Madsen v. Comm'r Of Internal Revenue, 2010-151
| Decision Date | 07 October 2010 |
| Docket Number | No. 2010-151,No. 18467-08S.,2010-151,18467-08S. |
| Parties | KELLY LYNN MADSEN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
KELLY LYNN MADSEN, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
No. 18467-08S.
UNITED STATES TAX COURT
Filed: October 7, 2010.
PURSUANT TO INTERNAL REVENUE COD SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY
OTHER CASE.
Kelly Lynn Madsen, pro se.
Lisa M. Oshiro, for respondent.
MORRISON, Judge: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time the petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not reviewable by any
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other court, and this opinion shall not be treated as precedent for any other case.
On April 23, 2008, respondent (the Commissioner of Internal Revenue, whom we refer to here as the IRS) mailed petitioner Kelly Lynn Madsen a notice of deficiency for the taxable years 2004 and 2005 determining the following deficiencies in income taxes and accuracy-related penalties:
Year
Deficiency
Penalty Sec. 6662(a)
2004
$4,166
$833
2005
7, 431
964
Ms. Madsen filed a timely petition with this Court, and a trial was held in Seattle, Washington, on June 23, 2009. After concessions by the IRS, 2 the issues we must decide are, for both
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of the tax years 2004 and 2005: (1) whether Madsen is a transportation industry worker, (2) the amounts of her deductions for meals and incidental expenses for three categories of work days (training, vaccinations, performing repairs and maintenance), (3) for each day before the day her tugboat departed on a voyage, the amount of the deduction allowed for lodging expenses and meals and incidental expenses, (4) for days spent in harbor and at sea, whether Madsen's deductions for meals and incidental travel expenses should be equal to her actual grocery expenses or to the special daily rates for transportation workers (and, if the special daily rates are used, whether the special daily rate should be reduced to $3 per day because Madsen received free meals on board the tugboats), (5) whether the deduction for meals and incidental expenses for each day that Madsen was partly at home and partly traveling (i.e., Madsen's first and last days of travel away from her home) should be prorated by reducing the deduction to 75 percent, (6) whether the
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increased allowable percentage for the deduction of food or beverages consumed while away from home for individuals subject to the federal hours-of-service limitations applies, (7) the amounts of deductions for other expenses, and (8) whether Madsen is liable for the section 6662(a) accuracy-related penalties.
The parties have stipulated some of the facts. These stipulated facts are adopted by the Court as factual findings. Madsen resided in the State of Washington at the time she filed her petition.
1. Madsen's Job and Her Duties Generally
Madsen was employed by Foss Maritime Co. in 2004 and 2005 as a chief engineer aboard its tugboats. She was licensed by the U.S. Coast Guard to perform duties as a master of steam or motor vessels and as a chief engineer during both years. She was also certified to perform navigational and engineering watches3 under the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers, 1978, as amended, during the tax years at issue. On board Foss's tugboats, her job was to perform engineering watches, in shifts with other boat employees, to ensure the proper running of the engine room.
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2. The Types of Work Days and the Frequency of Each Type
Madsen lived in Bellingham, Washington. During 2004 and 2005, all of Madsen's work was done while she was traveling away from her home. We base our description of each of her days of work on stipulated work schedules for 2004 and 2005 that classify each day of work into one of various categories. Some days were spent performing repairs and maintenance on Foss's ships while they were docked at port, and a few days were spent in training and receiving vaccinations.
Other than these days, her work duties consisted of sailing from one port to another before she returned home to Bellingham. The ports to which she most often traveled to report for those voyages, Everett and Seattle, Washington, were not more than a 90-minute drive from her home. She also traveled once each to the departure ports of (i) Tacoma, Washington, (ii) Brownsville, Texas, (iii) Kodiak, Alaska, and (iv) Chayvo, Russia (the Chayvo trip took 3 days). Madsen would arrive in each port of departure the day before her tugboat was to depart. She would lodge at a hotel to rest. She classified the days she spent working on trips among a series of ports in Washington State as "harbor" days. She classified trips among a series of ports at least one of which was outside Washington State as days at "sea". She classified the day of departure from the first port in a series of ports and the day of arrival at each successive port,
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including the last port, in the same manner as the intermediate days of any particular trip. Thus, if a series of departures and arrivals from various ports were classified as harbor days, the day of departure from the first port and the day of arrival at the last port were also considered harbor days.
Madsen's work days in 2004 and 2005 were classified as follows: 4
| Days | 2004 | 2005 |
| Repair and maintenance, vaccination, and training | 51 | 19 |
| Days of rest before harbor and sea days | 10 | 9 |
| Harbor | 12 | 29 |
| Sea | 135 | 171 |
| Total | 208 | 228 |
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3. Who Paid for Madsen's Lodging and Meals During Each Type of Work Day
A. Madsen's Lodging and Meals While She Was in Training, Receiving Vaccinations, or Performing Repairs and Maintenance
On the days in which she trained, was vaccinated, or performed repairs and maintenance, Foss did not provide her with any meals, nor did it reimburse her for any meal expenses. The record is unclear regarding Foss's lodging reimbursement policy for these days, but it is unnecessary for us to determine whether Foss reimbursed Madsen for lodging expenses because (1) the IRS has conceded that Madsen is entitled to deduct specific daily lodging amounts for her days spent performing repairs and maintenance and (2) Madsen did not claim lodging expenses for her days spent in training or receiving vaccinations.
B. Madsen's Lodging and Meals on Her Days Before She Departed From Port on Work-Related Voyages
Foss did not reimburse Madsen for the lodging or meal expenses she incurred on the days before she departed from port on her work-related voyages. She introduced, as evidence, a list of her days of rest before departure from port. The list did not include the amounts she actually spent on lodging or meals. As discussed below, we conclude that the IRS's statements at trial amounted to a concession of the deductibility of these expenses.
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C. Madsen's Lodging and Meals on Her Days Spent in Harbor
Foss provided her with lodging on board the tugboats on the harbor days. The record is unclear regarding whether Foss provided her with any meals or reimbursed her for any meals while she was in harbor. As explained below, we find that Foss did provide her with free meals for these days, but we do not resolve whether Foss reimbursed her for meal expenses.
D. Madsen's Lodging and Meals on Her Days Spent at Sea
While Madsen was at sea, Foss provided her with lodging on board the tugboat. It also provided her with three meals per day. Madsen was unable to eat the meals provided on board the tugboat vessels because they had caused her to gain weight and experience unhealthy levels of cholesterol when she consumed them over a period of time in the past. Thus she purchased vegetables, yogurt, tuna, water, rice, and other healthy food at grocery stores to prepare on board for her meals. The IRS does not contest that Madsen incurred grocery expenses to prepare her own food on board. Foss did not reimburse its employees for grocery purchases.
4. Work Clothing
In addition to spending money on food to take aboard the tugboats, Madsen spent money on clothes that she used exclusively at work. Her employer did not impose any attire requirements....
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