T.C. Summary Opinion 2011-109
UNITED STATES TAX COURT
EDWARD K. AND JERI L. GLOVER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17042-09S. Filed September 14, 2011.
Ellin Vicki Palmer, for petitioners.
Halvor R. Melom, for respondent.
DEAN, 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. Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
case. Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the years at
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issue, and Rule references are to the Tax Court Rules of Practice
and Procedure.
Respondent determined deficiencies in petitioners’ Federal
income taxes of $1,019 for 2004 and $2,011.30 for 2005.
The issue for decision is the location of Edward K. Glover’s
(petitioner’s) tax home with respect to certain unreimbursed
employee expenses for 2004 and 2005.1
This case was submitted on a stipulation of facts and a
supplemental stipulation of facts. The stipulated facts are so
found. The stipulation of facts, the supplemental stipulation of
facts, and the attached exhibits are incorporated herein by
reference. Petitioners resided in Missouri when the petition was
filed.
Background
During the years at issue petitioners resided in Jackson,
Missouri. Jeri L. Glover was employed by Southeast Missouri
Hospital Association in Cape Girardeau. Petitioner was employed
by Reinauer Transportation Cos., L.L.C. (Reinauer), which is
headquartered in Staten Island, New York, and maintains an office
1
Respondent determined that petitioners had unreported
interest income of $14 for 2005. Petitioners failed to address
the issue in either their pretrial memorandum or the stipulation
of facts and supplemental stipulation of facts. The Court
considers petitioners to have conceded the issue. See Bradley v.
Commissioner, 100 T.C. 367, 370 (1993); Sundstrand Corp. v.
Commissioner, 96 T.C. 226, 344 (1991); Rybak v. Commissioner, 91
T.C. 524, 566 n.19 (1988).
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in East Boston, Massachusetts. Petitioner was employed by
Reinauer as a merchant mariner aboard certain tugboats and barges
in 2004 and 2005. Reinauer is in the business of transporting
petroleum and chemical products by tug and barge along the
eastern seaboard of North America. Petitioner generally travels
to the New York City area to pick up tugboat and barge
combinations that are used to load and deliver petroleum or
chemical products, or both. Petitioner’s pay begins when his
vessel leaves the local dock. The collective bargaining
agreement (CBA) between Reinauer and the union to which
petitioner belonged for the years at issue states that Reinauer
will use its employees to perform work in the area of “The Port
of New York and vicinity” and “Any regular coastwise run having
as one of its terminal points a point in or north of Norfolk,
Virginia.”
In addition, the CBA provides for reimbursement of employee
travel expenses if: (a) The employee is required to go from one
vessel to another; (b) not more than once a month the employee is
given time off and must travel between his vessel and a common
carrier; or (c) not more than once a month the employee travels
round trip between his vessel and its home port or, if less
expensive, another city.
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In 2004 petitioner worked on the east coast of the United
States from Maine through Virginia, and in 2005 he worked on the
east coast from New Hampshire through Florida. Petitioner took
11 voyages in 2004 of which 9 originated in or around New York
City. He disembarked from those trips five times in the New York
City area. In 2005 petitioner voyaged 12 times, embarking from
the New York City area 9 times and disembarking there 9 times.
Petitioner paid various expenses to travel between his
residence and the terminals from which he boarded and disembarked
from the tugboats and barges on which he worked. Petitioner
paid: (a) Vehicle expenses of $1,999 for 2005; (b) miscellaneous
parking fees, tolls, and transportation expenses of $4,499 in
2004 and $1,482 in 2005; and (c) travel expenses while away from
home overnight of $2,786 for 20042 and $3,702 for 2005.
The parties stipulated various receipts as substantiation
for travel expenses and a summary table of the dates and
locations of petitioner’s voyages in the years at issue. In
addition to the summary stipulated by the parties, they
stipulated copies of petitioner’s “U.S. Sea Time Employee
Schedule” (employee schedule) that lists for petitioner the
vessel and date for each of his voyages in both years. The
2
Petitioners presented as substantiation a receipt from the
Baymont Inns and Suites in Lexington, Kentucky, for a stay from
June 28 to 29, 2004, but do not explain how it relates to
petitioner’s employment.
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parties also stipulated copies of port listings for each of the
vessels on which he served, showing the loading terminal, loading
date, unloading terminal, and unloading date for each vessel.
An examination of petitioner’s documentation raises some
questions that are not answered by other evidence in the record.
Petitioner presented receipts that show the purchase of a
Southwest Airlines ticket for a 5:10 p.m. flight from St. Louis,
Missouri, to Orlando, Florida, on September 27, 2005, and an
American Airlines ticket for a flight from St. Louis, Missouri,
to New York, New York, at 6:08 p.m. on the same date. The
conflicting receipts are unexplained, although other stipulated
evidence indicates that petitioner went to Orlando for a Port
Canaveral embarkation on September 28, 2005. Petitioner
presented an Airtran Airways receipt for a 8 p.m. flight from New
York to Newport News, Virginia, on June 29, 2004, while other
stipulated evidence indicates that he arrived in New York on that
date in preparation for an embarkation on June 30, 2004.
