REVISED, October 6, 1999
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
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No. 98-60472
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JAMES LAWTON ROBERTSON and
LILLIAN JANETTE HUMBER ROBERTSON,
Petitioners-Appellants,
VERSUS
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
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Appeal from the Decision of the United States Tax Court
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September 30, 1999
Before REYNALDO G. GARZA, HIGGINBOTHAM and DAVIS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
James Lawton Robertson, a former Mississippi Supreme Court
justice, and his wife, Lillian Janette Humber Robertson (“the
Taxpayers”), appeal from an order of the United States Tax Court
finding deficiencies in income tax due from the Taxpayers for the
taxable years 1990, 1991, and 1992. Justice Robertson contends
that the Tax Court erred in requiring him to declare as income the
amounts that the State of Mississippi reimbursed him for travel,
meals, and lodging incurred in attending court sessions in Jackson,
Mississippi. More particularly, he contends that the Tax Court
erred in finding that Jackson, Mississippi--where the court sits--
was his “tax home” rather than Oxford, Mississippi, his place of
residence. For reasons that follow, we affirm the Tax Court’s
order.
I.
Justice Robertson began practicing law in Greenville,
Mississippi in 1965. In 1979, he became a full-time law professor
at the University of Mississippi School of Law ("the law school"),
which is adjacent to Oxford, Mississippi. Justice Robertson and his
wife owned a home in Oxford, were registered to vote in Oxford,
conducted their banking in Oxford, registered their automobiles in
Oxford, enrolled their three sons in public schools in Oxford, paid
real estate taxes and claimed a homestead exemption for their home
in Oxford, attended church in Oxford, and were involved in several
civic organizations in Oxford.
On January 17, 1983, the Governor of Mississippi appointed
Justice Robertson to the Mississippi Supreme Court to fill a
retired justice's unexpired term. The Mississippi Supreme Court,
which sits 157 miles away from Oxford in Jackson, Mississippi,
consists of nine justices and is divided into three geographical
districts. Three justices are elected to each of the three
districts. Because more than nine months were left in the retired
Justice's unexpired term, Justice Robertson was required to stand
for election for the remainder of the term. In November 1983, he
was elected without opposition. Justice Robertson ran for
reelection in 1984 and won a full eight-year term that expired on
December 31, 1992.
While serving on the Mississippi Supreme Court, Justice
Robertson continued to teach one course each semester at the law
school. Because of the distance between Oxford and Jackson, he
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developed a weekly schedule to accommodate his two positions. On
Sunday afternoons, Justice Robertson drove from Oxford to Jackson.
He remained in Jackson from Monday through Thursday and attended to
his duties on the Mississippi Supreme Court. While in Jackson, he
resided in an apartment and paid monthly rent. On Thursday
afternoons, Justice Robertson drove from Jackson to Oxford. He
remained in Oxford from Thursday through Sunday, teaching his
course at the law school on Friday afternoons and spending the
weekends with Mrs. Robertson and their three sons at their Oxford
home. Justice Robertson completed such round trips between Oxford
and Jackson 48 times in 1990, 45 times in 1991, and 30 times in
1992.
Justice Robertson's duties as a Mississippi Supreme Court
justice required him to be in Jackson at least two days out of each
week that the Mississippi Supreme Court was in session--one day for
panel hearings and one day for en banc hearings. At the Mississippi
Supreme Court, Justice Robertson had an office, staff, and access
to the State library. Nonetheless, he completed much of his
judicial work at the law school library in Oxford during the
weekends. He also performed various nonjudicial civic functions in
Oxford, the purpose of which was in part to secure re-election.1
Justice Robertson was reimbursed by the State of Mississippi
for some of the travel, lodging, and meal expenses he incurred
while attending Mississippi Supreme Court sessions in Jackson and
returning to his residence in Oxford. The Taxpayers did not report
1
Justice Robertson ran for reelection in 1992, and was
defeated. He resigned from the Mississippi Supreme Court on August
31, 1992.
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this reimbursement as income on their federal joint income tax
returns for 1990, 1991, and 1992. Moreover, the Taxpayers deducted
those travel, lodging, and meal expenses that were not reimbursed
by Mississippi.
