Whitman v. United States, Civ. A. No. 10518

• Decision Date: 28 December 1965
• Docket Number: 10519.,Civ. A. No. 10518
• Citation: 248 F. Supp. 845
• Parties: W. H. WHITMAN and Mary E. Whitman v. UNITED STATES of America.
• Court: U.S. District Court — Western District of Louisiana

248 F. Supp. 845

W. H. WHITMAN and Mary E. Whitman v. UNITED STATES of America.

Civ. A. Nos. 10518, 10519.

United States District Court W. D. Louisiana, Monroe Division.

December 28, 1965.

Paul K. Kirkpatrick, Hudson, Potts & Bernstein, Monroe, La., for plaintiffs.

Robert I. White, Atty., Tax Div., U. S. Dept. of Justice, Fort Worth, Tex., Edward L. Shaheen, U. S. Atty., and Edward V. Boagni, Asst. U. S. Atty., Shreveport, La., for the Government.

BEN C. DAWKINS, Jr., Chief Judge.

These consolidated actions were brought by the plaintiffs, husband and wife, for refund of income taxes which were assessed against and paid by them for the calendar and taxable years of 1960 and 1961, together with interest, in the aggregate amount of $1,706.86, plus statutory interest. This Court has jurisdiction over the parties and over the subject matter under 28 U.S.C. § 1346(a) (1).

The plaintiffs filed timely joint income tax returns for 1960 and 1961. Upon audit and review of the returns, the Commissioner of Internal Revenue disallowed deductions claimed under Internal Revenue Code of 1954, section 162(a), for travel expenses while away from home in the pursuit of a trade or business and section 165(a) or section 172 for net operating losses incurred in the operation of plaintiffs' farm. Upon payment of the deficiencies assessed and disallowance of a timely claim for refund, this suit was instituted.

W. H. Whitman was born and reared on a farm near Ruston, Louisiana. Following termination of his service with the U. S. Army in 1946, he found work in the pipeline construction industry. He and his wife have followed that industry since 1946 all over the United States and Canada. They returned to Ruston and environs between jobs and stayed with their parents. Ultimately becoming dissatisfied with this arrangement, Whitman purchased a nine room house in Choudrant, Louisiana, in 1954. The house was selected by Whitman's father, who immediately moved into the place, as the house in which he had been living had become intolerable for lack of running water. The elder Whitman had quit farming and was following the carpentry trade.

W. H. Whitman maintained the new home and paid the utility bills for his aging parents. He received his mail at the Choudrant, Louisiana, post office, where his father kept a box. It does not appear whether the elder Whitmans received any income other than support furnished by W. H. Whitman. A room in the Choudrant home was set aside especially for Whitman and his wife when they were visiting there. From 1954 through the years here under consideration, Whitman continued to follow the pipeline construction business, visiting in Choudrant for periods varying from a few days to two months.

Whitman and his wife had adopted the practice of living in a house trailer which could be moved from job site to job site as early as 1949. In 1959 they purchased a new trailer for $4,000. Whitman had worked on different jobs since 1957 for the same employer, Panama, Inc., of Houston, Texas, who reimbursed some of the expenses incurred in moving the mobile home from place to place. This arrangement was so convenient to plaintiffs that when they adopted a child in February, 1961, the family of three continued to reside in the trailer.

Whitman, however, considers Choudrant his home. He has bank accounts both in Choudrant and in Chatham, Louisiana. He has Louisiana license plates and a Louisiana driver's license. He pays Louisiana State Income Taxes. Whitman belongs to a Shreveport local of a labor union, but, as his employment has been obtained through personal contact with the same employer for several years, he does not rely upon the union to find employment.

Whitman's claimed deductions under section 162(a) (2) include meals at $4.50 per day, trailer space rent at $1.50 per day, and depreciation on his trailer, using the double declining balance method of computation, for a total of 301 days in 1960 and 315 days in 1961.