Petitioner provided copies of ticket stubs showing that on
October 13, 2004, at 4:45 p.m. he left Norfolk, Virginia, on
Southwest Airlines, flew to Baltimore-Washington International
Airport, then to Chicago-Midway Airport, and finally to St. Louis
International Airport. Petitioner also presented a copy of a
receipt for an American Airlines flight leaving New York at noon
and arriving in St. Louis at 1:47 p.m., on the same date, October
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13, 2004. The employee schedule shows vessel RTC 120’s having a
voyage beginning on October 6, 2004, and ending on October 12,
2004. The 2004 port listing shows vessel RTC 120 loading at a
terminal in New Jersey on October 7 and unloading in Connecticut
on October 9, 2004, loading in Virginia on October 13 and
unloading in Massachusetts on October 20, 2004. The summary
table indicates that petitioner disembarked in Manhattan on
October 13, 2004, and arrived in Jackson, Missouri, on October
14, 2004. The record does not explain why petitioner’s documents
show him leaving Virginia for St. Louis and leaving Manhattan for
St. Louis on October 13; the summary shows him disembarking in
Manhattan on the 13th, and the port listing shows his vessel
loading in Virginia on the 13th.
In any event, almost all of petitioner’s substantiated
flights were between St. Louis International Airport and La
Guardia Airport in New York City or Newark Liberty International
Airport.
Discussion
Burden of Proof
The Commissioner’s determinations are presumed correct, and
generally taxpayers bear the burden of proving otherwise. Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). In some
cases the burden of proof with respect to relevant factual issues
may shift to the Commissioner under section 7491(a). Petitioners
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argue that the provisions of section 7491 apply and that the
burden of proof is on respondent. Because petitioners have not
met all the requirements of section 7491(a)(2), the burden of
proof does not shift to respondent.
Tax deductions are a matter of legislative grace, and the
taxpayer bears the burden of proving entitlement to the
deductions claimed. Rule 142(a)(1); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
Section 162 Expenses
Section 162 generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. An expense is considered
ordinary if commonly or frequently incurred in the trade or
business of the taxpayer. Deputy v. du Pont, 308 U.S. 488, 495-
496 (1940). An expense is necessary if it is appropriate and
helpful in carrying on a taxpayer’s trade or business.
Commissioner v. Heininger, 320 U.S. 467, 471 (1943); Welch v.
Helvering, supra at 113. Services performed by an employee
constitute a trade or business for this purpose. O’Malley v.
Commissioner, 91 T.C. 352, 363-364 (1988).
Section 162(a)(2) allows a taxpayer to deduct traveling
expenses, including amounts expended for meals and lodging, if
such expenses are: (1) Ordinary and necessary, (2) incurred
while away from home, and (3) incurred in the pursuit of a trade
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or business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946).
“The exigencies of business rather than the personal conveniences
and necessities of the traveler must be the motivating factors.”
Id. at 474.
This Court has generally defined the word “home” (or tax
home) as used in section 162(a)(2) to mean the vicinity of a
taxpayer’s principal place of business. Mitchell v.
Commissioner, 74 T.C. 578, 581 (1980); Daly v. Commissioner, 72
T.C. 190 (1979), affd. 662 F.2d 253 (4th Cir. 1981); Kroll v.
Commissioner, 49 T.C. 557, 561-562 (1968). Under this
definition, commuting expenses are not deductible and are
considered personal expenses. Anderson v. Commissioner, 60 T.C.
834, 835 (1973); see sec. 262.
On the other hand, if a taxpayer accepts temporary
employment outside the vicinity of his principal place of
residence, his travel expenses are generally deductible because
it would be unreasonable for him to move his residence for
temporary employment. Ireland v. Commissioner, T.C. Memo. 1979-
386 (citing Tucker v. Commissioner, 55 T.C. 783, 786 (1971)).
If a taxpayer does not have a principal place of business,
his personal residence will be considered his tax home. Johnson
v. Commissioner, 115 T.C. 210, 221 (2000) (citing Rambo v.
Commissioner, 69 T.C. 920 (1978), Dean v. Commissioner, 54 T.C.
663 (1970), and Leach v. Commissioner, 12 T.C. 20 (1949)). A
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taxpayer must have a tax home from which to be away to be
entitled to a deduction under section 162(a)(2). Henderson v.
Commissioner, T.C. Memo. 1995-559, affd. 143 F.3d 497 (9th Cir.