In March 1996, the Commissioner of Internal Revenue
("Commissioner") issued to the Taxpayers a notice informing them of
proposed deficiencies in income tax for the 1990, 1991, and 1992
tax years in the amounts of $6,400.27, $5,841.34, and $3,922.00,
respectively. The Commissioner determined that the Taxpayers had
underreported their income by the amount of travel, lodging, and
meal expense reimbursements Justice Robertson had received from the
State of Mississippi. The Commissioner also disallowed the
deductions claimed by the Taxpayers for the unreimbursed travel,
lodging, and meal expenses. The Taxpayers filed a petition in the
Tax Court challenging the deficiencies. Following trial, the Tax
Court sustained the deficiencies, with the exception of certain
amounts conceded by the Commissioner.
II.
The central issue on appeal is whether the Tax Court erred in
treating Justice Robertson's reimbursed travel expenses as income
to the Taxpayers, and in determining that the unreimbursed travel
expenses were not deductible. Before we address the Taxpayers'
specific arguments, it is useful to review the governing statutory,
regulatory, and case law in this area.
As a general rule, it is firmly established that "gross
income" means all income from whatever source derived. 26 U.S.C. §
61. See also Commissioner v. Schleier, 515 U.S. 323, 327 (1995).
4
This includes any economic or financial benefit conferred on an
employee as compensation, whatever the form or mode by which the
benefit is effected. Commissioner v. Smith, 324 U.S. 177, 181, 65
S.Ct. 591, 593 (1945).
Gross income does not, however, include the amount of
reimbursed trade or business expenses paid to a qualifying employee
under an accountable plan. 26 C.F.R. § 1.62-2(c)(2), (4). An
accountable plan is one in which (1) the reimbursed expenses would
otherwise be allowable as a deduction to the employee under part VI
of subchapter B of the Internal Revenue Code (I.R.C. §§ 161-96),
and are paid or incurred by the employee in connection with the
performance of services as an employee of the employer; (2) the
reimbursed expenses are substantiated by the employee; and (3) the
employee returns any amounts in excess of expenses. 26 C.F.R. §
1.62-2(d)-(f). Here we are concerned only with the first
requirement: whether the reimbursed expenses would otherwise be
deductible.
I.R.C. § 162(a) allows as a deduction ordinary and necessary
expenses incurred during the taxable year in carrying on a trade or
business. This deduction includes traveling expenses incurred while
“away from home” in the pursuit of a trade or business. I.R.C. §
162(a)(2). To qualify under this provision, an expense must satisfy
three conditions: "(1) the expense must be reasonable and
necessary; (2) the expense must be incurred while 'away from home;’
and (3) the expense must be incurred 'in the pursuit of business.'"
Putnam v. United States, 32 F.3d 911, 916 (5th Cir. 1994) (quoting
Commissioner v. Flowers, 326 U.S. 465, 470, 66 S.Ct. 250, 252
5
(1946)).
The word "home" for purposes of business deductions under
I.R.C. § 162 "does not have its usual and ordinary meaning."
Putnam, 32 F.3d at 917. This court has repeatedly recognized that
the term "home" means "the vicinity of the taxpayer's principal
place of business and not where his personal residence is located."
Id. at 916. Thus, a taxpayer's "home" for purposes of Section 162
"is that place where he performs his most important functions or
spends most of his working time." Id. at 916-17. If a taxpayer has
two places of business or employment separated by considerable
distances, the court applies an objective test in which it
considers the length of time spent at each location, the degree of
activity in each location, and the relative proportion of the
taxpayer's income derived from each location. See Markey v.
Commissioner, 490 F.2d 1249, 1255 (6th Cir. 1974); Hoeppner v.
Commissioner, T.C. Memo. 1992-703 (1992); Montgomery v.
Commissioner, 64 T.C. 175 (1975), affd. 532 F.2d 1088 (6th Cir.
1976).
Here, the Tax Court applied the above test and determined that
Justice Robertson's home for purposes of Section 162 was Jackson
rather than Oxford. Accordingly, because Justice Robertson's
traveling expenses were not incurred while "away from home," the
Tax Court concluded that they were not eligible for deduction as
ordinary and necessary business expenses. The Taxpayers challenge
that conclusion on several grounds, which we consider below.
