Portillo v. Commissioner
| Decision Date | 13 September 1982 |
| Docket Number | Docket No. 2463-80. |
| Citation | 1982 TC Memo 518,44 TCM (CCH) 1085 |
| Parties | Richard A. Portillo, Sr., and Priscilla D. Portillo v. Commissioner. |
| Court | U.S. Tax Court |
Lonnie G. McGee, for the petitioners. Kevin M. Bagley, for the respondent.
Memorandum Findings of Fact and Opinion
This case was assigned to and heard by Special Trial Judge John J. Pajak pursuant to the provisions of section 7456(c) of the Internal Revenue Code of 1954 and Rule 180.1 The Court agrees with and adopts the Special Trial Judge's Opinion which is set forth below.2
PAJAK, Special Trial Judge:
Respondent determined a deficiency in petitioners' Federal income tax for 1977 in the amount of $1,031.00 By the express consent of the parties pursuant to Rule 41(b), the issues for decision3 are (1) whether under section 162 petitioners are entitled to deduct expenses incurred in traveling between petitioner-husband's residence and his place of work and (2) whether the travel pay received by petitioner-husband is includable in his gross income.4
Some of the facts have been stipulated. The stipulation of facts and related exhibits are incorporated herein by reference. Petitioners resided in Ramona, California, when the petition in this case was filed.
Petitioner Richard A. Portillo, Sr. (petitioner), is an ironworker and a member of Ironworkers Local 229 (union) in San Diego, California. He has been a member of that local since 1977, having been a member of the ironworkers' union in the eastern part of the country prior to that time.
Petitioner was employed as an ironworker by Bechtel Power Corporation (Bechtel) for the period from July 15, 1976, through the date of trial at the San Onofre Nuclear Generating Station (SONGS), except for October 8 through October 28, 1976. He was terminated for that brief period because he was engaged in an illegal work stoppage. Petitioner secured his employment through his union.
Bechtel had contracted with Southern California Edison to construct two nuclear reactor facilities (Units 2 and 3) at the SONGS site in February of 1974. Construction actually began in May, 1974. When the contract was executed, Unit 2 was originally scheduled to have been completed 64 months from the start of construction and Unit 3 was originally scheduled to have been completed 15 months after completion of Unit 2. During construction of Units 2 and 3, the estimated time of completion was updated once every six months based on actual construction experience. As of the time of trial, Bechtel's construction work on Units 2 and 3 had not yet been completed.
During the entire period of construction on Units 2 and 3, Bechtel had substantial labor needs requiring ironworkers among others.
When Bechtel required ironworkers, an officer of Bechtel would contact a representative of the union and request that a certain number of workers be dispatched to the SONGS site. These employees were hired by Bechtel on an "as needed" basis. Such an employee could lose his job at the SONGS site by a layoff pursuant to a reduction-in-force, by being terminated for cause, or by a voluntary termination.
The decision to lay off any given employee pursuant to a reduction-in-force was based on criteria established by Bechtel and was in the sole discretion of Bechtel. In making layoffs, the job performance of any given employee was the most critical factor in determining whether that employee would be laid off. In short, the worst workers would be laid off first and the better workers would be laid off last. In determining which employees would be laid off and which would stay, no consideration was given to the employee's seniority on the job, seniority with the union, or union status (i.e., local members vs. members working on a "travel card"). Representatives of Bechtel met periodically with representatives of the union to discuss construction progress and anticipated labor requirements.
When petitioner was hired to work at the SONGS site, he claimed he had "no idea" how long his employment would last and believed his employment would last only two or three months. No one from the union told petitioner that Bechtel was hiring him on a temporary basis. No representative of Bechtel ever told petitioner, or any other trade employee, that he was being hired on a temporary basis.
A trade employee, such as petitioner, could expect to be employed at the SONGS site by Bechtel as long as work was available and as long as the employee maintained a good job performance. During the entire period of petitioner's employment, Bechtel had substantial actual and forecasted labor requirements for ironworkers. Bechtel highly regarded petitioner's job performance as an ironworker as indicated by the fact that he was never laid off.
Pursuant to the union agreement under which petitioner was employed at the SONGS site, petitioner was entitled to $14.00 in travel pay for every day he worked in 1977. This travel pay is sometimes referred to as subsistence pay. The amount was based on the distance from the job site to San Diego City Hall. Petitioner would have received the same amount of travel pay regardless of where he actually resided.
