Wills v. Comm'r of Internal Revenue

• Decision Date: 14 June 1967
• Docket Number: Docket No. 1956-66.
• Citation: 48 T.C. 308
• Parties: MAURICE M. WILLS AND GERTRUDE E. WILLS, PETITIONERS V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

48 T.C. 308

MAURICE M. WILLS AND GERTRUDE E. WILLS, PETITIONERS V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 1956-66.

Tax Court of the United States.

Filed June 14, 1967.

Francis J. Butler, for the petitioners.

Gary C. Randall, for the respondent.

1. During the years in issue, petitioner was a member of the Los Angeles Dodgers but, nevertheless, maintained a home in Spokane, Wash., wherein his wife and children resided. Petitioner resided in his Spokane home when not in Los Angeles or traveling with or for the Los Angeles Dodgers. Held, petitioner's post of duty was in Los Angeles, Calif., which was also petitioner's ‘home’ for tax purposes. Consequently, expenditures made by petitioner in 1962 and 1963 for travel, meals, and lodging in Los Angeles are not deductible as travel expenses under sec. 62(2)(B) or sec. 162(a)(2) I.R.C. 1954. See Commissioner v. Flowers, 326 U.S. 465 (1946).

2. In 1962, petitioner was awarded an MG automobile by a Los Angeles automobile agency after having been elected the ‘most popular Dodger.’ In 1963, petitioner received the S. Rae Hickok belt for being the ‘outstanding professional athlete’ in 1962. Held, the value of the MG automobile constituted gross income to petitioner in 1962, and the value of the Hickok belt constituted gross income to petitioner in 1963.

FAY, Judge:

Respondent determined deficiencies in petitioner's income tax for the calendar years 1962 and 1963 in the amounts of $1,475.78 and $7,091.22, respectively.

Other issues raised in the notice of deficiency for 1962 and 1963 were conceded by petitioners prior to the trial herein. Therefore, the only issues for decision are:

(1) Whether petitioners' tax home in 1962 and 1963 was Los Angeles, Calif., and they were, therefore, not entitled to deduct living and travel expenses incurred by petitioner Maurice Wills while he was in Los Angeles during those years;

(2) Whether the fair market value of an MG automobile received by petitioner Maurice Wills in 1962 as the most popular Dodger is properly includable in petitioners' income in 1962; and

(3) Whether the fair market value of the S. Rae Hickok award received by petitioner Maurice Wills in 1963 as the prior year's outstanding professional athlete is properly includable in petitioners' income in 1963.

FINDINGS OF FACT

Some of the facts were stipulated and as stipulated are so found by this reference.

Petitioners filed Federal joint income tax returns on the cash basis for the calendar years 1962 and 1963 with the district director of internal revenue for the District of Washington, Tacoma, Wash.

Petitioner Maurice Wills (hereinafter referred to as petitioner) is, and was during the years 1962 and 1963, a professional baseball player. In 1962 and 1963, he was employed by the Los Angeles Dodgers (hereinafter referred to as the Dodgers), whose club home is Los Angeles, Calif.

By the terms of the 1962 and 1963 contracts between petitioner and the Dodgers, petitioner was to be paid semimonthly at the Dodger headquarters in Los Angeles, Calif. In 1962 and 1963, petitioner spent a minimum of 87 days in Los Angeles, Calif., as a member of the Dodger baseball team. In 1963, petitioner spent an additional 4 days in Los Angeles in connection with the World Series and additional time in preparation for a nightclub routine.

Petitioner first purchased a house in Spokane, Wash., in 1958. He and his family used this house as a personal residence. In January 1962, petitioner purchased a second house in Veradale, Wash., on the outskirts of Spokane, Wash. Petitioner and his family vacated their first Spokane residence and moved into the second house in which they resided during the years 1962 and 1963. Petitioner retained the first house and used it as rental property until he sold it in 1965. Petitioner's wife and five children resided in Spokane during the 2 years in issue. When petitioner was in Spokane, he stayed at his residence.

Petitioner spent a total of 138 days and 96 days of the years 1962 and 1963, respectively, in Spokane, Wash., and lived during that time at his Veradale home.

During 1962 and 1963, petitioner did public relations work for the Dodger minor league team, the Spokane Indians located in Spokane. Petitioner received $5,000 in 1962 and 1963 from the Dodgers for his work in Spokane.

When in Los Angeles, petitioner lived with the pastor of the church that he attended in Los Angeles. Petitioner paid rent for the opportunity of having these accommodations.

