Bodzin v. Comm'r of Internal Revenue , Docket No. 1104-71.

• Decision Date: 04 September 1973
• Docket Number: Docket No. 1104-71.
• Citation: 60 T.C. 820
• Parties: STEPHAN A. BODZIN AND TANYA K. BODZIN, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

60 T.C. 820

STEPHAN A. BODZIN AND TANYA K. BODZIN, PETITIONERS

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 1104-71.

United States Tax Court

Filed September 4, 1973.

John J. Yurow, for the petitioners.

Steven G. Goldstein and Robert S. Erickson, for the respondent.

In 1967 the petitioner husband was a Government attorney. In connection with his business he found it helpful to maintain a small office in his apartment. There, in the evenings and on weekends, he frequently worked on his cases and studied current legal developments. The maintenance of his home office was not required by his employer; nor was it in a strict sense, required by the nature of his employment. But it was directly and closely related to his business. His employer provided office facilities, and these facilities were available to petitioner at all times— evenings and weekends included. Petitioner lived approximately 20 to 30 minutes by car from his employer's offices. His use of the home office to some extent served his own convenience, but it was also more efficient. Held, petitioner is entitled to deduct the reasonable, actual cost of his home office as an ordinary and necessary business expense under sec. 162, I.R.C. 1954.

DAWSON, Judge:

Respondent determined a deficiency in petitioners' Federal income tax for the year 1967 in the amount of $87.78. The only issue presented for our decision is whether petitioner Stephen A. Bodzin is entitled to deduct a portion of the cost of one room in his apartment as a business expense because of the use of the room as a home office. The issue is argued within the context of sections 162 and 262, I.R.C. 1954.¹

FINDINGS OF FACT

Some of the facts have been stipulated. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.

Stephen A. Bodzin and Tanya K. Bodzin (the petitioners herein) are husband and wife whose legal residence was in Alexandria, Va., when they filed their petition in this proceeding. They filed their joint Federal income tax return for taxable year 1967 with the district director of internal revenue at Richmond, Va.

During the entire year 1967 Stephen A. Bodzin (hereinafter referred to individually as petitioner) was employed as an attorney-adviser in the Interpretative Division, Office of the Chief Counsel, Internal Revenue Service. The Interpretative Division prepares legal opinions for the guidance of officials and employees of the Internal Revenue Service; reviews rulings or opinions referred to the Office of Chief Counsel by the Office of the Assistant Commissioner (Technical); reviews or assists in preparing mimeographs and press releases when referred to the Chief Counsel's Office for consideration; reviews and edits revenue rulings which are to be published; reviews closing agreements; and assists in maintaining digests of the opinions of the Chief Counsel. In short, the primary function of the Interpretative Division is to be a lawyer for the Commissioner of Internal Revenue. The work of the Interpretative Division has an appreciable effect on the interpretation and administration of the Federal tax laws.

Petitioner's duties as an attorney-adviser included the following: he worked on proposed ruling letters and published rulings, requests for technical advice referred to the Office of Chief Counsel by the Assistant Commissioner (Technical), and requests from other divisions within the Office of Chief Counsel for an opinion with regard to particular tax law problems. Although petitioner had been employed for only 6 months at the beginning of 1967 and his relative inexperience was at first taken into consideration by his supervisors, he was assigned a wide variety of important and complex legal problems. When assigned a problem he would first read and review the requests and administrative files and proceed to analyze the facts and issues involved. Next he would research the problem extensively, using the references available in his own office area, the Chief Counsel's library, the Interpretative Division digest section, and such other sources were available to him. He also conferred with others, such as reviewers, officials of the Service, and taxpayers' attorneys, to obtain their views and additional information. At the conclusion of all this, the petitioner would ordinarily draft a proposed memorandum— sometimes called a General Counsel Memorandum or G.C.M.— containing his final judgement of the problem. He might make several drafts of a G.C.M. before producing one that he was satisfied with. A proposed G.C.M. was reviewed carefully and thoroughly by his supervisors. Sometimes the petitioner would also prepare a ‘side memorandum’ to accompany his draft of the G.C.M.