During 1977, petitioner resided 65 miles from the SONGS site. He received travel pay from Bechtel in the amount of $3,332.00 and reported it as income on his original 1977 Federal income tax return.
Petitioner incurred $4,144.00 in expenses in traveling to and from the job site during 1977.
No deduction for travel expenses was taken on the original 1977 return. By an amended Federal income tax return for 1977, petitioner claimed an adjustment to income of $4,245.005 as employee business travel expense incurred intraveling between his residence and the SONGS site.
Respondent disallowed the $4,245.00 claimed for travel on the basis that it was not an ordinary and necessary business expense under section 162 and that daily travel expense incurred in traveling between dence and his job site is a nondeductible personal expense under section 262.
OpinionPetitioner contends that the travel expenses are deductible under section 162.6 For the reasons stated below, we agree with respondent that they are not deductible.
Although we have held that automobile expenses in commuting between the taxpayer's residence and even a temporary jobsite outside a taxpayer's normal area of employment are not deductible (see Turner v. Commissioner Dec. 30,717, 56 T.C. 27 (1971) (reviewed by the Court), vacated and remanded on the respondent's motion by an unpublished order (2d Cir. March 21, 1972)7 that issue has not been presented to us in this case. See McCallister v. Commissioner Dec. 35,241, 70 T.C. 505 (1978). Instead, respondent takes the position that if petitioner's employment was temporary his transportation expenses between his home and his jobsite are deductible.8 We shall limit our consideration to the "temporary" versus "indefinite" issue. Since we agree with respondent that petitioner's employment at SONGS was not temporary and therefore his transportation expenses are not deductible, any conflict with Turner v. Commissioner, supra, is mooted. McCallister v. Commissioner, supra.
The burden of proving that his employment was temporary rests with petitioner. Welch v. Helvering 3 USTC ¶ 1164, 290 U.S. 111 (1933); Rule 142(a). Whether a job is temporary or indefinite is purely a question of fact. This Court considers a job to be temporary if it is expected to last only a short period of time and not a substantial or indefinite period of time. Tucker v. Commissioner Dec. 30,657, 55 T.C. 783 (1971); McCallister v. Commissioner, supra. Employment which is originally temporary may become indefinite due to changed circumstances or the passage of time. Norwood v. Commissioner Dec. 33,877, 66 T.C. 467, 470 (1976); Kroll v. Commissioner Dec. 28,864, 49 T.C. 557, 562 (1968).
The Ninth Circuit has relied on a slightly different analysis when assessing the temporary nature of employment. Objecting to the restrictive method used in applying the "temporary" versus "indefinite" distinction, that court has sought to ascertain whether there was a reasonable probability known to the taxpayer that his employment would be for "a long period of time" and drew a distinction between "substantially short" and "substantially long" employment. Harvey v. Commissioner 60-2 USTC ¶ 9771, 283 F. 2d 491, 495 (9th Cir. 1960, revg. and remg. Dec. 23, 785, 32 T.C. 1369 (1959); Wright v. Hartsell 62-2 USTC ¶ 9608, 305 F. 2d 221, 224 fn. 1 (9th Cir. 1962). In later cases, the Ninth Circuit has used the term "indefinite" (see Wills v. Commissioner 69-1 USTC ¶ 9401, 411 F. 2d. 537, 541 (9th Cir. 1969), affg. Dec. 28,498 48 T.C. 308 (1967)), and has stated that the taxpayer's later awareness that an employment period would be indefinite "cannot be held to be an insignificant factor." Doyle v. Commissioner 66-1 USTC ¶ 9162, 354 F. 2d 480, 482 (9th Cir. 1966),9 affg. Dec. 26,766(M) T.C. Memo. 1964-110; see Commissioner v. Peurifoy 57-2 USTC ¶ 10,045, 254 F. 2d 483 (4th Cir. 1957), revg. Dec. 21,993 27 T.C. 149 (1956), affd. per curiam 58-2 USTC ¶ 9925 358 U.S. 59 (1958).
Despite any distinction that may still exist between this Court's analysis and that of the Ninth Circuit, both analyses lead to the conclusion that petitioner did not hold a temporary job away from home within the meaning of section 162 in 1977. During 1977 petitioner was working at the SONGS site. He has worked at SONGS from July 15, 1976, to the time of trial, except for an insignificant three-week break in service. It is clear that SONGS was an extensive program and that construction of Unit 2 and Unit 3 was contemplated to continue into the indefinite future. An official from petitioner's union testified that the SONGS construction project was a typical job in its duration "because it is always there." He...
To continue reading
Request your trial