T.C. Memo. 2000-289
UNITED STATES TAX COURT
JIM L. WESTLING, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 649-98. Filed September 15, 2000.
Steven R. Stolar and Kristina S. Keller, for petitioner.
Ric D. Hulshoff, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Petitioner petitioned the Court to redetermine
a $4,255 deficiency in his 1996 Federal income tax. The
deficiency stems from respondent’s disallowance of an $18,414
deduction that petitioner claimed as a miscellaneous itemized
deduction for travel expenses connected with his employment as a
merchant seaman. Petitioner ascertained the amount of that
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deduction by using the full Federal per diem rates for meals and
incidental expenses (M&IE rates) referenced in Rev. Proc. 96-28,
1996-1 C.B. 686 (applicable to meal and incidental expenses paid
by an employee for travel while away from home after March 31,
1996), and Rev. Proc. 94-77, 1994-2 C.B. 825 (applicable to meal
and incidental expenses paid by an employee for travel while away
from home after December 31, 1994). See, e.g., Rev. Proc. 96-28,
sec. 4.03, 1996-1 C.B. at 688. Petitioner’s actual expenses
consisted solely of incidental expenses; while at work, his
employer furnished him with lodging and meals at no charge.
We must decide whether petitioner may deduct the claimed
amount. We hold he may not. We hold that petitioner’s use of
the M&IE rates is limited to the incidental expense portion of
those rates and that his deductions must be determined
accordingly. Unless otherwise indicated, section references are
to the Internal Revenue Code in effect for the subject year, and
Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Most facts were stipulated. The parties’ stipulations of
fact and the exhibits submitted therewith are incorporated herein
by this reference. The stipulations of fact are found
accordingly. Petitioner resided in Everett, Washington, when his
petition was filed. He resided during the subject year in a
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house that he owned in Lake Stevens, Washington,1 paying during
that year $5,882 of mortgage interest and $1,433 of real estate
taxes. Lake Stevens is a city located near the Puget Sound
approximately 35 miles northeast of Seattle, Washington.2
Petitioner’s sole source of income is his wages from Silver
Bay Logging, Inc. (Silver Bay), the primary office of which is in
Juneau, Alaska. Silver Bay employs petitioner as the captain of
its tugboat (the tugboat), the Silver Bay I. Petitioner pilots
the tugboat transporting barges in and through the waters off,
and to the various ports in and around, southeast Alaska. On the
days which he works, petitioner generally must be on or around
the tugboat 24 hours a day.
During 1996, petitioner worked on the tugboat a total of 307
days. Those days and the corresponding locations in which he
worked were as follows:
Dates Days Location
Jan. 1 through Feb. 13 44 Seattle, Washington
Feb. 14 through Feb. 23 10 Ketchikan, Alaska
1
In their stipulations of fact, the parties spell Lake
Stevens with a “ph” instead of a “v”. Petitioner’s accountant
also used that spelling on the face of petitioner’s 1996 tax
return. Our research, however, leads us to conclude that the
preferred spelling of Lake Stevens is with a “v” instead of a
“ph”. We use the preferred spelling throughout this report. We
note that the preferred spelling also appears in petitioner’s
mailing address as shown on both the notice of deficiency and his
1996 Form W-2, Wage and Tax Statement.
2
We have taken judicial notice of this fact.
