NEUBAUER II v. Commissioner
| Decision Date | 20 May 1986 |
| Docket Number | Docket No. 17295-84. |
| Citation | 1986 TC Memo 204,51 TCM (CCH) 1037 |
| Parties | Ivan Maximilian Neubauer II and Marija-Terezija Neubauer v. Commissioner. |
| Court | U.S. Tax Court |
Ivan Maximilian Neubauer II, pro se. Julia A. Caroff, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined a deficiency in petitioners' 1980 Federal income tax in the amount of $528. The issues for decision are: (1) whether $1,673 in travel expenses are deductible by petitioners, (2) whether an additional $507 in travel expenses is deductible by petitioners,1 and (3) whether $2,486 of expenses incurred in connection with Yugoslavian real property and improvements are deductible by petitioners.2
Some of the facts have been stipulated and are so found. The stipulation and attached exhibits are incorporated herein.
At the time they filed the petition herein, petitioners, Ivan M. Neubauer, II and Marija T. Neubauer, husband and wife, resided at 85 Bellarmine Dr., Rochester Mich. They timely filed their 1980 joint Federal income tax return for 1980 with the Cincinnati Internal Revenue Service Center, using the cash method of accounting for that year.
During 1980, Ivan was an engineer employed by the Ford Motor Company. Maria was then a nurse assistant at Crittenton Hospital. Ivan also received some 1980 compensation as a soccer referee, and Marija distributed telephone directories for the Reuben H. Donnelly Corporation. The income from each of the latter two activities was reported on separate Schedule C's attached to petitioners' tax return.
The schedule upon which Maria's income was reported recites the name American Enterprise International (AEI)3 as the business to which it relates, naming "business development" as AEI's main business activity and "product distribution" as its product. The only income on the schedule is $50 from Maria's distribution of telephone books. No income was reported from the sale of Amway products. Petitioners claimed deductions of $2,088. Of $1,813 claimed for travel and entertainment, respondent disallowed $1,6734 related to a summertime trip to Yugoslavia.5
On December 18, 1979, the Industry for Motor Vehicles Novo Mesto in Yugoslavia wrote Ivan regarding "your valued offer for employment," conditioning such employment on an interview. Ivan was then a Ford Motor Company engineer.
On Friday, June 20, 1980, Marija and her three children flew to Germany, then drove through Austria, where Marija was born, to Yugoslavia. Marija had not been to Austria or Yugoslavia since 1968. Because of a differing vacation schedule, Ivan left for Europe on June 27, 1980. The record is silent as to his prior trips, if any. Each of their flights involved a scheduled stop in New York both east and west bound.
Taking petitioners' evidence at face value, we piece together Marija's activities in Europe as follows:6
Taking petitioners' evidence at face value, we piece together Ivan's activities in Europe as follows:8
Fri. June 27 Travel to Yugoslavia
Sat. June 28 Travel to Yugoslavia
Sun. June 29 Travel to Yugoslavia
Mon. June 30 At Inter County Collective for
Employment
Tues. July 1 At TAM (Maribor Factory for
Automobiles and Engines) to
discuss auto parts import/export
Wed. July 2 No business
Thurs. July 3 At Slavenian Emigrant Society,
Chamber of Commerce, Agrostroj,
and Employment Service.
Applied for engineering related
position.
Fri. July 4 No business
Sat. July 5 No business
Sun. July 6 No business
Mon. July 7 Amway presentation to Sagadin
Valentin in Stuttgart, Germany
Tues. July 8 Amway presentation to Sagadin
Valentin in Sestrze, Yugoslavia,
at his vacation home
Wed. July 9 No business
Thurs. July 10 Outboard/moped franchise negotiations
with Tomas, Kopor
Fri. July 11 Outboard/moped negotiations
with Tomas, Kopor
Sat. July 12 No business
Sun. July 13 No business
Mon. July 14 In Ljubljana, at Agrostroj
Tues. July 15 Filed application with personnel
services at Hidromontaza
Wed. July 16 At TAM (Factory for Automobiles
and Engines)
Thurs. July 17 Interview for engineer-manager
at IMV (Industry for Motor
Vehicles)
Fri. July 18 Discussed employment with
Zrece Forging Industry
Sat. July 19 Talks with Maribor Foundry
regarding bronze castings for
automotive applications
Sun. July 20 No business
Mon. July 21 Discussed Amway with Josef and
Stefka Korosec at their summer
home in Sestrze
Tues. July 22 Made travel arrangements to
return to U.S.
Wed. July 23 No business
Thurs. July 24 No business
Fri. July 25 IMV (Industry for Motor
Vehicles)
Sat. July 26 Went to Agrostroj in response to
a cable
Sun. July 27 No business
Mon. July 28 Went to Zrece Forging Industry
in response to a cable re:
employment. Discussions also
held regarding import/export
of hand tools
Tues. July 29 Arranged return trip
Wed. July 30 Travel to U.S.
Thurs. July 31 Travel to U.S.
While in Yugoslavia, Ivan received a letter dated July 18, 1980 from Agrostroj, Ljubljana (an "Enterprise for Manufacturing and Repair of Agricultural and Forestry Mechanization"). That letter answered Ivan's inquiry regarding employment in Morocco, and gave details if Ivan wished to further pursue the matter. In the United States, Ivan received another letter from Agrostroj dated August 27, 1980. This second letter contained an offer of employment as a process engineer including 5-year occupancy of a three-bedroom condominium, apparently the hallmark of an executive position in Yugoslavia.
By letter of September 30, 1980, the Unior Zrece Forging Industry wrote Ivan at a post office box in Troy, Michigan, also with an offer of employment including a three-bedroom condominium. This offer stated the available job was in the process design department of the machine building division, and explained that division's work in some detail. Ivan would not be working with automobiles at Unior, except that his division would make some forgings for the auto industry.
Finally, by letter of October 6, 1980, IMV Industry for Motor Vehicles Novo Mesto wrote Ivan at his post office box with an offer of employment including a three-bedroom condominium. This offer described Ivan's work as involving introduction of new programs from cooperation with Renault.
Despite testimony that he was job-hunting and open to relocating in Yugoslavia, Ivan rejected all these offers. Ivan discussed importing mopeds and outboard motors with Tomas, Incorporated but because of high interest rates, no deal was struck. Negotiations regarding auto parts, and presumably those regarding irrigation pipes fell through for the same reason.
Petitioners introduced into...
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