In 1962, petitioner broke the major league baseball record for the most stolen bases in one season, a record that had been set some 47 years earlier by Ty Cobb. In the same year, petitioner had a .299 batting average and tied with three other ball players for the most triples hit in the National League. Petitioner led the Dodgers in most games played, most times at bat, and most runs scored. Petitioner was the subject of leading magazine articles in 1962, appeared in the 1962 All-Stars game where he was voted ‘player of the game,’ was voted the ‘most valuable player’ of the National League, and received awards from the Associated Press as ‘Athlete of the Year,‘ the Sport Magazine as ‘Man of the Year,‘ the Baseball Writers as ‘Athlete of the Year,‘ and California as ‘Athlete of the Year.’

In October 1962, following the last Dodger baseball game of the season, petitioner was awarded an MG automobile with a fair market value of $1,731. Petitioner kept the MG until 1964, at which time he traded it in on another car and was allowed $1,318.52 as a trade-in. The automobile was awarded as the result of a vote taken at a Dodger baseball game several days previously to determine the most popular Dodger. The automobile agency distributed printed programs. Petitioner was selected as the most popular Dodger and received the automobile.

In January 1963, petitioner received the S. Rae Hickok belt awarded annually to the outstanding professional athlete of the prior year.¹ The predominant criterion in electing each year's recipient was excellence in athletics. The award was made for petitioner's activities in 1962. The inscription on the belt states that it is given to the outstanding professional athlete. Petitioner could have disposed of the Hickok belt at any time after he received it.

In his notice of deficiency respondent asserted that (1) the fair market value of the MG automobile that petitioner received as a prize or award is taxable as ordinary income in the year 1962 within the purview of section 74(a); (2) the fair market value of the Hickok belt that petitioner received as a prize or award is taxable as ordinary income in the year 1963 within the purview of section 74(a); and (3) that deductions of $3,169 and $3,858 claimed for travel expenses in 1962 and 1963, respectively, were not deductible to the extent of $1,239 and $2,095, respectively, because petitioner had not established that travel, meals, and lodging were incurred while away from home as required by section 62.

OPINION

The first issue for decision is whether expenditures made by petitioner in 1962 and 1963 for travel, meals, and lodging in Los Angeles are deductible as travel expenses under section 62(s)(B)² or section 162(a)(2).³ The Supreme Court in Commissioner v. Flowers, 326 U.S. 465, 470 (1946), stated:

Three conditions must thus be satisfied before a traveling expense deduction may be made under Sec. 23(a)(1)(A):

(1) The expense must be a reasonable and necessary traveling expense, as that term is generally understood. This includes such items as transportation fares and food and lodging expenses incurred while traveling.

(2) The expense must be incurred ‘while away from home.’

(3) The expense must be incurred in pursuit of business. * * *

Respondent submits that the expenditures in question were petitioner's personal living expenses and are, accordingly, not deductible. In support of this position, respondent argues that Los Angeles must be considered petitioner's home for tax purposes and, therefore, the amounts expended by petitioner in Los Angeles were not incurred while away from home within the meaning of section 62(2)(B) or section 162(a)(2). To the contrary, petitioner argues that, under the particular facts of this case, Spokane should be considered as petitioner's home for tax purposes and, therefore, the expenditures incurred by him in Los Angeles were incurred ‘while away from home’ within the scope of these sections.

The instant question relating to the location of a professional baseball player's tax home is a matter of first impression for this Court. However, general principles governing the deductibility of travel expenses are equally applicable in determining petitioner's tax home as a professional baseball player.

Consideration of Commissioner v. Flowers, supra, is relevant at this point. In Flowers, the Supreme Court denied any deduction for expenses incurred when the taxpayer lived in one city (Jackson, Miss.) and worked in another city (Mobile, Ala.). It held that by choosing to live at a distance from his place of employment the taxpayer could not convert commuting and living expenses into business expenses since such expenditures would not be required by the ‘exigencies of the business.’ The Supreme Court added:

Travel expenses in pursuit of business * * * could arise only when the railroad's business forced the taxpayer to travel and to live temporarily at some place other than Mobile, * * * . Business trips are to be identified in relation to business demands and the traveler's business headquarters. * * * (326 U.S.AT 474)

The principle of Flowers was eloquently articulated in Steinhort v. Commissioner, 335 F.2d 496 (1964), affirming and remanding a Memorandum Opinion of this Court, to wit:

Deeply ingrained in the whole tax structure— memorialized now by literally hundreds of tax rulings, Tax and other Court decisions in such numbers as to give some factual credence to what is so...