some-
times separately.
Upon Mrs. Wallace’s return to her home in San Fran-
cisco in May, and agair in July, during breaks in her
motion picture engagement, she and her husband read and
studied plays and discussed them with authors and actors’
agents, received her business mail, telephone ecails and tele-
grams connected with her business and professional activi-
ties, and again after her return home on ecompiction of her
Hollywood engagen: nt in September Mr. and Mrs. Wal-
lace continued for the rest of the vear to read and review
together many stage plays that had been submitted for
their approval, to consider and reject requests to ‘‘do”’
other motion pictures and to negotiate with persons pros-
pective to arranging with theatrical age::ts and managers
for a play featuring Mrs. Wallace as distinguished from a
motion picture for the current theatrical season.
[1] As the decision of the Tax Court inherently involves
the interpretation of terms used in a statute it presents
reviewable matter in the Circuit Court of Appeals. Dob-
son v. Commissioner, 320 U.S. 489, 64 S.Ct. 239.
[2] Our first inquiry is to ascertain whether there is any
indication of an intention by Congress to employ the ex-
pression ‘taway from home in the pursuit of a trade or
business’’ in the legislation under consideration other than
according to the ordinary and usual meaning of the words
—"
ene, 4la
used. The plain, obvious aint rational meaning of a tax
statute is always to be preferred to any narrow or hidden
sense that nothing but the exigency of a hard case justifies,’
and while the meaning to be given to terms used will be
determined trom the character of their use by the legisla-
ture in the statute under consideration, words in common
use should not be distorted by administrative or judicial
interpretation. This is, in effect, what has been done by
the Commissioner and sustained by the Tax Court.
We have found nothing in section 23(a)(1) of the In-
ternal Revenue Cede, 26 U.S.C.A. Int.Rev.Code § 25(a)
(1) or in the earlier legislation from whieh this eode pro.
vision is derived * which denotes any intent by Congress to
attribute to the word ‘thome’’ as therein used any unusual
or novel meaning.*
[3] Therefore the Tax Court in its effort to differentiate
between the conceded ‘‘domicile’’ and ‘‘legal residence’’ of
both petitioners after their marriage and their ‘*home’’ at
such times, has, we think, invaded the domain of Congress
in construing the term ‘‘home’’ as used in the statute
under consideration as meaning ‘‘the taxpayer’s place of
business, employment or the post or station at which he
is emploved.’? Had Congress intended that the word
“home’’ should not be understood and applied in its ordi-
nary sense but rather as meaning the locale of employment
of the taxpayer, it would have used a more appropriate
term to express such an intent.
4] A home in relation to the place of abode is a dwelling
place of a person, distinguished from other dwelling places
of that person by the intimacy of the relation between the
person and the place.’
*Lang v. Commissioner, 289 U.S. 109, 53S. Ct. 534, 77 L. Ed.
1066; Lynch, Executrix, ete., v. Alworth-Stephens Company, &
Cir, 294 F. 190, affirmed 267 U.S. 364, 45 S. Ct. 274, 69 L. Ed. 660.
*See note of Professor Erwin N. Griswold in Vol. LVI. No. ‘3
Harvard Law Review, June, 1943, page 1140 et seq.
‘Coburn vy. Commissioner, 2 Cir., 138 F. 2d 763.
“American Law Institute, Restatement of Conflict. of Laws,
section 13,
42:
(5) If the elements of this characterization of a home are
applied to the habitations of the petitioners, no place, under
the facts fourd by the Tax Court, other than New York
City and San Francisco can be classified as the ‘‘home™
of either of the petitioners during the calendar year 1939.
Both the Commissioner and the Tax Court found that pe-
titioner William R. Wallace, Jr., at all applicable times had
his home, his residenee and domicile-in San Francisco, but
despite the undisputed evidence of petitioner Ina Claire
Wallace’s retention of the living apartment in New York
City and her definite intention up to the time of her mar-
riage of returning there upon completion of her profes-
sional engagement with Loew's, Ine., and notwithstanding
the uncontroverted agreement of petitioners to establish
their marital home in San Francisco, and the uncontra
dicted evidence that petitioners lived in such home all times
in the taxable vear after their marriage when Mrs. Wallace
was not temporarily-staying in Beverly Hills and vicinity
to complete the motion picture in which she was acting, thie
Tax Court concluded that Mrs. Wallace’s home during the
time she was acting in the cinema was in the vicinity of
Hollywood.
Petitioner Ina Claire Wallace’s relations with Hollywood
and its vicinity wee casual, professional and temporary.
None of her private and intimate attitudes and relation-
ships which go to make up home, as that place is ordinarily
designated,® found lodgment there. Her physical presence
and her place of abode in the vicinity of Hollywood were
business necessities, and at no time did she manifest any
intention or desire to remain there after completion of her
work. All of her expenditures tor which the deductions are
claimed were allowable business expenses * as distinguished
‘*«The word home denotes a merely natural and untechnical
conception based upon the relation between a person’s residence
and his intention as to residence.’ Kennan on Residence and
Domicile, p. -#0.
