Commissioner of Internal Revenue v. Janss, 15963.

• Decision Date: 20 October 1958
• Docket Number: No. 15963.,15963.
• Citation: 260 F.2d 99
• Parties: COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. Peter F. JANSS, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

260 F.2d 99 (1958)

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. Peter F. JANSS, Respondent.

No. 15963.

United States Court of Appeals Eighth Circuit.

October 20, 1958.

Marvin W. Weinstein, Atty., Dept. of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., and Lee A. Jackson and Harry Baum, Attys., Dept. of Justice, Washington, D. C., were with him on the brief), for petitioner.

Peter W. Janss, Des Moines, Iowa, for respondent.

Before GARDNER, Chief Judge, and VOGEL and MATTHES, Circuit Judges.

VOGEL, Circuit Judge.

The Commissioner of Internal Revenue seeks review and reversal of a decision of The Tax Court of the United States which allowed the taxpayer, respondent herein, a deduction for traveling expenses, meals and lodging in the year 1954 while employed as a common laborer on a construction job in the Territory of Alaska.

The following sections of the Internal Revenue Code are pertinent: 26 U.S.C.A.

"§ 62. Adjusted gross income defined

"For the purposes of this subtitle, the term `adjusted gross income\' means, in the case of an individual, gross income minus the following deductions:

* * * * * *

"(2) Trade and business deductions of employees. —

* * * * * *

"(B) Expenses for travel away from home. — The deductions allowed by part VI (sec. 161 and following) 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."

"§ 162. 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 —

* * * * * *

"(2) traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; * * *."

"§ 262. Personal, living, and family expenses

"Except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses."

The foregoing provisions are in effect the same as the correlative sections contained in the 1939 Code and accordingly decisions construing similar provisions in the 1939 Code are applicable herein.

There is no essential dispute as to the facts. Nevertheless an understanding of the issue requires that they be set forth in some detail. Peter F. Janss, respondent (petitioner below), was born in Des Moines, Iowa, where he resided with his parents and where he attended school. During the summer vacation periods of 1951, 1952 and 1953 he was employed as a common laborer by construction companies in the vicinity of Des Moines. He was unmarried. In 1953 he enrolled as a student in the Iowa State College at Ames, Iowa, where he pursued a course in civil engineering. In March, 1954, Janss, then 19 years of age, contacted the personnel director of the Green Construction Company of Des Moines, exploring the possibility of employment during the summer vacation period of 1954. This company was a client of Janss' father, a practicing attorney in Des Moines. In association with other companies, it engaged in various construction projects in Alaska, South Dakota and Minnesota. The personnel manager, who had known Janss for a number of years, suggested employment in Alaska but "* * * specified to him that he was to pay for his own transportation to and from the Territory, however he elected to go." Janss was told that the employment would terminate approximately September 1st. The personnel manager testified:

"Our prime reason for suggesting to him that he would have to pay his own transportation was that men are generally available in the Territory. We don\'t feel that we get the same caliber of people in Alaska that we can recruit from the States, but with that exception, men are available in the Territory. We do pay transportation for certain key people * * *."

Also:

"We had other projects in operation at that time not located in Alaska. I kind of put myself in his position, and if I was out working for the summer I would want to go where I could make the most money, so I felt Alaska was the place for the boy, and I offered him that opportunity."

Janss accepted the suggested employment, traveled to Alaska, where he commenced work as a common laborer about June 15, 1954, continuing such work until about August 21, 1954, when the employment was terminated due to an accident with a rock crusher on which he was employed. Thereafter Janss returned to Iowa and resumed his studies at the Iowa State College at Ames, Iowa. In his 1954 income tax return he reported gross income from the Alaskan employment in wages of $1,943.27. He expended the sum of $398.75 for travel to and from Alaska and the sum of $402.50 for meals and lodging while there, making a total of $801.25 which he claimed as a deduction from gross income. The Commissioner denied the allowance, whereupon the matter was taken to the Tax Court.

In an opinion not officially reported, the Tax Court reversed the Commissioner, holding that:

"* * * denial of a deduction for travel expenses including the entire amount for meals and lodging in the taxable year 1954 was improper. Petitioner\'s contention is sustained on the authority of James E. Peurifoy, supra." James E. Peurifoy, 27 T.C. 149.

In the Peurifoy case, the Tax Court had held that the employment of the taxpayers away from the places of their established residences was temporary in character and that the cost of meals, lodging and transportation constituted deductible traveling expenses while away from home. The Tax Court stated there, at page 155:

"Each of the petitioners before us is a construction worker and each maintained a residence at a particular place, * * *. Each of them belonged to a local union at or near the place of his residence and each obtained employment through that union. The stipulated facts 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 varying periods of time. There was no particular place where 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 acceptance 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 employment. In those instances the expenses incurred at the places of employment are considered as being due to the exigencies of the trade 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 the traveling expenses to be deductible."

Upon appeal to the United States Court of Appeals, 4th Circuit, the Peurifoy case was reversed. See Commissioner v. Peurifoy, 4 Cir., 1957, 254 F.2d 483; certiorari granted May 19, 1958, 356 U.S. 956, 78 S.Ct. 996, 2 L.Ed.2d 1065. In reversing, the Court of Appeals held that where taxpayers who were regularly employed in construction work accepted employment at some distance from homes which they respectively maintained, but there was nothing to show that their work was not of an indefinite duration, and in fact they were actually employed on a project for periods ranging from 12 to 20 months, their living expenses while employed on the project and traveling expenses upon termination of employment were not deductible from income as business expenses. The court there stated, 254 F.2d at page 486:

"When a taxpayer accepts employment at a place removed from the residence he maintains for his family, his travel and maintenance expense is not usually deductible under § 23(a) (1) (A). Commissioner of Internal Revenue v. Flowers, 326 U.S. 465, 66 S.Ct. 250, 90 L.Ed. 203. Indeed under the rule of Commissioner of Internal Revenue v. Flowers the expense, in order to be deductible, must be `required by the exigencies\' of the employer\'s business, not those of the calling of the employee. `The job, not the taxpayer\'s pattern of living, must require the travel.\' Carragan v. Commissioner, 2 Cir., 197 F.2d 246, 249. That an employee for reasons personal to himself and his family maintains a home at a distance from his business does not serve the business of the employer and ordinarily his travel expense and the expense of his maintenance at either place is not deductible. Commissioner of Internal Revenue 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 established tax home, accepts temporary employment of short duration away from his tax home, it has been held that his travel and maintenance are allowable deductions under § 23(a) (1) (A) and are not `personal, living, or family expenses\' within the meaning of § 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 v. Commissioner, 12 T.C. 20. If we assume the validity of this exception to the rule of Commissioner of Internal Revenue v. Flowers, as applied to one not self-employed, it is essential that the employment away from the established tax home shall be temporary in contemplation at the time of its acceptance and not indeterminate in 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

...