Sibla v. Comm'r of Internal Revenue

• Decision Date: 27 June 1977
• Docket Number: Docket No. 2864—76.
• Citation: 68 T.C. 422
• Parties: RICHARD R. SIBLA, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

68 T.C. 422

RICHARD R. SIBLA, PETITIONER

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 2864—76.

United States Tax Court

Filed June 27, 1977.

1. Held: Petitioner, a Los Angeles, Calif., fireman, may not exclude or deduct from gross income amounts withheld from his salary during 1973 as contributions to the Los Angeles Firemen's Pension Fund. Petitioner received a current economic benefit in 1973 from increased vested annuity rights at least equal in value to the amounts withheld from his salary.

2. Held, petitioner is not entitled to a deduction claimed because the value of the dollar declined in relation to gold or silver.

3. Held, petitioner is not entitled to a dependency exemption for his 21-year-old son, who did not receive over half his support from petitioner.

4. Petitioner made mandatory payments of $3 per day for participation in the nonexclusionary, organized mess at his fire station. Held, amounts paid are deductible as ordinary and necessary business expenses under sec. 162(a), I.R.C. 1954, even though petitioner did not protest payment and was generally present in the fire station during the mess periods and ate his meals there. Cooper v. Commissioner, 67 T.C. 870 (1977).

5. Held, from the evidence amount of deductible rental business and miscellaneous expenses determined. Richard R. Sibla, pro se.

Alan R. Herson and Patrick J. Dowling, for the respondent.

SCOTT, Judge:

Respondent determined a deficiency in petitioner's income tax for the calendar year 1973 in the amount of $1,240.

Each party has made certain concessions with respect to the issues raised by the pleadings. There remain for decision the following:

(1) Whether petitioner in computing his income subject to tax is entitled to exclude or deduct amounts withheld from his salary for contributions to the Los Angeles Firemen's Pension Fund;

(2) Whether petitioner is entitled to a deduction of $12,983 from his adjusted gross income on the basis that the value of the United States dollar has declined with respect to gold and silver;

(3) Whether petitioner, a fireman employed by the Los Angeles Fire Department, is entitled to deduct either as a business or miscellaneous expense the $366 which he was required to pay at the rate of $3 for each 24-hour working shift into the organized mess at his post of duty;

(4) Whether petitioner's itemized deductions for real estate taxes, contributions, and court appearance were properly disallowed by respondent to the extent of $62, $81, and $17, respectively, and whether petitioner's deductions for rental expenses for building supplies, utilities, advertising and legal, and licenses were properly disallowed by respondent to the extent of $81, $24, $115, and $45, respectively; and

(5) Whether petitioner is entitled to a dependency exemption for his 21-year-old son.¹

FINDINGS OF FACT

The parties stipulated only the facts with respect to petitioner's residence and the filing of his tax return and amended tax return for the year here in issue. These facts are found accordingly.

Petitioner, who resided in Woodland Hills, Calif., at the time of the filing of his petition in this case, filed a joint Federal income tax return with his wife, Dora G. Sibla, for the calendar year 1973 with the Fresno Service Center and on August 5, 1974, filed a joint amended Federal income tax return for 1973.

During 1973 and for 23 years prior thereto, petitioner was employed as a fireman by the Los Angeles City Fire Department. Petitioner also owned an apartment building which he operated as a rental business. In 1973, petitioner owned two automobiles and a truck which was used solely in connection with his business of renting apartments.

Under the provisions of the charter of the City of Los Angeles (the charter), petitioner was required to be a member of the Firemen's Pension System. Under the provisions of that charter, deductions were made from the salaries of firemen and deposited into the pension fund to defray in part the cost of pensions to which members would become entitled. For the year 1973, a total amount of $1,327.52 was deducted from petitioner's salary and paid into the Firemen's Pension Fund. The deductions for the pension fund are mandatory and are not returned to a member of the pension system other than through pension system payments. Under the charter provisions, any member of the pension plan who has 20 years or more of service shall be retired upon the filing of his written application therefor or, under certain circumstances involuntarily retired by order of the board of the fire department. Upon retirement, either at his own request or otherwise by the board, a member of the pension system with 20 or more years of service but less than 25 years receives a monthly pension payment for life equal to 2 percent of a pension base for each year of service. For 25 years of service, a member of the system upon retirement receives 55 percent of the pension base, and for years of service in excess of 25, an additional 3 percent per year not to exceed a maximum of 70 percent. The pension base is computed on the basis of the salary received by the fireman. The pension system also provides for disability retirement with less than 20 years of service, for survivor annuities to the widow, minor or dependent children, or dependent parents of a deceased fireman whether or not he had retired prior to his death.

