T.C. Summary Opinion 2007-59
UNITED STATES TAX COURT
JASON EMANUEL AYALA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6369-06S. Filed April 23, 2007.
Jason Emanuel Ayala, pro se.
Derek W. Kaczmarek, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
taxable years in issue.
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other court, and this opinion shall not be treated as precedent
for any other case.
Jason Emanuel Ayala (petitioner) received a notice of
deficiency in which respondent determined: (1) Deficiencies in
income taxes for 2002, 2003, and 2004 of $2,079, $3,305, and
$4,559, respectively, and (2) accuracy-related penalties under
section 6662(a) for negligence or intentional disregard of rules
or regulations of $416, $661, and $912, respectively. The
deficiencies arose from respondent’s disallowance of claimed
employee business expenses. We are asked to decide whether
petitioner may deduct those expenses under section 162(a)(2).
This requires that we decide whether petitioner was “away from
home” when he incurred the expenses. If we sustain respondent’s
determination, we are also asked to decide whether petitioner is
liable for the accuracy-related penalties.
Background
Some of the facts have been stipulated, and they are so
found. We incorporate by reference the parties’ stipulation of
facts and accompanying exhibits.
Petitioner’s mailing address at the time he filed his
petition was in Las Vegas, Nevada.
Petitioner is employed by Sheehan Pipeline Construction
Company (Sheehan) as a truck driver, and he travels all over the
country delivering materials for Sheehan’s pipe-laying projects.
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When one project is completed, he is usually assigned a new
project immediately. Projects can last anywhere from a few weeks
to several months. During the years at issue, petitioner worked
on several back-to-back projects.
When he is traveling for work, petitioner tries to find
hotel accommodations that offer weekly rates to keep his expenses
down.2
When he is not on the road, petitioner stays with his family
in Vallejo, California. He does not maintain a separate
apartment or household, and he does not pay rent at his family’s
home. Although he does contribute money towards food and the
like when staying in Vallejo, he does not have any regular
household maintenance expenses. As he does not have a home of
his own, petitioner keeps many of his possessions at his family’s
home.
Because petitioner travels frequently and has to receive
mail somewhere, his mailing address is that of a mail service
which forwards his mail to him wherever he happens to be.
Similarly, because he does not reside anywhere for any length of
time, he is not registered to vote.3
2
Petitioner did not generally receive a per diem or other
expense reimbursement from Sheehan while working.
3
Further demonstrating how much ground petitioner covers
is the fact that his commercial driver’s license was issued by
the State of Texas, and his personal automobile is registered in
(continued...)
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Petitioner and respondent primarily disagree on whether the
house in Vallejo, California, is petitioner’s “tax home” and
consequently, whether petitioner’s travel expenses incurred while
working for Sheehan are deductible under section 162(a)(2) as
expenses incurred in pursuit of a trade or business while away
from home.
Discussion4
A. Section 162(a)(2)
Generally, outlays for food and shelter are considered
personal expenses and are not deductible. Sec. 262. However,
section 162(a)(2) allows a deduction for traveling expenses,
including amounts expended for meals and lodging, if the expenses
are: (1) Ordinary and necessary, (2) incurred while “away from
home”, and (3) incurred in pursuit of a trade or business. See
Bochner v. Commissioner, 67 T.C. 824, 827 (1977). Respondent
contends that petitioner was not “away from home” when he
incurred the expenses and thus that petitioner does not satisfy
the second factor for deductibility of the expenses claimed on
his Federal income tax returns for the years in issue.
3
(...continued)
Nevada.
4
Given the manner in which these issues were presented to
the Court, we make our decision as to both the deficiencies and
additions to tax without regard to the various burdens of proof
under sec. 7491.
