Wright v. Hartsell

• Decision Date: 10 July 1962
• Docket Number: No. 16885.,16885.
• Citation: 305 F.2d 221
• Parties: Calvin E. WRIGHT, District Director of Internal Revenue, Appellant, v. Richard V. HARTSELL, Marjorie Hartsell, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

305 F.2d 221 (1962)

Calvin E. WRIGHT, District Director of Internal Revenue, Appellant, v. Richard V. HARTSELL, Marjorie Hartsell, Appellees.

No. 16885.

United States Court of Appeals Ninth Circuit.

July 10, 1962.

Louis F. Oberdorfer, Asst. Atty. Gen., Sylvan A. Jeppesen, U. S. Atty., Scott W. Reed, Asst. U. S. Atty., Meyer Rothwacks, and Kenneth E. Levin, Dept. of Justice, Tax Div., Washington, D. C., and Melvin Sears, Office of Regional Counsel, Internal Revenue Service, San Francisco, Cal., for appellant.

Johnson & Olson, L. Charles Johnson, and Callis A. Caldwell, Pocatello, Idaho, Martin F. O'Donoghue, and Donald J. Capuano, Washington, D. C., for appellees.

Before POPE, HAMLEY and KOELSCH, Circuit Judges.

KOELSCH, Circuit Judge.

This is another of those numerous cases involving the question whether a construction worker, in computing his income subject to tax, is entitled to deduct expenses incurred in traveling to and from work. The facts are undisputed. Richard V. Hartsell is a non-itinerant journeyman pipe-fitter and plumber. Beginning in 1950 he has continuously maintained his regular place of abode in Pocatello, Idaho. He is a member of the local union for his trade and has secured employment solely through the hiring hall that the union maintains at Pocatello. He has not been continuously employed by any one concern, nor has he worked in any particular locality. Rather, he has had numerous jobs with different employers and has worked not only in and near Pocatello, but also at other places, as far away as 90 miles. His rate of pay was not affected by the distance of the work from Pocatello, but whenever he was required to travel more than five miles then the job was regarded as outside the so-called "freezone" and he was paid a fixed sum as compensation for the extra travel.

All Hartsell's jobs from June 1954 until June 1956 were at the Atomic Energy Commission site in Southeastern Idaho, where the Federal Government is conducting atomic research. He was a construction worker and was employed by contractors who were engaged in various construction projects. In this two-year period he had four jobs with three different contractors. His first job was with J. F. Pritchard and Company and lasted from June 1954 until April 1955; he next worked three weeks for Morrison-Knudsen Co., Inc.; then from July to September 1955 he again worked for Pritchard and finally from October until the following June, he was employed by Kaiser Engineers.

Each time, save the last when he voluntarily quit, his "lay-off" was due to the reduction of the size of the crew or the completion of the particular project; and on each occasion, when he found himself out of work, he reported to the union hiring hall and after some interval of unemployment was referred to a new job.

The AEC site encompasses an area of more than 1,500 square miles situated in a vast desert remote from any town or place of habitation. It is 70 miles from Pocatello and 46 miles from the town of Arco. No one is allowed there except on business, and access into the grounds is gained by a single road with a control gate at the entrance. No living accommodations were provided and no transportation was furnished for construction workers.

Hartsell traveled back and forth from Pocatello to his work each day. Some of the times he rode with others, and on other occasions he drove his own automobile. During 1955, the tax year in question, he made a total of 132 round trips to and from Pocatello, for which he received from his employers a travel allowance of $1,356. In his income tax return for that year filed jointly with his wife, Hartsell treated this sum as travel expense and deducted it from gross income, but the Commissioner disallowed the deduction. Thereupon the Hartsells paid the deficiency and commenced this action for a refund.

The district court found, in substance, that the Hartsells in fact maintained their home in Pocatello; that the nearest "habitable" community to the AEC site was Arco; that Hartsell's employment with Morrison-Knudsen Co. was "temporary" in nature; that his three jobs with the other two firms were each of "indefinite" duration, and that his travel allowance reflected no more than ordinary and reasonable cost of operating his automobile to and from Pocatello.

The court approved the deduction of the entire expense arising from the "temporary" job with Morrison-Knudsen Co., but limited the deduction in connection with the three jobs that were "indefinite" to the cost of driving from Arco to the work sites. It rendered judgment in favor of the Hartsells but for an amount less than they had sought. The Government alone appealed; the Hartsells filed no cross-appeal.

Section 162(a) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 162(a) provides for the deduction of all ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business; amongst those enumerated are:

"(2) traveling expenses (including the entire amount expended for meals and lodging) while away from home in pursuit of a trade or business * * *."