* Section 19.23(a)-1, Treasury Regulation 103.
|
43a
-
from personal expenses ~ and were ineurred in the pursuit
of and directly connected with a temporary contract of em-
ployment while she was away from her usuat place of abode.
[6] The clearly expressed purpose of Congress in enact-
ing income tax laws is to impose tax burdens upon the net
income of individuals,® and in ascertaining such ineome
when Congress has used only literal terms in specifying
the allowable deductions from gross income such meaning
of deductions must be accepted by the courts unless such
course Would lead to absurd results." We ean conceive of
no such results by giving to the word ‘Shome”’ in the appli-
vation of Section 23(a) (1) of the Internal Revenue Code
its normal and customary meaning. On the other hand,
» judicially innovate a meaning of ‘thome’’ as the tax-
payer’s ‘place of business, employment, or the post or sta-
tion at which he is employved,”* as the Tax Court has done,
would, we think, operate to thwart the obvious purpose of
Congress " to tax net income and would in many cases tax
the gross instead of the net income of individuals.’? The
court should functicn to interdict such a result.
In the briefs rs the respective parties various decisions
of the Board of Tax Appeals and other administrative
agency parent are cited and discussed. Petitioner con-
“26 US.C.A. Int. Rev Code, § 24, Section 19.24-1, Treasury
Regulation 103.
"26 U.S.C.A. Int. Rev. Code, $11, 52 Stat. 452: Stewart v.
Commissioner, 5 Cir., 95 F. 2d 821.
"See Armstrong Paint & Varnish Works v. Nu-Enamel Corp.,
305 U.S, 315, at pages 382, 333, 59S. Ct. 191, 83 1. Ed. 195.
" Haggar Co. v. Helvering, 308 U.S. 389, at pages 394, 395, 60
S. Ct. 337, 84 L. Ed. 340.
See 26 U.S.C.A. Int. Rev. Code, § 21, for definition of Net
Income.
" Griesemer v. Commissioner, 10 B.T.A. 386; Brown v. Com-
missioner, 13° B.T.A. 832; Potter v, Commissioner, 18 B.T.A. 549;
Powell v. Commissioner, 34 B.T.A, 655; Cabot v. Commissioner.
Memo Decision, Docket No. 90996, 1939, 39: B.T.A. 1241; GCM.
1133, VITL-2, C.B. p. 85; Bixler v. Commissioner, 5 B.T.A. 1181;
Dunean vy. Commissioner, 17 B.T.A. 1088; Lindsay v. Commis-
sioner, 34 B.T.A. 840; Tracy v. Commissioner, 39° B.T.A. 578:
Priddy v. Commissioner, 43 B.T.A. 18.
Ha
tends that these rulings are conflictnig and irreconcilable
in construing the meaning of the word ‘thome’’ as it is
used in Section 23(a) (1) of the Internal Revenue Code
and in prior revenue statutes of like import, while respond.
ent asserts that such rulings have evolved neither conflict
nor confusion in administrative action. We think it un-
necessary in this review to determine whether there is anv
conflict in the administrative interpretations of the legis-
lation under consideration.
The crucial question here is what is the proper const rue-
tion to be given to an unambiguous income tax statute, and
administrative decisions in such matters, while entitled to
respect, are not binding upon the court."*| It is noteworthy
in this regard that the Board of Tax Appeals in situations
similar to the one involved in this review has eonstrued
the word ‘‘home’’ in like income tax statutes in its usual
and common meaning, and not figuratively."
We conclude that the taxpayers, a husband and wife,
were entijled under Section 23(a) (1) of the Internal Reve-
nue Code to deduct as traveling expenses ‘‘while away from
home’? amounts expended by Mrs. Wallace for food, rent
and household expenses in the vicinity of Hollywood, Cali-
fornia, while she was employed there as a motion picture
actress during the year 1939.
The decisions of the Tax Court entered May 7, 1943,
being ‘‘clear-cut mistakes of law’’" are, and eaeh of such
decisions is, reversed,
4 Minnesota Tea Co. v. Commissioner, ete., 8 Cir., 76 F. 2d 797
affirmed 296 U.S. 378, 56 S. Ct. 269, 80 L. Ed. 284; Biddle v.
(‘ommissioner, ete., 2 Cir., 86 F. 2d 718.
' Griesemer y. Commissioner, 10 B.T.A. 386; G.CLM. 712%.
VIII-2, C.B. p. 85; Brown v. Commissioner, 13 B.T.A. 832.
16 Ref. Dobson v. Commissioner, 320 U.S. 489, 64 S. Ct. 239
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