Coombs v. C. I. R.

• Decision Date: 23 November 1979
• Docket Number: 78-2036,Nos. 77-2026,s. 77-2026
• Citation: 608 F.2d 1269
• Parties: 79-2 USTC P 9719 Lee E. COOMBS and Judy B. Coombs et al., Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. James C. COX et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1269

608 F.2d 1269

79-2 USTC P 9719

Lee E. COOMBS and Judy B. Coombs et al., Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

James C. COX et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.

Nos. 77-2026, 78-2036.

United States Court of Appeals, Ninth Circuit.

Nov. 23, 1979.

Barry L. Guterman, Hochman, Salkin & DeRoy, Beverly Hills, Cal., for petitioners-appellants.

Anthony Ilardi, Jr., Washington, D. C., Robert L. Brosio, Los Angeles, Cal., for respondent-appellee.

Petition to Review a Decision of the Tax Court of the United States

and

Appeal from the United States District Court for the District of Nevada.

Before TRASK and WALLACE, Circuit Judges, and ZIRPOLI, ^* District judge.

WALLACE, Circuit Judge:

Two groups of taxpayers appeal from two sets of unfavorable judgments, one entered by the Tax Court and one entered by the district court. The appellants in No. 77-2026 are taxpayers whose fifty-two cases were consolidated for trial in the Tax Court. The Tax Court's opinion, Coombs v. Commissioner, is reported at 67 T.C. 426 (1976). The appellants in No. 78-2036 are taxpayers whose fifteen cases were consolidated for trial in the District of Nevada. The district court's opinion, Cox v. United States, is reported at 78-2 U.S.T.C. (CCH) P 9572 (D.Nev.1978). Because the two cases arise out of almost identical factual circumstances, the appeals have been consolidated.

In each set of cases the taxpayers sought to exclude from income various allowances from their employers or, in the alternative, to deduct from their gross incomes various expenses pursuant to the provisions of the Internal Revenue Code of 1954 (I.R.C.). The taxpayers also allege that the Commissioner of Internal Revenue discriminated against them when it treated the allowances received from their employers as income. Both the district court and the Tax Court ruled against the taxpayers on each of their claims, although in some instances for different reasons. We affirm the district court judgments and affirm in part and reverse and remand in part the judgments of the Tax Court.

I

The taxpayers each were employees at the Nevada Test Site during at least some portion of the time period 1970-73. ¹ The Test Site is used as a nuclear testing facility by the United States Government, although the government carries on other activities there as well. Las Vegas, Nevada, the closest habitable community to the Test Site, is 65 miles from the Camp Mercury control point, located at the southernmost boundary of the Test Site, and is 130 miles from the northernmost boundary of the Test Site. The Test Site encompasses an area of approximately 1,350 square miles in a remote area of the Nevada desert.

Indeed, because of the potential dangers arising out of the activities conducted at the Test Site, the government chose the location precisely because of its remoteness from populated areas. Moreover, access to the site is severely restricted. Only authorized persons may enter the Test Site, and then only through guard stations located at the perimeter of the site. The primary entrance is located at Camp Mercury.

Reynolds Electrical and Engineering Company, Inc. (REECO) is the prime contractor at the Test Site. REECO is responsible for the maintenance and operation of facilities at both the Camp Mercury and forward work areas of the Test Site. These responsibilities include, but are not limited to, providing food and housing, and supervision of industrial safety. REECO operates under a "cost plus" contract with the Energy Research and Development Administration (ERDA), which has jurisdiction over the Test Site. In order to fulfill the requirements of this contract, REECO enters into bargaining agreements with a variety of unions for employment of their members. Other private contractors operating at the Test Site during the years in question include Edgerton, Germeshausen and Grier, Inc. (EG&G), of which REECO is a subsidiary, Bendix Product Engineering Corp., and Wackenhut Services, Inc. During this time, approximately 100 federal employees other than military personnel, and 4,000 private contractor employees worked at the Test Site.

During each of the taxable years in question, all federal employees permanently assigned to the Test Site and all employees of private contractors who worked at the Test Site, received, in addition to their regular wages, a per diem allowance for each day they reported for work at the Test Site. The amount of the allowance varied. Employees reporting to Camp Mercury received $5 per day; those reporting to any forward area received $7.50 per day. Employees received these allowances without regard to the actual costs incurred by them for transportation, meals, or lodging. Employees who were members of certain craft unions received an additional travel allowance which varied in amount depending upon the location of a particular employee's work station.