III.
In reviewing a decision of the Tax Court, we apply the same
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standards used in reviewing a decision of the district court:
questions of law are reviewed de novo; findings of fact are
reviewed for clear error. Estate of Street v. Commissioner, 152
F.3d 482, 484 (5th Cir. 1998). The Tax Court's determination
regarding the location of a taxpayer's tax home is a finding of
fact, and as such is reviewed only for clear error. See, e.g.,
Henderson v. Commissioner, 143 F.3d 497, 500 (9th Cir. 1998);
Weinberg v. Commissioner, 639 F.2d 434, 437-38 (8th Cir. 1981).
The Taxpayers argue that the Tax Court erred in its
determination that Justice Robertson's home for purposes of Section
162 was Jackson rather than Oxford. The Taxpayers observe that
justices who maintain their residence outside of Jackson spend less
than forty percent of the calendar year in Jackson, and that many
of their duties (reading briefs and records and clerk memos,
writing opinions, etc.) can be performed anywhere. The Taxpayers
contend that Justice Robertson did not perform his duties as a
justice of the Mississippi Supreme Court solely while in Jackson.
Rather, he spent many weekends in Oxford reading briefs and writing
opinions. Moreover, the Taxpayers point out that Justice
Robertson's duties as an adjunct professor of law involved much
more than just showing up in a classroom and teaching. He was also
required to prepare for classes, to counsel students, to judge moot
court arguments, to engage in discussion and conferences with
faculty colleagues, to participate as an instructor in continuing
legal education programs, to present papers on academic occasions,
to prepare and publish scholarly articles, to grade exam papers,
and to keep up with the literature in his field. These duties were
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far more time-consuming than the teaching itself, and the Taxpayers
argue that they too were performed in Oxford.
Following a careful review of the record, we conclude that the
Tax Court did not clearly err in finding that Justice Robertson's
tax home was Jackson. In a typical work week, Justice Robertson
spent four days in Jackson and three days in Oxford. While in
Jackson, all four days were committed to Justice Robertson's work
as a justice of the Mississippi Supreme Court. Even assuming that
Justice Robertson spent a significant part of each weekend in
Oxford performing his duties both as a justice and as an adjunct
professor of law, the fact remains that the greater part of his
typical work week was spent in Jackson. Justice Robertson's office
and staff were located in Jackson, and his most important duties--
holding panel and en banc hearings--were performed in Jackson.
Justice Robertson earned $75,000 per year as a justice, and $15,000
per year as an adjunct professor, meaning that the greater relative
proportion of his income was derived from his work in Jackson. In
light of all these facts, we can find no clear error in the Tax
Court's determination that Jackson rather than Oxford was Justice
Robertson's tax home.
Additionally, the Taxpayers argue that the present case is
analogous to this Court's decision in United States v. LeBlanc, 278
F.2d 571 (5th Cir. 1960), in which we determined that the expenses
incurred by a justice of the Louisiana Supreme Court while
traveling between his home district and New Orleans during the
court term were deductible as ordinary and necessary business
expenses. In LeBlanc, we carefully explained that the Louisiana
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Constitution: (l) requires the justices of the Louisiana Supreme
Court to be and to remain residents of their home districts; and
(2) further requires the Louisiana Supreme Court to be in annual
session from October through June in New Orleans. In light of this
legal requirement, we concluded that it was "most certainly 'the
exigencies of business'" rather than personal convenience that
forced Justice LeBlanc to incur his traveling expenses. Id. at 575
(quoting Peurifoy v. Commissioner, 358 U.S. 59, 60, 79 S. Ct. 104,
105 (1958)). Consequently, "mileage, travel, carrier fares, board
and lodging during the absence were deductible." Id.
The Taxpayers argue that Mississippi, like Louisiana, has
imposed a residency prerequisite to run for office as a justice of
the Mississippi Supreme Court. See Miss. Const. Art. 6, § 145. The
Taxpayers recognize that under the Mississippi Constitution--in
contrast to the Louisiana Constitution--a justice does not vacate
his office by becoming a physical resident of Jackson. See id.