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Feb. 24 through Feb. 25 2 Klawock, Alaska
Feb. 26 through Feb. 27 2 Juneau, Alaska
Feb. 28 through Feb. 29 2 Gustavus, Alaska
Mar. 1 1 Juneau, Alaska
Mar. 2 1 Gustavus, Alaska
Mar. 3 through Mar. 4 2 Juneau, Alaska
Mar. 7 through Mar. 8 2 Gustavus, Alaska
Mar. 9 1 Juneau, Alaska
Mar. 10 through Mar. 11 2 Gustavus, Alaska
Mar. 12 1 Juneau, Alaska
Mar. 13 1 Ketchikan, Alaska
Mar. 14 through Mar. 15 2 Sitka, Alaska
Mar. 16 through Mar. 17 2 Juneau, Alaska
Mar. 18 through Mar. 19 2 Sitka, Alaska
Mar. 20 through Mar. 21 2 Ketchikan, Alaska
Mar. 22 through Mar. 25 4 Sitka, Alaska
Mar. 26 1 Ketchikan, Alaska
Mar. 27 through Apr. 3 8 Seattle, Washington
Apr. 4 through Apr. 6 3 Tacoma, Washington
Apr. 7 through Apr. 11 5 Seattle, Washington
Apr. 12 through Apr. 15 4 Juneau, Alaska
Apr. 16 1 Wrangell, Alaska
Apr. 17 1 Gustavus, Alaska
Apr. 18 through Apr. 19 2 Sitka, Alaska
Apr. 20 through Apr. 22 3 Wrangell, Alaska
Apr. 23 1 Juneau, Alaska
Apr. 24 1 Gustavus, Alaska
Apr. 25 through Apr. 26 2 Juneau, Alaska
May 23 through May 29 7 Sitka, Alaska
May 30 1 Juneau, Alaska
May 31 through June 1 2 Wrangell, Alaska
June 2 through June 3 2 Juneau, Alaska
June 4 through June 5 2 Ketchikan, Alaska
June 6 1 Juneau, Alaska
June 7 1 Sitka, Alaska
June 8 1 Juneau, Alaska
June 9 through June 14 6 Sitka, Alaska
June 15 through June 18 4 Juneau, Alaska
June 19 through June 20 2 Metlakatla, Alaska
June 21 1 Juneau, Alaska
June 22 1 Ketchikan, Alaska
June 23 1 Metlakatla, Alaska
June 24 through June 26 3 Ketchikan, Alaska
June 27 1 Metlakatla, Alaska
June 28 1 Klawock, Alaska
July 5 1 Ketchikan, Alaska
July 6 through July 9 4 Juneau, Alaska
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July 10 through July 16 7 Ketchikan, Alaska
July 17 1 Petersburg, Alaska
July 18 1 Juneau, Alaska
July 19 1 Sitka, Alaska
July 20 through July 21 2 Klawock, Alaska
July 22 through July 23 2 Ketchikan, Alaska
July 24 through July 25 2 Juneau, Alaska
July 26 through July 29 4 Wrangell, Alaska
July 30 1 Klawock, Alaska
July 31 through Aug. 1 2 Juneau, Alaska
Aug. 2 through Aug. 3 2 Sitka, Alaska
Aug. 4 1 Gustavus, Alaska
Aug. 5 through Aug. 8 4 Seward, Alaska
Aug. 9 through Aug. 10 2 Juneau, Alaska
Aug. 11 1 Sitka, Alaska
Aug. 12 1 Petersburg, Alaska
Aug. 13 1 Ketchikan, Alaska
Aug. 14 1 Juneau, Alaska
Aug. 15 1 Ketchikan, Alaska
Aug. 16 1 Klawock, Alaska
Aug. 17 1 Juneau, Alaska
Aug. 18 through Aug. 30 13 Ketchikan, Alaska
Sept. 13 through Oct. 11 29 Ketchikan, Alaska
Oct. 18 1 Ketchikan, Alaska
Oct. 19 1 Klawock, Alaska
Oct. 20 1 Juneau, Alaska
Oct. 21 1 Klawock, Alaska
Oct. 22 1 Juneau, Alaska
Oct. 23 1 Gustavus, Alaska
Oct. 24 through Oct. 27 4 Juneau, Alaska
Oct. 28 through Oct. 30 3 Wrangell, Alaska
Oct. 31 1 Juneau, Alaska
Nov. 1 1 Sitka, Alaska
Nov. 2 1 Petersburg, Alaska
Nov. 3 1 Sitka, Alaska
Nov. 4 1 Wrangell, Alaska
Nov. 5 1 Klawock, Alaska
Nov. 6 1 Juneau, Alaska
Nov. 7 1 Gustavus, Alaska
Nov. 8 1 Juneau, Alaska
Nov. 9 through Nov. 10 2 Sitka, Alaska
Nov. 11 1 Petersburg, Alaska
Nov. 12 through Nov. 13 2 Klawock, Alaska
Nov. 14 1 Sitka, Alaska
Nov. 15 1 Juneau, Alaska
Nov. 22 through Nov. 24 3 Klawock, Alaska
Nov. 25 1 Juneau, Alaska
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Nov. 26 1 Petersburg, Alaska
Nov. 27 1 Sitka, Alaska
Nov. 28 through Nov. 29 2 Klawock, Alaska
Nov. 30 1 Petersburg, Alaska
Dec. 1 1 Sitka, Alaska
Dec. 2 1 Wrangell, Alaska
Dec. 3 through Dec. 5 3 Ketchikan, Alaska
Dec. 6 1 Sitka, Alaska
Dec. 7 1 Klawock, Alaska
Dec. 8 1 Juneau, Alaska
Dec. 9 1 Seattle, Washington
Dec. 10 1 Ketchikan, Alaska
Dec. 11 1 Seattle, Washington
Dec. 12 through Dec. 13 2 Edward Island, Canada
Dec. 14 through Dec. 31 18 Seattle, Washington
Total 307
While he was at work, Silver Bay furnished petitioner with
lodging and meals at no charge. Petitioner had to and did
purchase his other “personal” items. Petitioner purchased while
at work incidental travel items such as hygiene products, safety
equipment, float coats, work gloves, and grooming services.