In 1959 Whitman purchased a farm consisting of 143 acres near Chatham, Louisiana. In addition he purchased six cows, making an arrangement with the seller of the land to tend to the place in Whitman's absence in return for all male offspring of the cattle. Although no transactions occurred in the years 1960 and 1961, Whitman has since acquired additional acreage and presently owns a herd of fifty-five cattle. It was his intention to build his herd up to 120 to 160 animals by 1967 or 1968, at which time he would leave the pipeline construction business and devote all his time to his cattle business. Whitman received no income from the operation in the taxable years here under consideration, and has received little since. Thus the operation had not reached the status of a full-fledged operating business. The Commissioner has taken the position with respect to the claimed deductions for current expenses, which amounts to a net operating loss in the plaintiff's farming operation, that those expenditures must be capitalized as part of the basis of land or cattle and recovered in later years through depreciation and sale of the assets.

With respect to the two questions presented by this case, we hold that the Commissioner was correct in his disallowance of plaintiff's deductions for traveling expenses while away from home, but incorrect in his disallowance of plaintiff's deduction for farming losses.

The basic statutory provisions to be considered in determining the deductibility of traveling expenses are sections 162(a) and 262 of the Internal Revenue Code of 1954. Section 162(a) provides for the deduction of all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Congress explicitly included as examples of ordinary and necessary business expenses "traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business." (Emphasis added) On the other hand, section 262 specifies that no deduction shall be allowed for personal, living, or family expenses.

Although the term "home" is one of the most commonly used words in the English language, its definition under the Code had confounded the Supreme Court on two separate occasions.¹ It has been argued that Congress gave no consideration to the formulation of a definition of "home" other than that which was in common usage at the time of the enactment of the provision.² But speculating whether or not "home" should have a common or a technical meaning does not benefit our analysis of the particular dispute before us. Our determination must be whether a claimed place of abode is the taxpayer's regular place of abode in a real and substantial sense and whether the facts as a whole tend to show that the undertaking of jobs away from the point where business contacts are normally maintained is primarily for business rather than for personal reasons.³

The myriad authorities dealing with a claimed deduction under section 262(a) generally tend to fall into three categories: The first of these may be called the commuter cases, in which the taxpayer, for personal reasons, lives in one place and works in another. The high watermark of these cases is perhaps Commissioner of Internal Revenue v. Flowers, 326 U.S. 465, 66 S.Ct. 250 (1946), in which Flowers, an attorney living in Jackson, Mississippi, was employed by a railroad which required him to work in Mobile, Alabama. In denying any deduction for expenses the Supreme Court held that Flowers's choosing to live at an unusual distance from his place of employment could not convert commuting living expenses into business expenses since such expenditures would not be required by "the exigencies of the business."⁴

A second group of cases concern taxpayers whose employment may be located in places away for their desired residence. As early as 1927, in Mort L. Bixler, 5 B.T.A. 1181, it was held that "traveling and living expenses are deductible * * * only while the taxpayer is away from his place of business, employment, or the post or station at which he is employed, in the prosecution, conduct, and carrying on of a trade or business." From this reasoning the Commissioner developed the concept of the "tax home" as allowing the deduction of traveling expenses only while away from the taxpayer's post of duty or place of employment. Thus the taxpayer's "home" for traveling purposes is usually at the city in and around which he usually works. If he can show he is temporarily employed at another business location, he may be "away from home." The Tax Court in Harvey v. Commissioner of Internal Revenue, 32 T.C. 1368 rev'd 283 F.2d 491 (9 Cir. 1960), found the taypayer employed away from home for more than a temporary period, and disallowed the deduction, citing Peurifoy v. Commissioner of Internal Revenue, 358 U.S. 59, 79 S.Ct. 104 (1958), as authority for the rule that the place where the taxpayer is employed for an "indefinite" period is his "tax home."⁵

The third category involves the worker who generally spends more time traveling than those in the second group, although each place of employment is conceded to be temporary since he customarily moves from one job to the next. In the cases where the commissioner has been successful in denying the deduction,⁶ the taxpayer is characterized as a "boomer" or an itinerant worker; in the cases where the taxpayer prevailed, he is characterized as a non-itinerant worker having a fixed place of abode in a general area that could be called his tax home. It is in this third category that we find Whitman's case to fall.

Just as each case must be determined on its own facts, Peurifoy v. Commissioner of Internal Revenue, 358 U.S. 59, 79 S.Ct. 104 (1958), prior cases must be examined in light of the particular facts of each in order that proper weight be given the myriad factors in the balance between deductibility vel non.

Among the cases in which...