Christey v. U.S.

• Decision Date: 21 July 1988
• Docket Number: No. 86-5433,86-5433
• Citation: 841 F.2d 809
• Parties: -769, 56 USLW 2519, 88-1 USTC P 9205 Karl W. CHRISTEY and Kathleen Christey on behalf of all others similarly situated, Appellees, v. UNITED STATES of America, Appellant. Steven L. PILLSBURY and Holly L. Pillsbury on behalf of all others similarly situated, Appellees, v. UNITED STATES of America, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 809

841 F.2d 809

61 A.F.T.R.2d 88-769, 56 USLW 2519, 88-1

USTC P 9205

Karl W. CHRISTEY and Kathleen Christey on behalf of all

others similarly situated, Appellees, v. UNITED STATES of America, Appellant.

Steven L. PILLSBURY and Holly L. Pillsbury on behalf of all

others similarly situated, Appellees, v. UNITED STATES of America, Appellant.

No. 86-5433.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 1, 1987.

Decided March 2, 1988.

Rehearing and Rehearing En Banc Denied July 21, 1988.

Mary Frances Clark, Washington, D.C., for appellant.

Gary J. Haugen, Minneapolis, Minn., for appellees.

Before McMILLIAN, JOHN R. GIBSON and FAGG, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

The sole issue before us is whether taxpayers, members of the Minnesota Highway Patrol, are entitled to deduct as ordinary and necessary business expenses under Sec. 162(a) ¹ of the Internal Revenue Code expenses incurred for restaurant meals while on duty. The Internal Revenue Service disallowed the deduction, but the district court ² concluded that such expenses were deductible under Sec. 162(a) and therefore the taxpayers were entitled to refunds for the 1981 and 1982 tax years. On appeal the government argues that the taxpayers' meal expenses are not business expenses, but personal expenses not deductible under Sec. 262 of the Internal Revenue Code. We affirm the judgment of the district court.

Steven L. Pillsbury and Karl W. Christey ³ are employed as state troopers by the Minnesota State Highway Patrol. The Patrol is charged by law with enforcing traffic laws, investigating traffic accidents, directing and controlling traffic, providing information and assistance to the public, and cooperating with other law enforcement agencies in apprehending violators of criminal laws. See Minn.Stat. Sec. 299D.03, subd. 1 (1986). The normal working day for troopers is between 8 1/2 and 9 hours, although a shift may stretch into 12 hours. Troopers are also subject to call 24 hours a day.

As a requirement of their job, troopers must comply with the rules and regulations contained in the General Orders of the Patrol. These orders address in detail the conduct required of troopers while on duty. General Order R 77-20-008 ("the General Order") provides troopers with specific instructions concerning meal breaks while on duty. The General Order requires that troopers "eat their meals in a public restaurant adjacent to the highway whenever practical" and "report by radio when they eat and * * * advise the telephone number or the code number of the restaurant where they are eating." The restaurant must be open to the public and may not serve liquor. The Order prohibits troopers from eating meals at home during working hours and has been interpreted to prohibit troopers from bringing meals from home and eating in their patrol cars. The Order also details the time at which troopers may eat, the time allowed for a meal, and the number of troopers who may eat together. Failure to adhere to these instructions renders troopers subject to reprimand.

As set forth in the General Order, the principal purpose of these requirements "is to promote public safety and obedience to the law through the physical presence of troopers in uniform and to facilitate, through availability to the public, the reporting of accidents and the dissemination of information with reference to the traffic and motor vehicle laws of the state." The Order also ensures that meal breaks taken by the troopers are designated and staggered in order to maintain maximum coverage of patrol areas with minimal call response time.

There was testimony that during meals troopers are subject to calls for emergencies and other Patrol business to which they must respond immediately. Troopers are also subject to interruptions from the general public who are seeking information about road conditions, weather, traffic laws, and other subjects relating to trooper responsibilities. Thus, troopers are frequently interrupted during their meals and are often unable to finish meals for which they have paid. ⁴

The Christeys claimed a deduction of $926.66 for the meals Officer Christey purchased while on patrol in 1981 and a deduction of $880.28 for those purchased in 1982. The Pillsburys claimed a deduction of $944 for the meals Officer Pillsbury purchased while on patrol in 1981 and a deduction of $968 for those purchased in 1982. Both taxpayers claim the deductions as ordinary and necessary business expenses under I.R.C. Sec. 162(a). After the I.R.S. disallowed the deductions, both taxpayers paid the taxes due and filed timely claims for refund, which the I.R.S. denied. These suits for refund in federal district court followed. The district court determined that Pillsbury's and Christey's expenses for meals while on duty were deductible as "ordinary and necessary" business expenses under the general provision of Sec. 162(a) of the Internal Revenue Code. The court found that Pillsbury and Christey were "subject to * * * duty-related restrictions and requirements concerning their meals while on duty," and that their meals were taken "for the convenience and benefit of the patrol." Accordingly, the court held the taxpayers were entitled to deduct the cost of meals purchased while on duty under Sec. 162(a).