Petitioner claimed on his 1996 Federal income tax return a
miscellaneous itemized deduction of $18,414 for “deemed
substantiated” incidental travel expenses related to his claimed
employment away from home for 268 days. Petitioner has no
receipts to support the amount of these expenses. He ascertained
the amount by utilizing the per diem substantiation method of the
applicable revenue procedures and, more specifically, the full
M&IE rates for the various locations to which he had traveled on
business. Petitioner reported that he had ascertained the
expenses as follows:
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Area Number Reported
of Of M&IE Incidental
Travel Days Rate Expenses
Juneau, Alaska 103 $80 $8,240
Gustavus, Alaska 68 62 4,216
Sitka, Alaska 56 58 3,248
Ketchikan, Alaska 19 70 1,330
Petersburg, Alaska 14 62 868
Wrangell, Alaska 4 70 280
Yakutat, Alaska 4 58 232
Total 268 18,414
In total, petitioner reported $18,714 of miscellaneous
itemized deductions for 1996, and he claimed on his 1996 return
that he was entitled to deduct $16,956 of that amount after
taking into account the 2-percent floor of section 67.
Respondent determined that petitioner could not deduct any of the
$18,414.
OPINION
We must decide whether petitioner may deduct the cost of the
incidental travel items which he purchased during the subject
year while working away from his home. Petitioner argues he may.
Petitioner asserts that he incurred the costs while working away
from home on business. Petitioner asserts that the applicable
revenue procedures dispense with the need to substantiate the
amount of those costs in order to deduct them. Respondent argues
that petitioner may not deduct those costs. Respondent asserts
primarily that petitioner had no tax home. Respondent asserts
secondly that petitioner did not prove that he actually incurred
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the claimed expenses. Respondent asserts thirdly that petitioner
may not use the subject revenue procedures to ascertain the
amount of his deductions because, respondent asserts, those
revenue procedures do not apply when only incidental expenses are
incurred.
We agree with petitioner that he is entitled to the claimed
deductions, but we disagree with him as to the amount of those
deductions. We hold that petitioner’s deductions are limited to
the incidental expense portion of the applicable M&IE rates. See
Johnson v. Commissioner, 115 T.C. (2000). In Johnson, we
considered and rejected each argument advanced by respondent
here. We held that the taxpayer, a merchant seaman similar to
petitioner, could deduct the cost of his incidental travel items
even though he could not establish the cost of those items by way
of written documentation. We held that the taxpayer could
establish those costs by using the incidental expense portion of
the applicable Federal per diem rates for meals and incidental
expenses referenced in section 4.03 of Rev. Proc. 96-28, 1996-1
C.B. at 688, and its progenitors. We held that the taxpayer
could deduct those amounts because his records met as to those
costs the time, place, and business purpose requirements of
section 1.274-5T(b)(2), Temporary Income Tax Regs., 50 Fed. Reg.
46014 (Nov. 6, 1985). The taxpayer’s records showed clearly:
(1) The dates of his departure and return from each city that he
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visited while away from home (the time requirement), (2) the
cities or points of locality of travel (the place requirement),
and (3) the business nexus between his employment and his travel
(the business purpose requirement). See Johnson v. Commissioner,
supra.
Here, petitioner has introduced into evidence the log of the
tugboat for 1996 and a schedule that lists each of the locations
to which he traveled on business and the dates of that travel.
Although the log and schedule are somewhat inconsistent with each
other, as well as with respect to information that petitioner
reported on his 1996 tax return in support of his deduction,
respondent, for some unexplained reason, has conceded that
petitioner traveled to each of the cities stated on that schedule
and did so on the corresponding dates shown on the schedule. We
believe that the business purpose nexus between petitioner’s
incidental expenses and his travel is met by virtue of those
documents when viewed in the context of the record at hand and
conclude that petitioner has met the time, place, and business
purpose requirements of section 1.274-5T(b)(2), Temporary Income
Tax Regs., supra, as to the incidental expenses which he incurred
during 1996. Under the precedent of Johnson, we hold that
petitioner is entitled to deduct the incidental expense portion
of the applicable M&IE rates for his points of travel as set
forth on his schedule.
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Accordingly, to reflect those amounts,
Decision will be entered
under Rule 155.