Bodzin v. C. I. R.

• Decision Date: 20 January 1975
• Docket Number: No. 74--1397,74--1397
• Citation: 509 F.2d 679
• Parties: 75-1 USTC P 9190 Stephen A. BODZIN and Tanya K. Bodzin, Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 679

509 F.2d 679

75-1 USTC P 9190

Stephen A. BODZIN and Tanya K. Bodzin, Appellees, v. COMMISSIONER OF INTERNAL REVENUE, Appellant.

No. 74--1397.

United States Court of Appeals, Fourth Circuit.

Argued Dec. 2, 1974.

Decided Jan. 20, 1975.

Michael L. Paup, Atty., Tax Div., Dept. of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks and F. Arnold Heller, Attys., Tax Div., Dept. of Justice, on brief) for appellant.

John J. Yurow, Washington, D.C. (Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., on brief), for appellees.

Before HAYNSWORTH, Chief Judge, BOREMAN, Senior Circuit Judge, and THOMSEN, Senior District Judge.

THOMSEN, Senior District Judge.

The Commissioner appeals from a decision of the Tax Court ¹ which allowed taxpayers, in computing their taxable income for 1967, to deduct $100 of the $2,100 annual rent they paid for their apartment, on the ground that one room therein was used on some evenings and weekends by the husband as an office.

There is no dispute about the basic facts. Bodzin was an attorney-advisor in the Interpretive Division, Office of the Chief Counsel, Internal Revenue Service. His office was in the Internal Revenue Building, in Washington, where he worked on proposed ruling letters and published rulings, requests for technical advice and opinions; he analyzed the facts and issues, did the necessary legal research, conferred with other people and prepared memoranda. He generally worked independently, without day-to-day supervision, but was expected to complete his work with reasonable promptness. He was not required, requested, expected or encouraged to work in the evenings or on weekends, but he sometimes did in order to meet deadlines, self-imposed or otherwise. If he had chosen to do so, he could have worked comfortably in his I.R.S. office at any time.

During the tax year in question, the Bodzins and their child lived in Alexandria, Virginia. Their apartment consisted of a living room, dining room, kitchen, two bedrooms and baths and an 8 12 study or den. The study was furnished with a desk, desk chair, cabinets, lamps and several bookcases, in which Bodzin and his wife kept some of their personal books, as well as some tax treatises and lawbooks. The study was not used for entertaining visitors, but was used by the Bodzins for various non-business purposes, including Bodzin's stamp collecting activities.

Bodzin usually worked in the study two or three evenings a week and for three to five hours on weekends, reading or writing. This was more pleasant and convenient to him than remaining at or returning to his office in the Internal Revenue Building, although that building was always open, heated or air conditioned, and not a long distance from his home.

The Commissioner disallowed the claimed deduction. On taxpayers' petition for redetermination, the majority of the Tax Court concluded:

'We have found as an ultimate fact, on this record, that the expenses at issue were directly related and pertained to his business--that of a Government attorney. It makes no difference that the petitioner was not required to maintain a home office, that he wanted merely to do a good job, and that he liked his work. The expenses were 'necessary' because they were appropriate and helpful in the conduct of his business. They enabled him to keep a facility in his home wherein he could, and did, work. See Newi v. Commissioner (432 F.2d 998, C.A. 2, 1970); Blackmer v. Commissioner, 70 F.2d 255 (C.A. 2, 1934). They were 'ordinary,' and not capital in nature. See Welch v. Helvering, 290 U.S. 111 (54 S.Ct. 8, 78 L.Ed. 212) (1933); Commissioner v. Tellier, 383 U.S. 687 (86 S.Ct. 1118, 16 L.Ed.2d 185) (1966). Accordingly, we hold that the home office expenses of this petitioner fall within section 162 and outside section 262.'

The dissenting opinions took the position that the claimed deduction was a personal expense and not a business expense.

It is true that § 162(a) of the Internal Revenue Code, 1954, provides: '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.' But § 262 provides: 'Except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living or family expenses.' And, as the Supreme Court has recently pointed out, Commissioner v. Idaho Power Co., 418 U.S. 1, 17, 94 S.Ct. 2757, 2767, 41 L.Ed.2d...