Justice Robertson argues that notwithstanding this distinction,
"[o]bviously, if a judge plans to seek reelection, he must continue
residency in the district." Moreover, the Taxpayers contend that
the State has expressed its strong public policy interest in
maintaining the geographical diversity of its Justices by
appropriating funds to reimburse the justices for their travel
expenses. The Taxpayers argue that the State only has the authority
to reimburse these expenses if they are what the Commissioner says
they are not: expenses incurred while away from home and in pursuit
of the State's business and interests. Finally, the Taxpayers
challenge the Tax Court's reading of LeBlanc as too narrow. The Tax
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Court stated that LeBlanc only applies in circumstances where the
taxpayer is legally compelled to maintain a residence in one place
and to work in another, rejecting the proposition that economic,
political, and other practical necessities may also suffice to
establish the fact that a taxpayer is away from home. The Taxpayers
argue that Section 162 speaks of business related compulsions, not
just legal compulsions. Thus, the Taxpayers conclude, it follows
that other business related considerations--political, economic, or
otherwise--may be just as compelling for purposes of Section 162 as
the legal compulsion identified in LeBlanc.
We find these arguments unpersuasive. The Tax Court properly
recognized that the holding in LeBlanc is narrow, limited to cases
in which the taxpayer is legally compelled to reside in one
location and to work in another.2 In reaching its conclusion that
the exigencies of business rather than personal convenience forced
Justice LeBlanc to incur his traveling expenses, the LeBlanc panel
expressly relied on the fact that Justice LeBlanc was obligated by
law to maintain a residence in his home district and to attend
court sessions some distance away in New Orleans. In the absence of
such express legal compulsion, we agree with our sister circuits
that Section 162 is unavailable to an elected official for expenses
incurred traveling from the official's home district to the state
capital. See Montgomery v. Commissioner, 532 F.2d 1088, 1091 (6th
Cir. 1976) (state legislator); Barnhill v. Commissioner, 148 F.2d
913 (4th Cir. 1945) (state supreme court justices).
2
See Putnam v. United States, 32 F.3 911, 917 (5th Cir.
1994); Ireland v. United States, 621 F.2d 731, 735 (5th Cir. 1980);
Steinhort v. Commissioner, 335 F.2d 496,503 (5th Cir. 1964).
10
In the present case, Justice Robertson was not legally
compelled to maintain his residence in Oxford after he became a
justice of the Mississippi Supreme Court. The fact that the
Mississippi Constitution imposes a residency requirement to run for
the position of justice does not alter the fact that, once elected,
"the removal of a judge to the state capital during his term of
office shall not render him ineligible as his own successor . . .
." Miss. Const. Art. 6, § 145. Indeed, in addition to the
Constitution itself, Section 25-1-61 of the Mississippi Code
provides that State officers who must remove themselves to another
county for official purposes "shall be deemed in law in all
respects to be householders and residents of the county from which
they so remove . . . ."3 Thus, we agree with the Tax Court that
LeBlanc is inapplicable in the present case.
IV.
The Tax Court did not clearly err in finding that Jackson
rather than Oxford was Justice Robertson's tax home. Likewise, the
Tax Court correctly determined that LeBlanc is inapplicable in this
case because Justice Robertson was not legally compelled to reside
in Oxford. Because Justice Robertson's expenses were not incurred
3
For the first time at oral argument, Justice Robertson cites
Section 25-1-59 of the Mississippi Code for the proposition that he
was legally compelled to reside in Oxford. Section 25-1-59 states:
"If any state, district, county district, or municipal officer
during the term of his office shall remove out of the state,
district, county, or municipality for which he was elected or
appointed, such office shall thereby become vacant and the vacancy
be supplied as by law directed." This provision does not change our
analysis, given that the more specific provisions contained in
Article 6, Section 145 of the Mississippi Constitution and in
Section 25-1-61 of the Mississippi Code both expressly permit a
justice of the Mississippi Supreme Court to remove himself to
Jackson without vacating his office.
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while "away from home," the Tax Court properly concluded that they
were neither deductible under Section 162 nor excludable as
reimbursement under an accountable plan.
For these reasons, the decision of the Tax Court is AFFIRMED.
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