In Flowers v. Commissioner, 326 U.S. 465, 470, 66 S.Ct. 250, 252, 90 L.Ed. 203 (1946), the Supreme Court declared that,

"Three conditions must thus be satisfied before a traveling expense deduction may be made * * *: (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 expense incurred while traveling. (2) The expense must be incurred `while away from home.\' (3) The expense must be incurred in pursuit of business."

The Commissioner contends that the word "home" as it appears in section 162 (a), connotes the regular post of duty of a taxpayer as well as his place of abode and that therefore, Hartsell's travel expenses were not deductible because they were not incurred away from "home." A number of courts have given the statute this construction and have said "home" is the equivalent of work home or principal place of duty. See Barnhill v. Commissioner, 148 F.2d 913 (4th Cir. 1945); Bixler v. Commissioner, 5 B.T.A. 1181 (1927); Lindsay v. Commissioner, 34 B.T.A. 840 (1936). But in Wallace v. Commissioner, 144 F.2d 407 (9th Cir. 1944), this court unequivocally declared that "home" as it is used in this statute should be given its ordinary and usual meaning, and held that the expenses of a taxpayer who regularly lived in San Francisco but visited Los Angeles on business, met the statutory requirement that she incur the expense while away from home. Accord, Coburn v. Commissioner, 138 F.2d 763 (2 Cir. 1943); Flowers v. Commissioner, 148 F.2d 163 (5th Cir. 1945), rev'd on other grounds, 326 U.S. 465, 66 S.Ct. 250, 90 L.Ed. 203 (1946).

The Commissioner argues that a literal application of the Wallace doctrine would permit the use of commuting and other non-deductible personal expense to reduce taxable income, but we think that the third condition imposed by the statute clearly serves to prevent such a wrong result. By virtue of that requirement the cost of transportation, food and lodging is deductible only if directly related to the pursuit of a trade or business. This means that "the exigencies of business rather than the personal conveniences and necessities of this taxpayer must be the motivating factors." Flowers v. Commissioner, 326 U.S. 465, 474, 66 S.Ct. 250, 254 90 L.Ed. 203 (1945); or stated even more succinctly, "the job, not the taxpayer's pattern of living, must require the travel." Carragan v. Commissioner, 2 Cir., 197 F.2d 246 (1952).

Some of the circuits appear to read the Supreme Court's opinion in Flowers as extending the deduction only to expenses incurred by a taxpayer while pursuing an employer's business, and not to those due to the prosecution of his own trade or occupation. Commissioner v. Puerifoy, 254 F.2d 483 (4th Cir. 1957), aff'd 358 U.S. 59, 79 S.Ct. 104, 3 L.Ed.2d, 30 (1958); Commissioner v. Janss, 260 F.2d 99 (8th Cir. 1958). But we see no warrant for such a construction and conclude both types of expenses are embraced by the statute. See Chandler v. Commissioner, 226 F.2d 467 (1st Cir. 1955); Rev.Rul. 189, 1960-1 Cum.Bull. 60, 62. The statute expressly refers to "trade" as well as "business" expenses and states both may be deducted; and although the Supreme Court held that the expenses under consideration were not allowable because they were not necessitated by the employer's business, nevertheless, the Court also recognized that the third condition was met if there was "a direct connection between the expenditure and the carrying on of the trade or business of the taxpayer or of his employer." Moreover, in Flowers the expenses were clearly non-deductible personal expenses whether considered with reference to the employer's business or the taxpayer's profession.

Where it appears probable that a taxpayer's employment outside the area of his regular abode will be for a "temporary" or "short" period of time, then his travel expenses are held to be deductible; conversely, if the prospects are that his work will continue for an "indefinite" or "intermediate" or "substantially long" period, then the deduction is disallowed. Compare Burns v. Gray, 287 F.2d 698 (6th Cir. 1961); Claunch v. Commissioner, 264 F.2d 309 (5th Cir. 1959); Commissioner v. Puerifoy, 254 F.2d 483 (4th Cir. 1957), aff'd 358 U.S. 59, 79 S.Ct. 104, 3 L.Ed.2d 30 (1958), with Harvey v. Commissioner, supra.¹ The Commissioner has acquiesced in the distinction between "indefinite" and "temporary" employment and has permitted deductions in the latter instance. Rev.Rul. 189, 1960-1 Cum. Bull. 60, 65.

Similarly, deductions are allowed to a public official who is required by law to maintain his actual residence in his home district, but perform his official duties elsewhere. United States v. LeBlanc, 278 F.2d 571 (5th Cir. 1960); Moss v. United States, 145...