Jones v. Comm'r of Internal Revenue
| Decision Date | 08 April 1970 |
| Docket Number | Docket Nos. 5296-65,2167-68. |
| Citation | 54 T.C. 734 |
| Parties | LLOYD G. JONES AND MARILYN A. JONES, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Lloyd G. Jones, pro se.
W. John Howard, Jr., for the respondent.
Pursuant to an incentive program maintained by his employer, Mobil, petitioner was granted a 3-year release from status as an active employee at Mobil's laboratory in Dallas, Tex., to undertake studies at Ohio State University in Columbus, Ohio. During the entire period of his enrollment at Ohio State petitioner remained an employee of Mobile. Held, no part of the expenses for petitioner's meals and lodging while he was residing in Columbus is deductible. Held, further, unreimbursed expenses incurred by petitioner in moving his family from Dallas to Columbus in 1963 are not deductible under sec. 162(a), I.R.C. 1954.
Respondent determined the following deficiencies in petitioners' income tax:
+----------------------+
¦Year ¦Deficiencies ¦
+------+---------------¦
¦ ¦ ¦
+------+---------------¦
¦1963 ¦$824.42 ¦
+------+---------------¦
¦1964 ¦983.80 ¦
+------+---------------¦
¦1965 ¦954.70 ¦
+------+---------------¦
¦1966 ¦1,110.87 ¦
+----------------------+
The issues submitted for decision are as follows:1
(1) Whether the expenses for petitioner's meals and lodging, incurred during the 3 years he was attending graduate school (under his employer's incentive program) in a locale different from his post of employment immediately prior and immediately subsequent thereto, are deductible under section 162(a). 2
(2) Whether the expenses incurred by petitioner in moving his family from Dallas, Tex., to Columbus, Ohio, in 1963 are deductible under section 162(a).
At the time the petition in docket No. 5296-65 was filed, petitioners, husband and wife, were legal residents of Columbus, Ohio. At the time the petition in docket No. 2167-68 was filed, they were legal residents of Dallas, Tex.
Petitioners filed their joint Federal income tax returns for 1963, 1964, and 1965 with the district director of internal revenue, Cincinnati, Ohio. They filed their joint Federal income tax return for 1966 with the district director of internal revenue, Dallas, Tex. For convenience, Lloyd G. Jones will be referred to as petitioner.
Petitioner attended Ohio State University as an undergraduate student during the middle 1950's, majoring in petroleum engineering. In 1959 he was graduated from the same university with a master's degree in chemical engineering. Upon graduation, and until September 1963, he was employed by Socony Mobil Oil Co., Inc., now Mobil Oil Corp. (hereinafter referred to as Mobil), as a chemical engineer, assigned to do research work at the Field Research Laboratory in Dallas.3 His work consisted of making tests of oil wells to determine their potential productivity.
In a letter dated August 1, 1963, Mobil informed petitioner that he was being offered an ‘Incentive Fellowship.’ The fellowship was granted to petitioner upon certain conditions, including the following:
2. The course of study selected must be in a field of interest to the Laboratory.
3. During the period of this arrangement you will remain on the Company payroll and will retain the status of an employee in the sense that you will not surrender your rights to employee benefits such as the annuity and retirement plan and the savings plan, nor will you be relieved of your existing obligations to the Company, such as the undertakings of your invention assignment agreement.
5. We will expect you to maintain a standard of behavior consistent with your status as an employee of Socony Mobile Oil Company, Incorporated. You will pursue the approved course of study for a continuous period (except for vacations to which you are entitled as a Company employee) until you have duly qualified for graduation with the degree Doctor of Philosophy, or its equivalent. However, we must place a time limit on the arrangement, and it will terminate on August 31, 1966. Further, we reserve the right to effect the termination of the arrangement at any time if, in our judgment, proper standards of conduct and scholarship are not maintained. In this connection, you will be obligated to provide us, at the end of each term, with a photostatic copy of the official record of courses which you have taken and the grades you have received.
6. We reserve the right to require you to return to active status in the event of a National Emergency. * * *
7. We will expect you to resume the status of an active employee in this Laboratory on a full-time basis promptly upon completion of your studies under this agreement or promptly upon termination of your studies under this agreement prior to completion thereof if such such termination of your studies is the result of action on your part.
