Crowther v. CIR, 15994.

• Decision Date: 29 July 1959
• Docket Number: No. 15994.,15994.
• Citation: 269 F.2d 292
• Parties: Charles CROWTHER and Ivy L. Crowther, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

269 F.2d 292 (1959)

Charles CROWTHER and Ivy L. Crowther, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 15994.

United States Court of Appeals Ninth Circuit.

July 29, 1959.

Morris M. Grupp, Leon Schiller, San Francisco, Cal., for petitioner.

Charles K. Rice, Asst. Atty. Gen., Carolyn R. Just, Lee A. Jackson, Robert N. Anderson, James P. Turner, Attys., Dept. of Justice, Washington, D. C., for respondent.

Before CHAMBERS, HAMLIN and JERTBERG, Circuit Judges.

HAMLIN, Circuit Judge.

Charles Crowther and Ivy L. Crowther, hereinafter called petitioners, received from the Commissioner of Internal Revenue notices of deficiency in income tax for the years 1951 and 1954. Within 90 days thereafter petitioners filed petitions in the Tax Court of the United States, asking for a redetermination of those deficiencies. Following a trial and decision of the Tax Court, petitioners filed a petition for a review by this Court. No question is raised as to the jurisdiction of the Tax Court nor of this Court.

The case involves income tax deductions for the years 1951 and 1954. The two cases were consolidated for trial in the Tax Court. The Internal Revenue Act of 1939 is applicable to the 1951 tax return, and the Internal Revenue Act of 1954 is applicable to the income tax return of 1954. However, there is no appreciable difference between the pertinent provisions in the 1939 or in the 1954 Act. Therefore the same general principles govern the two cases.

Petitioners make generally two claims of error on the part of the Tax Court. We will discuss the second claim first.

Petitioners in their complaint filed in the Tax Court made allegations in some detail that the Commissioner acted in an arbitrary manner in finding the deficiencies in petitioners' returns, in failing to furnish petitioners with a 30-day letter (not required by law), and in failing to make a proper investigation before sending out the 90-day deficiency notices. No evidence was offered by petitioners in support of these allegations.

The propriety of the motives of the Commissioner in giving the notice of deficiency is immaterial. Kerr v. Bowers, 2 Cir., 1933, 66 F.2d 419; Greene v. Commissioner, 1925, 2 B.T.A. 148; Southern California Loan Association, 1926, 4 B.T.A. 223; Levine Bros. Co. v. Commissioner, 1926, 5 B.T.A. 689. It was the duty of the Tax Court to determine the amount of taxpayers' deficiencies, if any, regardless of the motive of the Commissioner in setting forth these deficiencies. We find no error on the part of the Tax Court in refusing to consider this claim.

The important question involved in this case is whether certain automobile and jeep expenses incurred by Charles Crowther, hereinafter called taxpayer, in traveling from his residence in Fort Bragg to various job sites in 1951 and 1954 are deductible by him, or whether, as the Tax Court found, those expenses are divisible into (1) personal expenses of "commuting" to his work and (2) business expenses of transporting tools and equipment used by him in his employment.

The taxpayer lived in Fort Bragg, California, with his wife and three children during all of the time in question. In 1951, the two older children were of school age and attended schools in Fort Bragg.

In 1951 taxpayer was a "faller" and a "bucker" who worked in the general area surrounding Fort Bragg. In his occupation he was required to go to various log sites or "layouts" to fall trees located thereon, and to cut these trees into logs. His compensation was received from various lumber companies on the basis of the number of board feet of trees which were felled and cut into logs. The various places of his operation were determined by the lumber companies owning the timber. His job was to cut all the timber upon a particular log site.

In 1951 he was employed by the Rockport Redwood Mills, whose main office was at Rockport, California, a small town completely owned by the lumber company, located about 29 miles north of Fort Bragg. The log sites where taxpayer did his work were located some 13 to 15 miles from Rockport, and taxpayer was required to go over private logging roads to reach the log site. One road into the timber country was used by him in good weather, and in winter time another road through the timber was used. In 1951 he traveled daily about 40 miles each way between Fort Bragg and the log sites, consuming approximately four hours per day. He had no definite hours of work. Under the terms of his employment he supplied his own transportation and tree and log-cutting equipment which consisted of chain saws, chains, bars, spring boards, gunsticks, axes, sledge hammers, wedges, safety hats, caulk boots, and various minor tools.