Both the district court and the Tax Court determined that the allowances were not excludable from income, and that the expenses incurred by the taxpayers in traveling between their residences and their work stations, and in purchasing meals and temporary lodging at the Test Site were not deductible in any amount whether or not the taxpayers worked overtime or slept at the Test Site overnight when they incurred these expenses. Both courts also concluded that the Commissioner had not discriminated against the taxpayers.

In view of the Supreme Court's decision in Commissioner v. Kowalski,434 U.S. 77, 98 S.Ct. 315, 54 L.Ed.2d 252 (1977), rendered subsequent to the ruling in Coombs, the taxpayers have properly abandoned any claim to an exclusion from income of the allowances received from their employers. Thus, they bring before us only their claims for deductions of what they allege are travel expenses, including expenses for transportation, meals and lodging, and their allegation that the Commissioner has subjected them to discrimination. We first consider the taxpayers' various arguments regarding the deductibility of their expenses.

II

Both the Coombs and Cox taxpayers seek deductions for expenses incurred for meals and lodging when working overtime or sleeping at the Test Site overnight. The Cox taxpayers also argue that they are entitled to transportation expenses when they stay overnight at the Test Site. Both sets of taxpayers purport to ground these deductions on the provisions of I.R.C. § 162(a)(2). That section provides:

(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 amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; . . .

The Cox taxpayers, pursuant to the general provisions of I.R.C. § 162(a), also attempt to justify the deduction of their meals and lodgings as "ordinary and necessary" business expenses when they work overtime.

A.

We start from the premise, recognized by the taxpayers in both Cox and Coombs, that the transportation expenses ordinarily incurred by them, at least between their personal residences, most of which are in Las Vegas, and the entrance to the Test Site at Camp Mercury, are commuting expenses which are not deductible. Sanders v. Commissioner, 439 F.2d 296, 299 (9th Cir.), Cert. denied, 404 U.S. 864, 92 S.Ct. 55, 30 L.Ed.2d 108 (1971). See generally Commissioner v. Flowers, 326 U.S. 465, 473, 66 S.Ct. 250, 90 L.Ed. 203 (1946); Smith v. Warren, 388 F.2d 671, 672 (9th Cir. 1968) (per curiam). Moreover, although taxpayers may find it necessary to eat meals away from their personal residences because of the exigencies of their businesses, this circumstance, alone, will not ordinarily provide a basis for the deduction of the cost of these meals. See, e. g., United States v. Correll, 389 U.S. 299, 302 n.7, 88 S.Ct. 445 19 L.Ed.2d 537 (1967); Commissioner v. Bagley, 374 F.2d 204, 206 (1st Cir. 1967); Drill v. Commissioner, 8 T.C. 902, 903-04 (1947). Finally, as a corollary to this last point, and contrary to the contention of both the Cox and Coombs taxpayers, the mere requirement by an employer that an employee work overtime will not justify the deduction by the employee of the expense of a meal eaten at his place of work after completion of his regular shift. See Commissioner v. Bagley, supra, 374 F.2d at 206 (dicta); Courtney v. Commissioner, 32 T.C. 334, 344-45 (1959); Drill v. Commissioner, supra, 8 T.C. at 904. As the First Circuit stated in Bagley "we (do not) suppose, if a commuter were required to work late at his place of business, that any court would distinguish between his lunch and his supper." 374 F.2d at 206.

B.

With these principles in mind, we move on to consider the claims of the taxpayers here. We begin with the Cox taxpayers' attempt to justify their deduction of overtime-related expenses pursuant to the general provisions of section 162(a).

As stated above, an employer's requirement that an employee perform overtime work will not, alone, justify the deduction of personal expenses for items such as meals and lodging. In an attempt to avoid the impact of this rule, the Cox taxpayers rely upon Sibla v. Commissioner, 68 T.C. 422 (1977), Appeal docketed, No. 78-1295 (9th Cir. Feb. 8, 1978), and Cooper v. Commissioner, 67 T.C. 870 (1977), Appeal docketed, No. 77-3815 (9th Cir. Dec. 6, 1977). This reliance is misplaced. In Sibla and Cooper, the Tax Court concluded that firemen required by regulations to make payments into the firemen's mess and to eat in the mess when in the station house, could deduct the payments as a business expense. In Sibla the Tax Court emphasized that it based its decision in both cases "on the nature of the requirement for the payment," ...