The district court's conclusion that the taxpayers' meal expenses qualify as ordinary and necessary business expenses is a question of fact and will not be set aside unless clearly erroneous. Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1200, 4 L.Ed.2d 1218 (1960); Commissioner v. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 254, 88 L.Ed. 171 (1943); Long v. Commissioner, 277 F.2d 239, 240-41 (8th Cir.1960). A finding is "clearly erroneous" when, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (defining clearly erroneous standard as set forth in Fed.R.Civ.P. 52(a)). If the district court's account of the evidence is plausible in light of the record viewed in its entirety, this court may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Id. at 574, 105 S.Ct. at 1511.

Section 262 disallows the deduction of "personal, living, or family expenses * * * except as otherwise expressly provided in this chapter."

Section 162(a) expressly provides a deduction for all the "ordinary and necessary expenses paid or incurred * * * in carrying on any trade or business, including * * * (2) traveling expenses (including amounts expended for meals * * * while away from home)."

The government does not challenge the factual findings of the district court but argues that the court erred in concluding that the taxpayers are entitled to deduct meal costs incurred while on patrol duty under the general permission of Sec. 162(a). They contend that the cost of meals is a personal expenditure and that the district court should have applied Sec. 262 to disallow the deduction. ⁵

In support of their contention that meal expenses are nondeductible personal expenses, the government particularly relies on two United States Supreme Court cases. United States v. Correll, 389 U.S. 299, 88 S.Ct. 445, 19 L.Ed.2d 537 (1967) and Commissioner v. Kowalski, 434 U.S. 77, 98 S.Ct. 315, 54 L.Ed.2d 252 (1977). ⁶ Neither of these cases, however, addresses the issue of whether meal expenses may be deducted as "ordinary and necessary" business expenses under the general provision of Sec. 162(a). Correll, supra, concerned the deductibility of meal expenses as "traveling expenses" under Sec. 162(a)(2), while Kowalski, supra, concerned the exclusion from gross income under Sec. 119 of a cash meal allowance. Indeed, the Court in Kowalski acknowledged that the deductibility of trooper meal expenses under the general provision of Sec. 162(a) was not under consideration. 434 U.S. at 81 n. 9, 98 S.Ct. at 318 n. 9.

It is beyond question that the cost of one's meals is ordinarily a personal expense which is nondeductible under Sec. 262. Treas.Reg. Sec. 1.262-1(b)(5) (1987). However, under certain limited circumstances, such expenses may be deducted under the general provision of Sec. 162(a); ⁷ "that which may be a personal expense under some circumstances can when circumscribed by company regulations take on the color of a business expense," Sibla v. Commissioner, 611 F.2d 1260, 1262 (9th Cir.1980). Accord Cooper v. Commissioner, 67 T.C. 870 (1977), aff'd sub nom Sibla v. Commissioner, 611 F.2d 1260 (9th Cir.1980); Walsh v. Commissioner, 52 TCM (CCH) 1344 (1987); Belt v. Commissioner, 47 T.C.M. (CCH) 1433 (1984). In Sibla, supra, the taxpayers, Los Angeles firemen, were permitted to deduct under Sec. 162(a) the cost of their participation in a mandatory mess plan, organized pursuant to a desegregation plan. ⁸ The firemen were required to pay a per diem amount for participation in the mess even if they brought their own meals or for some other reason did not eat the meals prepared in the mess. The Ninth Circuit held that the taxpayers' share of expenses of the mandatory organized mess was deductible as an ordinary and necessary business expense under Sec. 162(a). ⁹ We therefore reject the government's argument that the district court erred in failing to apply Sec. 262.

Additionally, the government contends that even if Sec. 162(a) applies, the restrictions on the manner in which the taxpayers could take their meals while on duty were not so significant that they transformed an essentially personal expense into a business expense. They reason that the restrictions are no different from those placed upon other taxpayers who have to work during meals and are subject to interruptions. Further, the happenstance that the Patrol may derive incidental benefit...