Brooks v. Comm'r of Internal Revenue, Docket No. 63936.

• Decision Date: 18 August 1958
• Docket Number: Docket No. 63936.
• Citation: 30 T.C. 1087
• Parties: MATILDA M. BROOKS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

30 T.C. 1087

MATILDA M. BROOKS, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 63936.

Tax Court of the United States.

Filed August 18, 1958.

Herbert P. Moore, Jr., Esq., for the petitioner.

Edward H. Boyle, Esq., for the respondent.

Deductions— Travel and Other Expenses.— Taxpayer was a scientist engaged in research. She was appointed a research associate in physiology, without compensation, by the University of California in 1949. For the periods July 1, 1951, to June 30, 1952, and July 1, 1952, to June 30, 1953, she was appointed a research associate, with salary of $500 per annum. She also was paid $1,000 by the university to help her meet deficiencies in income tax for former years. By answer the Commissioner claimed the $1,000 as taxable income. In 1952 and 1953 taxpayer went to Europe. On these trips she spent $2,988 and $3,685.20 for expenses incidental to her research. She was not studying for a higher degree or a new profession. The university did not require taxpayer to travel in connection with her research. Held, on the facts, the Commissioner properly disallowed the travel expenses. Held, further, the $1,000 paid in 1952 was not taxable income.

TIETJENS, Judge:

The Commissioner determined deficiencies in income tax of $473.10 and $509.70 for the years 1952 and 1953, respectively, and an increased deficiency of $669.90 for 1952 in an amended answer.

The questions for decision are (1) whether certain claimed deductions for travel and other expenses in connection with research activities were properly disallowed, and (2) whether a $1,000 payment received by petitioner from the University of California in 1952 was taxable as income.

FINDINGS OF FACT.

The stipulated facts are so found and are incorporated herein by reference.

Petitioner lives in Berkeley, California. Her income tax returns for 1952 and 1953 were filed with the director of internal revenue for the first district of California in San Francisco, California.

At the time of the trial of this case petitioner was in her sixth decade. She is a scientist and received a Ph. D. degree from Radcliffe College in 1920. For 6 years thereafter she worked in the Hygiene Laboratory of the United States Public Health Service, 4 of those years as an assistant biologist and the last 2 years as an associate biologist. In connection with her research activities while with the Public Health Service and thereafter, petitioner published the results in a number of publications.

In 1927 petitioner's husband, Dr. Sumner C. Brooks, also a scientist, came to the University of California as a professor of zoology, which position he held until his death in 1948. At the time of his appointment as a professor of zoology, Sumner received a letter dated June 1, 1927, from Dr. C. A. Kofoid, chairman of the department of zoology of the University of California, where Dr. Kofoid stated: ‘I hope you can convince Mrs. Brooks that she would have very full opportunity here for research. The facilities of the laboratory, insofar as they are at our disposal, would always be available for her.’

Petitioner left the Public Health Service in 1926, and in 1927 accompanied her husband to the University of California where she was given an appointment as research associate in biology, without compensation. Petitioner served the university in that capacity until 1949 except for two intervals, one from October 17, 1934, to December 16, 1934, and the other from October 24, 1936, to June 30, 1937. During these intervals, her husband was on leave of absence without salary and she carried on his work, under an appointment as lecturer in zoology, receiving the salary released by his leave as follows: For 1934, $5,880; for 1936-1937, $3,472.

In 1949 petitioner was appointed research associate in physiology, without compensation. The ‘without compensation’ aspect of the appointment was modified in 1952, as hereafter described.

During her connection with the University of California, petitioner performed valuable and important research and published her findings in regard thereto in many important scientific journals concerning such subjects, among others, as the cause and cure of air sickness, treatment for cyanide and carbon monoxide poisoning, the Crocker tumor, human reaction to altitude, and studies on growth and development of normal and abnormal forms in single cells as affected by changes in redox potential. Also, her scientific work has deem recognized by her election to membership in such scholarly organizations as the Physiological Society; Phi Beta Kappa; Sigma Xi; listing of her name in American Men of Science; and radio dramatization of her work on March of Time and Ceilings Unlimited.

During the taxable years petitioner's primary research activities concerned studies on growth and development of normal and abnormal forms in single cells as affected by changes in redox potential. Certain single cells which she studied grow only in certain parts of the world and, in order to perform her research, she traveled in Europe during the greater part of 1952 and 1953. She expended $2,988 in 1952 and $3,685.20 in 1953 for her travel expenses to and from Europe, all of which expenses were incidental to her performance of research there.

Until the year 1952 the only sums of money received by petitioner from the university were in the form of research grants. In 1952 the university paid petitioner the gross amount of $1,749.96 and in 1953 the gross amount of $499.92. Minutes of various meetings of the regents of the University of California and various other official documents show the following information concerning such payments:

(a) Petitioner traveled to Peru in 1947 and 1948, in connection with which she claimed deductions for travel expenses in those years. These deductions were thereafter questioned by the Commissioner. She claimed the expenses were required by her research activities and that the expenses were legitimate business deductions. She had many discussions with representatives of the Commissioner from time to time concerning her 1947-1948 returns. The dispute was still unsolved in January of 1952, at which time she brought her tax problems to the attention of the regents of the university at a January meeting, suggesting to them that her designation as an ‘employee,‘ even though without salary, rather than a ‘research assistant,‘ would aid her tax status. The regents realized the impracticality of this suggestion, and indicated at their second meeting, after receiving the president's report on petitioner's services to the university and her record as a scientist, that they were inclined to reimburse petitioner for her possible income tax deficiencies.

(b) At a third meeting, held April 10, 1952, the regents voted in favor of reimbursing petitioner in an amount not to exceed $1,000 of her aggregate 1947-1948 proposed deficiencies, and requested the president to ascertain the exact amount thereof. In a letter dated May 6, 1952, the university controller recommended to the president that $1,000 be allowed to petitioner based on estimated total possible deficiencies of $850 to $900 for 1947-1948, and possible additional deficiencies for other past years, and in addition recommended petitioner's appointment, effective July 1, 1951, with an ‘annual stipend’ of $500, until severance of her connection with the university, predicated on the assumption that petitioner's work was valuable to the university.

(c) At the meeting of May 23, 1952, the following budget transfer was made, without further comment, by the regents:

(1) From the Regents' Emergency Fund to:

(a) Miscellaneous Expense: Supplies and Expense $1,000.00 To cover tax deficiency disallowances on the 1947 and 1948 Federal Income Tax return of Dr. Matilda M. Brooks in accordance with the April 10, 1952 minutes * * *

On May 13, 1952, a request to issue a check to petitioner for $1,000 ‘to cover deficiency disallowances on 1947...