8. You will agree to remain in the Company's employ for two years from the date of resumption of your full-time active status on the Laboratory staff pursuant to Paragraph 7. During the two-year period, you will not seek or accept employment with any person, firm, or corporation unless your employment with this Company is terminated by this Company, or you are released in writing from this obligation. Throughout this period, the Company reserves its right of termination with or without cause.
9. Your salary while an Incentive Fellow will be affected by such general adjustments in base pay as apply to professional employees of the Field Research Laboratory. * * *
Petitioner accepted Mobil's offer on August 7, 1963, and, after investigating several schools, he selected Ohio State as the one at which to undertake his studies. One factor affecting his choice was that some of the credits he had earned while obtaining his master's degree would apply toward his Ph. D. requirements.
In early August 1963 petitioners rented their former residence in Dallas to a lessee. The net rental income from this property was reported in their income for 1963 through 1965.
Petitioner's wife and children traveled to Ohio by train in early August, and petitioners' children stayed with their grandparents, who lived near Ohio State, until petitioners located suitable housing. About the middle of August petitioner rented a U-Haul trailer, loaded it with household goods, and drove the approximately 1,100 miles from Dallas to Columbus. Petitioners incurred the following expenses in moving from Dallas to Columbus, none of which were reimbursed by Mobil:
+---------------------------------------------------------------+
¦Railroad fare for petitioner's wife and two children ¦$57.74¦
+--------------------------------------------------------+------¦
¦Labor ¦10.00 ¦
+--------------------------------------------------------+------¦
¦Servicing a washing machine and refrigerator ¦6.50 ¦
+--------------------------------------------------------+------¦
¦Rental of trailer ¦103.45¦
+--------------------------------------------------------+------¦
¦Rental of dolly ¦1.53 ¦
+--------------------------------------------------------+------¦
¦Estimated automobile expense, 1,100 miles at 8 cents per¦ ¦
+--------------------------------------------------------+------¦
¦mile ¦88.00 ¦
+--------------------------------------------------------+------¦
¦Total ¦267.22¦
+---------------------------------------------------------------+
On or about September 1, 1963, petitioner enrolled in Ohio State as a candidate for the degree of doctor of philosophy in Chemical Engineering. On November 7, 1963, Mobil sent a check in the amount of $750 to Ohio State, accompanied by the following explanation:
Our Incentive Fellowship Plan, in addition to the support given to the Incentive Fellow, recognizes that a student's tuition does not cover all costs associated with his education. In view of this, it is our policy to make a grant in the amount of $750 for the unrestricted use of the department in which the Incentive Fellow is enrolled. Our most recent Incentive Fellow, Mr. Lloyd G. Jones, is now enrolled in the Department of Chemical Engineering. Enclosed is our check No. 273596 in the amount of $750. These funds are for the unrestricted use of the Department of Chemical Engineering. If you have any questions with regard to the grant, please do not hesitate to contact us.
Mobil made similar grants to Ohio State in 1964 and 1965.
In late August or early September 1963 petitioner, his wife, and two children moved into a rented house in Columbus, where they lived until they moved to another rented residence in that city, following the birth of their third son in March 1964. Petitioners obtained Ohio tags for their automobile, subscribed to a local newspaper, and opened a joint checking account at a Columbus bank. However, they continued to pay the Texas poll tax, maintaining their voting registration in Dallas, retained their Texas driver's licenses, and retained ownership of their home in Dallas until 1966, when they sold it at a loss of $873.93.
Throughout the entire period that petitioner resided in Columbus, Mobil maintained him on the payroll of the Dallas office, sending him bimonthly salary checks totaling $3,452 in 1963, $10,356 in 1964, $10,356 in 1965, and $6,904 in 1966. Petitioner also retained his employee benefits, including life insurance, group hospitalization (for himself and his family), an annuity or retirement plan, and a savings plan. Petitioner made periodic reports to Mobil, which consisted mainly of transcripts of his grades in his courses of study.
Petitioners paid rent for their residences in Columbus in the total amounts of $540 in 1963, $1,700 in 1964,...
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