Fryer v. Commissioner
| Decision Date | 28 March 1974 |
| Docket Number | Docket No. 4632-72. |
| Citation | 33 TCM (CCH) 403,1974 TC Memo 77 |
| Parties | Robert C. Fryer and Martha J. Fryer v. Commissioner. |
| Court | U.S. Tax Court |
Robert C. Fryer, pro se, 58 Half Moon Bend, Coronado, Calif. Richard H. Gannon, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent has determined a deficiency of $3,105.94 in petitioners' Federal income taxes for the calendar year 1969. Both parties have made certain concessions and the following issues remain for our decision:
(1) Whether petitioners may deduct expenses incurred by Robert C. Fryer in driving to and from his home and the American Airlines' terminal in Buffalo, New York;
(2) whether petitioners are entitled to any deductions for alleged traveling expenses incurred by Robert C. Fryer while on layovers between flights for American Airlines;
(3) whether petitioners may deduct traveling expenses incurred in looking for a new home in California;
(4) whether respondent erred in denying to petitioners any deduction for traveling expenses incurred on a trip to Europe;
(5) whether respondent erred in disallowing deductions for alleged casualty losses to petitioners' property;
(6) whether petitioners are entitled to a bad debt loss deduction under section 166, I.R.C. 1954,1 because of the failure of a contractor to reimburse them, as allegedly promised, for the cost of completing certain work on petitioners' property.
Some of the fact have been stipulated and are so found.
Petitioners Robert C. Fryer and Martha J. Fryer are husband and wife who, at the time they filed the petition herein, resided in Coronado, California. They filed their joint Federal income tax return for the calendar year 1969 with the district director of Internal Revenue, Buffalo, New York.
During 1969, Robert C. Fryer (petitioner) was employed as a commercial pilot by American Airlines, flying out of the American Airlines' terminal in Buffalo, New York (Buffalo). Petitioner and his wife, Martha, lived in Cuba, New York. During 1969, petitioner made at least 48 round trips by automobile from Cuba, New York, to Buffalo, a round-trip distance of approximately 150 miles. As a condition of his employment, petitioner was required to carry certain materials on all flights, including charts, flight manuals, FAA regulations, a log book and a flashlight. There was no storage space for such materials at the airport in Buffalo, nor any other place at the airport where he could conveniently make necessary revisions of the flight manuals and charts, consequently, petitioner took these materials home with him between flights. He carried the materials in a "kit bag" the size of an ordinary attache case. The bag, when filled with such materials, weighed approximately 30 to 40 pounds. Petitioner made the necessary revisions of the manuals and charts in an office he maintained in his home. There is no evidence as to how much time he spent in his office on such revisions.
During 1969 petitioner was also the president of Williams Food Products, Inc. (Williams), a business located in Olean, New York, which was approximately 16 miles from petitioner's residence. Petitioner also managed some real estate in the Caribbean and certain stocks and bonds. In late 1969 petitioner began operating a coat-checking business but received gross income from the latter of only $3.25 for that year. It is not established how much time he actually spent on any of these other activities in the office he maintained in his home.
On his 1969 return petitioner claimed a $720 deduction for automobile expenses incurred in traveling to and from his home in Cuba, New York, to the airport in Buffalo. Respondent disallowed such deduction in full.
As required by American Airlines, petitioner flew on numerous occasions from Buffalo to various cities in the United States. Prior to returning to Buffalo he was required to layover in those cities for at least eight hours. While present in these other cities he incurred expenses for food, transportation, and other miscellaneous items, but except for a car rental expense item of $189.96 in connection with a training session in Fort Worth, Texas, there is no evidence in the record as to the amounts petitioner actually spent for any of the above-mentioned items. Pursuant to a contract between American Airlines and the Allied Pilots Association, petitioner received $1,049.22 from American Airlines as reimbursement for a portion of these expenses. Petitioner was away from home for at least 128 days on American Airlines' business during 1969.
On his 1969 return petitioner claimed a deduction of $2,150.78 for unreimbursed expenditures incurred while away from home on American Airlines' business. He arrived at this figure by estimating that he incurred an average of $25 a day in deductible expenses on those 128 days he was away from home. Respondent has disallowed such claimed deduction in full.