The duties of an attorney in the petitioner's position required mature judgement and an ability to apportion one's own time and workload. Petitioner generally worked independently, without day-to-day supervision, receiving guidance only when requested or when guidance was deemed necessary.

It was the policy of the Interpretative Division to complete its cases as expeditiously as possible, the quality of the work performed on each case being emphasized above all else. No specific number of cases was required to be completed at the end of a given week or month. Attorney production reports were, however, required. Each week the petitioner filled out one such report showing the number of cases disposed of in the preceding week, the number of cases on hand, and the number of 60-day cases and expedite cases on his docket. The report also listed the date on which each case was received by him, the date on which he expected to begin work on the case, the date by which he actually began work on the case, and the target date by which he expected to finish the case. Petitioner was given the responsibility of setting his own target dates. They were supposed to be realistic ones. However, he could, and often did, extend them. So-called expedite cases were to be completed within a short period of time. Though rare, petitioner did receive and work on some expedite cases.

It was not the policy of the Interpretative Division to request its attorneys to work overtime. Accordingly, petitioner was not required, requested, expected, or encouraged to work after normal working hours (9 a.m. to 5:30 p.m.).

Nevertheless, petitioner's duties and responsibilities were of such a nature that he frequently deemed it desirable to work overtime in order to meet deadlines, self-imposed or otherwise, and to insure that work was performed to the best of his abilities. In addition, petitioner liked to use evenings and weekends to read widely about current developments in the tax law. He would spend hours reading such things as advance sheets of various Federal tax services and Tax Court opinions. Petitioner was not given any additional compensation for overtime work since his salary was regarded as covering all job-connected work regardless of the number of hours devoted thereto.

During 1967 the petitioner, his wife, and one child lived in an apartment in Alexandria, Va., across the Potomac River from Washington, D.C. The apartment consisted of a living room, dining room, kitchen, two bedrooms, two bathrooms, and a study or den. The study was a separate room, approximately 8 feet by 12 feet in size. It was furnished with a large desk, a desk chair, several bookcases, several cabinets, and several lamps. The bookshelves contained, among other things, a 1-year-old looseleaf tax service, a set of Seidman's Legislative History of the Income Tax Laws, and various tax treatises and lawbooks. There was no other furniture or appliances in the room. The room was not used when entertaining visitors and was generally not used by anyone except the petitioner. He used the room as his home office.

Petitioner occasionally used the room for purposes unrelated to his business, including payment of bills, reconciliation of monthly bank statements, and stamp collecting. He stored in the room personal papers, his stamps, and his personal library. To this was added some of his wife's personal library.

Petitioner usually worked in his home office two or three evenings during the week and for 3 to 5 hours on weekends. He worked on cases and other matters assigned to him and read about recent developments. With respect to his cases, he would rely sometimes on reference materials of his own stored in the study and sometimes on materials that he had photocopied and brought home. He frequently worked on the first draft of memoranda while at home in his home office. He would often prepare for upcoming conferences while there.

During 1967 the petitioner customarily traveled the 10 miles to and from work in a carpool that left the Federal Triangle area of downtown Washington, D.C. shortly after 5:30 p.m. Therefore, whenever petitioner found it desirable to work past the normal working hours he was faced with the following three choices: (1) Go home with the carpool and return to the Internal Revenue Service offices after dinner; (2) use public transportation or call home for a ride after working late at the Internal Revenue Service offices and eating dinner downtown, eating no dinner, or postponing dinner until arriving at home; (3) bring work home to his home office. In such situations petitioner almost invariably chose to bring the work home because it was more convenient to do so and because he thought it was more efficient. It enabled him to make better use of his carpool and to spend more time with his family.

The Internal Revenue Service offices are located at 1111 Constitution Avenue in downtown Washington, D.C. Petitioner was provided an office in that building. At all relevant times his office in the Internal Revenue building was heated and air-conditioned 7 days a week, 24 hours a day. If he had chosen to do so, the petitioner could have worked comfortably in his Internal Revenue...