Courtney v. Comm'r of Internal Revenue

• Decision Date: 12 May 1959
• Docket Number: Docket No. 67200.
• Citation: 32 T.C. 334
• Parties: DARRELL SPEAR COURTNEY AND HAZEL MARGARET COURTNEY, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

32 T.C. 334

DARRELL SPEAR COURTNEY AND HAZEL MARGARET COURTNEY, PETITIONERS,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 67200.

Tax Court of the United States.

Filed May 12, 1959.

Darrell Spear Courtney, pro se.

Nat F. Richardson, Esq., for the respondent.

Petitioner was transferred from his employer's main plant in California to an office of the employer at Edwards Air Force Base in California where his employer performed work under a contract with the Air Force. The employer paid petitioner a cash allowance, in addition to his salary, to cover his additional living expenses. Held: (1) The living expense allowance was gross income under section 22(a). (2) Petitioner's post of duty or principal place of business was his employer's office at Edwards Air Force Base. (3) Petitioner's expenses for rent, utilities, moving, and operating his automobile while he was employed at the Edwards Base office were nondeductible personal expenses and were not deductible traveling expenses while away from home in the pursuit of his employer's business under section 23(a)(1)(A). (4) The cost of morning and evening meals taken at the Edwards Base when petitioner worked overtime are nondeductible personal expenses.

Respondent determined a deficiency in income tax for the taxable year 1953 in the amount of $579.30. The issue for decision is whether various expenses of the petitioner are deductible as traveling expenses while away from home within the meaning of section 23(a)(1)(A) of the 1939 Code.

FINDINGS OF FACT.

During 1953 the petitioners were residents of Lancaster, California. They filed a joint return with the director of internal revenue for the sixth district of California in Los Angeles.

Since the question to be decided relates only to Darrell Courtney, he is referred to hereinafter as the petitioner.

The petitioner was employed by North American Aviation, Inc., from October 1951 until sometime in 1956. He was employed at the main plant, in its accounting department, in Downey, California, until July 1952.

In 1952, petitioner was about 28 years old; he was married and had one child. In 1953, a second child was born. Petitioner is a high school graduate and he attended a business college, where he studied accounting, for 2 years.

North American Aviation, Inc. (hereinafter called North American) has a main plant and offices in Downey, California. The town of Downey is located near Los Angeles; it is about 6 miles from Long Beach; and it is a considerable distance from Edwards Air Force Base which is located in the Mojave Desert in California.

In 1952 North American received a contract from the United States Air Force to do certain work at Edwards Air Force Base in connection with the testing of guided missiles. The nature of the project was classified as secret for security purposes. Under the contract, North American was to use its own employees who were to be transferred to Edwards Air Force Base. They received all payments for their work from North American. North American understood that the Air Force was constructing a permanent missile test station and range on the east coast of Florida, and that the work to be done by North American at Edwards Air Force Base would be continued at the missile test station in Florida after the Air Force Base there was completed. That base is now known as Cape Canaveral. North American's personnel which constituted its missile test organization at Edwards Air Force Base was moved to Cape Canaveral at sometime after March 1954. Under these circumstances, North American regarded the location of its offices at Edwards Air Force Base as temporary.

At sometime prior to July 1952 North American began organizing a group of its employees at its Downey plant to go to Edwards Air Force Base. Petitioner was asked whether he would be willing to go to the Edwards Base. He accepted the offer because he would be given a promotion and an increase in salary. In July 1952 petitioner, as an employee of North American, was transferred to Edwards Air Force Base along with many others. Petitioner was employed continuously at Edwards Air Force Base from July 1952 to March or April 1954 when he was transferred to Cape Canaveral, Florida. He worked at the Downey plant, however, between March or April and July before going to Florida, during which time he lived with his family in a furnished apartment in Downey, having put his furniture in storage in Lancaster until it was shipped by North American to Florida. He was employed by North American at Cape Canaveral for about 10 months, until May 1955, when he was transferred back to the North American plant at Downey, where he worked for about a year and a half, until he resigned from his position with North American for the purpose of obtaining other employment.