The charter also contained with respect to pensions of firemen a provision that—

Each System Member shall be deemed to consent and agree to each deduction as provided herein, and the payment of each payroll check to such System Member shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such System Member during the period covered by each such payroll check, except such claims as such System Member may have to the benefits provided by this Article, and no System Member, former System Member or Retired Member ever shall be entitled, for any cause or reason whatsoever, to be paid any of the moneys which shall be deducted from his salary as hereinabove provided.

During 1973, petitioner's adjusted gross income as reported on his original return was $21,692. Petitioner, on his amended return, reported $8,709 as adjusted gross income with the following explanation:

5/6 of adjusted gross income (for months Jan to Oct inclusive) in Pseudo dollars P $21692 equals P $18077 times 38 equals 686926 divided by 95.48 (monthly (sic) average Jan to Oct of Daily London Gold Price) equals 7194 in Statutory dollars (S$ ) 1/6 of adjusted gross income (for months Nov & Dec) in Pseudo dollars P$21692 equal P$3615 times 42.22 equal 152625 divided by 100.75 (Nov & Dec monthly average of Daily London Gold Price) equal S$1514 in Statutory Dollars. S$7194 S$1514 = S$8709 in Statutory Dollars * * *

Petitioner's son, Blake, was 21 years old during 1973. Blake was not living with petitioner during 1973 and was not a student. During 1973, Blake was employed in a gasoline station but also occasionally did work for petitioner in connection with petitioner's rental business. Petitioner during 1973 paid Blake for the work he did in connection with petitioner's apartment rental business. Petitioner deducted these payments in computing his net income from the apartment rental business. Blake paid all of his normal support out of his own earnings and petitioner furnished him with no support during the year 1973.

The rules and regulations of the Board of Fire Commissioners of the City of Los Angeles established under the Los Angeles City Charter provide that all facilities of the fire department that are provided for the storage, preparation, cooking, and serving of food or drink shall be utilized equitably for the benefit of all members assigned at each of the fire stations or on each platoon. The regulations further provide that there shall be maintained an organized, nonexclusionary mess and that it is the department policy that all members participate in the organized mess unless specifically excluded therefrom. Each fireman was required to pay $3 for participation in the mess for each day he was on duty, and under this requirement petitioner in 1973 was required to, and did, pay a total of $366. Petitioner's duty days consisted of 24 hours each. Under the department regulations, each fireman was required to pay the $3 a day for his participation in the mess even if he brought his own lunch or for some reason did not eat the meals prepared in the mess. Each fireman was required to pay the same amount to the mess whether or not he ate the meals prepared in the mess and irrespective of the amount he ate. At petitioner's station, generally, if petitioner were out on department business, such as fighting a fire, all of the firemen at his station were out. Therefore, if the firemen were away at regular mealtime, the meal in the mess would be served upon the return of the firemen from their firefighting work. As a general rule, petitioner did in fact eat most of his meals in the mess on the days he was on duty. Since on his duty days he was required to be at his post of duty when not called out in connection with department business, petitioner would be required even if he brought his own lunch to eat it in the mess facilities when other firemen were eating the lunch prepared in the mess.

The following schedule shows the deductions claimed by petitioner for itemized deductions and rental expenses on his income tax return as filed, the amounts of the claimed deductions disallowed by respondent, and the amounts still in controversy after concessions made by the parties:

+------------------------------------------------------------+
                ¦                     ¦Per     ¦Disallowed     ¦Still in     ¦
                +---------------------+--------+---------------+-------------¦
                ¦Itemized deductions  ¦return  ¦by respondent  ¦controversy  ¦

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