In 1951 he worked on three separate log sites about five or six miles apart from each other. The practice was to work upon a particular "lay out" until it was all logged out. The company then directed him to work at another log site until that was logged out.

No living accommodations were available in the woods at any of the log sites worked by the taxpayer in either 1951 or 1954.

In the actual operations of bucking and falling timber, two sized chains are used and two sizes of bars. It is necessary to have extra bars and chains because many times they are bent or broken when a tree starts to fall. It was necessary to have extra equipment in order to keep the work moving. This extra equipment and spare parts were generally carried in an automobile. In the operations, tools were frequently broken or bent, axe handles broken and axes dulled, and parts were broken on the saws. All these had to be taken back to Fort Bragg for repair or replacement. The evidence showed that very seldom did the taxpayer leave the woods without bringing back something to be repaired. When some part of the saw was broken, the taxpayer would take that off, bring it back to town and either repair it himself or buy a new part for it if it was not repairable. Carried in the automobile, also, daily back and forth from the job, were extra sledge hammers, extra axes, oil for lubricating the chain, approximately ten wedges, and various minor tools.

For the first part of 1951, the taxpayer used a 1947 Cadillac to carry this equipment and to drive back and forth from Fort Bragg to the log site. About the middle of the year he purchased for $125 an old Plymouth and used that as a means of conveyance for the greater part of the latter half of the year. However, when the Plymouth broke down and could not be used, taxpayer used the Cadillac. In December of 1951, the company discontinued its logging operations for the year and taxpayer was laid off.

In 1954, taxpayer was employed in the first part of the year for the Christie Company, and worked at two different log sites during that period. He daily traveled approximately 30 to 35 miles in an easterly direction from Fort Bragg in the first part of 1954 to each of these log sites.

In the second half of the year, he worked for another company at three different log sites. All of these were in a southeasterly direction from Fort Bragg and were approximately 30 miles from Fort Bragg. His operations in 1954 were similar to those in 1951, except that he used a jeep to transport the tools and himself to the various log sites. On some occasions in 1954 when the jeep was not operating, he used the 1947 Cadillac. In order to get to each of the log sites, taxpayer was required to use a public road for a portion of the way and to then proceed over about 6 to 9 miles of logging road for the balance of the trip.

At each of the log sites worked by the taxpayer in 1951 and 1954, the logging operations were discontinued at the instance of the company.

No public transportation was available into the woods to get to the log sites, and no transportation was provided by any of the companies for which the taxpayer worked. During 1954 taxpayer worked at either four or five different log sites. It apparently could not be determined in advance just how long the work would last at each log site.

The pertinent provisions of the 1939 Internal Revenue Code are as follows:

Section 23.

"Deductions from gross income.

"In computing net income there shall be allowed as deductions:

"(a) Expenses.

"1. Trade or business expenses.

"A. In general. All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, * * *; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; * * *

* * * * * *

"(l) Depreciation. A reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) —

"(1) of property used in the trade or business, or

"(2) of property held for the production of income." 26 U.S.C.A. § 23.

Section 24. Items Not Deductible.

"(a) General rule. In computing net income no deduction shall in any case be allowed in respect of —

"(1) Personal, living, or family expenses, * * *." 26 U.S.C.A. § 24.¹

The Tax Court held that the taxpayer's use of the automobiles and jeep to travel between Fort Bragg and the log sites was for the dual purpose of commuting between his home and his work and for transporting tools and equipment used by him in his employment. The Tax Court further held that to the extent that the automobile and jeep expenses in question represented commuting expenses of the taxpayer, they were personal expenses and were not deductible as ordinary and necessary business expenses.

The question of the deductibility of traveling expenses under various circumstances has been considered in a great number of cases.

In Emmert v. United States, D.C.Ind. 1955, 146 F.Supp. 322, the plaintiff, James A. Emmert, was a judge of the Supreme Court of the State of Indiana. By law he was required to reside in the judicial district from which he was elected. However, he was required to attend the sessions of ...