The employees of North American who were transferred to Edwards Air Force Base worked under a base manager and a division chief, both being employees of North American. Petitioner's division chief was G. J. Raushbach. The nature of petitioner's work was, in general, office work which included the maintenance of records and estimates of the number of hours required to complete various engineering functions.

Petitioner's regular working hours were from 7 a.m. to 3 p.m. He frequently was called upon to work overtime. Overtime work often lasted through the night. During such periods of overtime work it was necessary for petitioner to purchase breakfasts and dinners at the base, as well as lunches.

At the time petitioner was asked whether he would go with a group of employees to Edwards Air Force Base, he was not told that his employment there would be for any specified period of time, but it was petitioner's understanding that the North American project at Edwards Air Force Base might continue for at least 1 year. However, he was not told that he would be there for 1 year. Petitioner and the other members of the group were advised that the organization of North American at Edwards Air Force Base would be a temporary facility which would do initial tests and that the work under North American's contract would be continued at the Patrick Air Force Base in Florida where the final tests would be made.

North American did not pay the moving expenses, as such, of any of its employees who decided to move to some town near Edwards Air Force Base. One of the towns near Edwards Air Force Base is Lancaster which is located about 35 miles from the base in the Mojave Desert.

There were facilities in officers' barracks at the base where employees of North American could live for a charge of $1 per day. Also, they could purchase their meals at the base.

North American paid employees assigned to Edwards Air Force Base a weekly allowance, in addition to wages, to cover the employee's additional expenses for food, lodging, and other necessities the cost of which was over and above the cost at or near Downey.

When North American moved its project and personnel from Edwards to Florida, it paid the costs of moving the household goods and furniture of an employee to Florida and from Florida back to California. When petitioner was transferred to Cape Canaveral in July 1954, North American arranged for shipping his household goods from Lancaster, California, to Cape Canaveral, and paid the cost thereof. Also, North American paid the expense of shipping his household goods back to Downey, California, in May 1955.

When petitioner began his work at Edwards Air Force Base in July 1952 he did not move his family from Long Beach. During the last 6 months of 1952, petitioner, at first, lived during the week at Edwards Air Force Base; later he lived in a trailer in Lancaster. He paid $28 a month for the use of parking space near a house. Petitioner went to his apartment in Long Beach over weekends. Under these arrangements in 1952, petitioner went to restaurants, or to the facilities at the base, for his meals during the week. Petitioner owned an automobile which he used for transportation between the base and Lancaster, and between Lancaster and Long Beach. The round trip from Lancaster to the base was 70 miles.

In December 1952 petitioner decided to move his family to Lancaster where he rented a small house for.$89.50 per month. As his rent in Long Beach had been $60 per month, an increase in rent of $29.50 per month was involved. Petitioner was required to sign a 1-year lease for the house in Lancaster, but there was a clause in the lease which provided that if he should be transferred away from Edwards Air Force Base the lease would end at such time without further charges. Petitioner and his family moved into the house in Lancaster on or about December 24, 1952, and they lived there until around March 1954 when petitioner was transferred to Florida.

Other employees of North American moved to Lancaster, or to some other town near Edwards Air Force Base.

During 1953, petitioner received each week from North American, in addition to his wages, an additional check, an allowance to cover his increased living expenses, in the amount of about $47. During 1953, the total amount of petitioner's wages was $5,923.32, the total amount of the increased living expense allowance was $2,443, and the total amount received from North American was $8,366.32.

Petitioner was not required by North American to submit any expense account showing his use of his living expense allowance, and he did not do so. North American did not place any restriction of any kind upon the use of the living expense allowance; petitioner could spend is as he wished.

In his income tax return for 1953, in line 2, petitioner reported both the total amount of his wages and the total amount of the living expense allowance. He deducted, in line 2, $2,443 as ‘living expenses away from home.’ Petitioner did not itemize in his return his expenditure of the allowance of $2,443.

At sometime in 1956 petitioner's return for 1953 was examined by...