Petitioner was not entirely satisfied with operating out of the American Airlines' terminal in Buffalo. He though that if he could transfer to California he would be able to fly larger planes and earn a higher salary. In September of 1969 petitioner and Martha flew to California to look for a suitable home in case he was transferred to California at some time in the future. While the primary purpose of the trip to California was to look at homes, petitioner also had discussions with American Airlines' representatives in which he sought information about a possible transfer to California. Because such transfers were made only on the basis of seniority, petitioner was not transferred to California until sometime in 1972.
Petitioner and Martha expended $422.05 for transportation, food and lodging on their trip to California, and deducted this amount on their 1969 return. Respondent has disallowed this deduction in full.
Issue 4. Business Travel Expenses
In November of 1969, petitioner and Martha traveled to Portugal, Italy and Greece. Prior to his arrival in Portugal, petitioner had ordered a quantity of wigs from a Belgian manufacturer whose factory was in Portugal. Petitioner examined the wigs in Portugal, determined that their quality was unsatisfactory, and refused to go through with the deal. Petitioner had sought these wigs because he was thinking of offering a line of ladies' wigs in Canada.
After leaving Portugal the petitioners traveled to Italy, where no business was conducted. From Italy they went to Athens, Greece, where they agreed with Dimitrious Venoutsos (Venoutsos) to open and operate three retail fur stores on the island of Rhodes. After leaving Athens they traveled to Rhodes to check on possible locations for the stores, as well as to check on Venoutsos' business reputation. Investigation revealed that Venoutsos was not a trustworthy person, and as a result no further action was taken by petitioner to establish fur stores on Rhodes.
There is nothing in the record as to the actual duration of the trip to Europe, nor as to the length of time spent in any of the places visited. Petitioner and Martha expended the sum of $2,718 for travel expenses on this trip, and deducted one-half this amount on their 1969 return. Respondent disallowed such deduction in full.
Issue 5. Casualty Loss Deductions
On or about June 27, 1969, a large shade tree, located next to petitioner's home in Cuba, New York, was broken in half by a tornado. The upper half of the tree fell against petitioner's house and damaged the roof. Insurance compensated him for all damages to the house, but on his 1969 return he claimed that the loss of the tree reduced the fair market value of the house by $500, thus entitling him, he contended, to a casualty loss deduction of $400 under section 165(c) (3). The property on which the house and tree was located was leased from the State of New York; the house was owned by the petitioners. Respondent disallowed such deduction in full.
On or about December 13, 1969, wind pushed ice on Cuba Lake into a dock owned by the petitioners, thereby causing damage to some of the pilings supporting the dock.2 The dock was L-shaped, one leg being approximately 30-feet long, the other approximately 20-feet long, with each leg approximately 7-feet in width. The damaged pilings were replaced in 1970. On their 1969 return petitioners claimed a casualty loss with respect to the damaged dock in the amount of $900, a deduction which respondent again disallowed in full.3
Issue 6. Bad Debt Loss Deduction
In August 1968, petitioner signed two contracts with P and P Sales (P & P) for the performance of concrete and paving work around the family home in Cuba, New York. Pursuant to the contracts, petitioner made total downpayments of $715, leaving a balance of $723.25 to be paid by him when the work was completed. When petitioner and Martha returned from a trip to Florida in the fall of 1968, they discovered that the work was only partially completed and that some damage had been done to their property. In 1969, after it had become apparent that P & P would be unable to perform its part of the contract, a representative of P & P verbally promised petitioner that the company would reimburse him for his excess costs in having to obtain another contractor to complete the work. In fact, petitioner expended an additional $1,874.65 to complete the work which was to have been performed, originally, by P & P, and claims a deduction of $1,151.40 (the amount of the excess costs incurred which P & P had promised to cover) as a bad debt loss sustained in 1969. Respondent disallowed such deduction in full.
OpinionThe first issue for our decision is whether petitioner may deduct the automobile expenses he incurred in driving to and from his home in Cuba, New York, and the airport in Buffalo. Petitioner sets forth two theories upon which he...
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