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As a general rule, a taxpayer’s principal place of
employment is the taxpayer’s “tax home”. Kroll v. Commissioner,
49 T.C. 557, 561-562 (1968). An employee without a principal
place of business may treat a permanent place of residence at
which the employee incurs substantial continuing living expenses
as his or her tax home. Weidekamp v. Commissioner, 29 T.C. 16,
21 (1957). Where “the taxpayer has neither a principal place of
business nor a permanent residence, he has no tax home from which
he can be away. His home is wherever he happens to be.” Barone
v. Commissioner, 85 T.C. 462, 465 (1985), affd. without published
opinion 807 F.2d 177 (9th Cir. 1986).
Although the subjective intent of a taxpayer is to be
considered in determining whether the taxpayer has a tax home,
for purposes of section 162(a)(2), this Court and others have
consistently focused more on objective criteria. Section
162(a)(2) is intended to mitigate the burden of a taxpayer who,
because of the travel requirements of his or her trade or
business, must maintain two places of abode and, therefore, incur
additional living expenses. Brandl v. Commissioner, 513 F.2d
697, 699 (6th Cir. 1975), affg. T.C. Memo. 1974-160; Kroll v.
Commissioner, supra at 562. In other words, section 162(a)(2) is
intended to provide relief to a taxpayer who incurs “substantial
continuing expenses” of a home that are duplicated by business
travel. See James v. United States, 308 F.2d 204, 207-208 (9th
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Cir. 1962); Kroll v. Commissioner, supra at 562. When a taxpayer
continuously travels for work and does not have substantial,
duplicative, continuous living expenses for a permanent home
maintained for some business reason, the taxpayer has no tax
home. Henderson v. Commissioner, 143 F.3d 497, 499 (9th Cir.
1998), affg. T.C. Memo. 1995-559; James v. United States, supra.
Most significantly in this case, petitioner bore no expenses
in maintaining a home. Notwithstanding his visits to his
family’s home in California and financial contributions during
those periodic visits, petitioner bore no duplicative living
expenses. He did not make mortgage payments, pay regular
utilities costs, or regularly pay for running a household.
Petitioner’s costs on the road, while they may have been
substantial, were not redundant, and thus petitioner was not
“away from home” within the intent and meaning of section
162(a)(2) for the taxable years at issue. Barone v.
Commissioner, supra at 465; Wirth v. Commissioner, 61 T.C. 855,
858-859 (1974). In short, petitioner’s tax home was wherever he
happened to be. See Brandl v. Commissioner, supra. Accordingly,
petitioner is not entitled to deduct the expenses claimed on his
returns for the years at issue.
B. Section 6662(a)
Section 6662(a) imposes a penalty equal to 20 percent of the
amount of any underpayment attributable to negligence or
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disregard of the rules or regulations. Sec. 6662(b)(1).
“‘[N]egligence’ includes any failure to make a reasonable attempt
to comply with the [Internal Revenue Code], and the term
‘disregard’ includes any careless, reckless, or intentional
disregard.” Sec. 6662(c).
Petitioner does not have a bank account, and his credit
cards are billed to his father. Petitioner’s mother assists him
by handling his finances and acting as his bookkeeper. Working
for Sheehan is the first job he has had, and petitioner often
pays taxes in several states in addition to his Federal income
tax. He strikes us as a hardworking young man who does his best
to comply with his tax responsibilities.
Given the facts presented in this case, as well as
petitioner’s honest and straightforward testimony, we are
convinced that the reasonable cause and good faith provisions of
section 6664(c)(1) are applicable here. Accordingly, we decide
in favor of petitioner on this issue.
C. Conclusion
We find that petitioner’s family’s home in Vallejo was not
his tax home for Federal tax purposes during the years in issue.
Rather, his tax home was wherever he happened to be, and
consequently, petitioner had no home from which to be away for
purposes of claiming deductions for travel expenses under section
162(a)(2).
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To reflect our disposition of the disputed issues,
Decision will be entered
for respondent as to the
deficiencies in income taxes and
for petitioner as to the accuracy-
related penalties.