1998). “Married couples that both work and file a joint tax
return may have separate tax homes.” Allen v. Commissioner, T.C.
Memo. 2009-102; see Hammond v. Commissioner, 20 T.C. 285, 287-288
(1953), affd. 213 F.2d 43 (5th Cir. 1954); Chwalow v.
Commissioner, T.C. Memo. 1971-185, affd. 470 F.2d 475, 478 (3d
Cir. 1972).
In order to decide what expenses petitioners are entitled to
deduct, the Court must first decide the location of petitioner’s
tax home. The “determination of a taxpayer’s tax home is a
question of fact to be decided on the entire record.” Nicholls
v. Commissioner, T.C. Memo. 1995-291 (citing Coombs v.
Commissioner, 608 F.2d 1269, 1274 (9th Cir. 1979), affg. in part
and revg. in part 67 T.C. 426 (1976)).
Petitioners argue that petitioner’s employment is in the
“transportation industry” and on that basis alone he is entitled
to treat his personal residence as his tax home. Petitioners
rely heavily on the cases of Johnson v. Commissioner, supra at
221, and Westling v. Commissioner, T.C. Memo. 2000-289. In
Johnson the taxpayer husband was a merchant seaman who lived in
Freeland, Washington, and was the captain of a vessel that sailed
worldwide. The primary office of the taxpayer husband’s employer
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was in Jacksonville, Florida. Johnson v. Commissioner, supra at
211. The taxpayer husband and his crew flew to and from whatever
port around the world in which the vessel was docked to begin and
end each work shift. Id. at 211-212. The Court found that the
taxpayer husband had no principal place of business and that his
personal residence was his tax home. Id. at 221. To support its
finding the Court noted that the taxpayer husband’s family did
not travel with him and that there was no reason to second guess
the taxpayer husband’s decision to maintain his principal
residence in Washington State instead of Florida or one of the
many cities to which he traveled. Id. at 222.
In Westling v. Commissioner, supra, the Court discussed not
the taxpayer’s tax home but whether he was entitled to use the
Federal per diem rates to determine his incidental expenses for
his employment as a merchant seaman. The primary office of the
taxpayer’s employer was in Juneau, Alaska, and the taxpayer
piloted a tugboat to various ports in and around southeast
Alaska. Id. The taxpayer also began and ended his shifts on the
tugboat at several different ports. Id. Although there was no
discussion of the taxpayer’s tax home, the Court found that the
taxpayer was entitled to deduct his incidental expenses using the
Federal per diem rate because the taxpayer’s meals and lodging
were supplied by his employer at no charge when he was working.
Id.
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Respondent takes the position that petitioner’s tax home was
in the vicinity of New York City and that he maintained his home
in Jackson for personal reasons. The Court agrees with
respondent.
Petitioner’s employment situation is factually different
from those of the taxpayers in Johnson and Westling. The primary
office of petitioner’s employer was in Staten Island, a borough
of New York City. Almost all of petitioner’s embarkations were
from the New York City area, and most of his disembarkations were
there, too. In addition, the CBA provided for reimbursement of
employee travel expenses if petitioner had to go from one vessel
to another, was given time off, or had to travel between his
vessel and its home port or, if less expensive, another city.3
Petitioner’s situation is more analogous to that of the
taxpayers in Swicegood v. Commissioner, T.C. Memo. 1989-467, and
in Dady v. Commissioner, T.C. Memo. 1981-440, affd. without
published opinion 696 F.2d 1006 (11th Cir. 1983). In Swicegood,
the taxpayer was a pilot for an international airline that was
headquartered in New York City. He maintained residences in
Hollywood, Florida, where his wife and daughter lived, and in
Freeport, Bahamas, which is 84 nautical miles from Hollywood.
3
Petitioners offered no evidence of the home ports of the
four vessels on which petitioner worked in the subject years, and
the Court infers from the record that the home port of the
vessels was in the New York City area.
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Many but not all of the taxpayer’s flights originated or
terminated in New York City. The taxpayer could have flown on
his own to the beginning or terminating airport of a particular
flight or he could have relied on his airline to provide
transportation between New York City and the other airport from
which he would depart. If he chose the latter, he would be
responsible for transportation between his home and New York
City. He argued, as petitioner does here, that he did not have a
regular place of employment and that therefore his residence was
his tax home. The Court pointed out that New York City was his
“base station” as well as being the headquarters of his employer.
His employer took responsibility to get him between New York City
and any other airport where his flight would begin or end. Upon
that basis and the taxpayer’s “significant work ties”, 16 of his
20 flights began and/or ended in New York City, the Court found
that his principal place of business was New York City.
In Dady, the taxpayer was a tugboat captain who resided in
Lauderhill, Florida. While the tugboat’s home port was in the
New York City area, the taxpayer might have reported to or been
relieved from duty at other East Coast locations or in Puerto
Rico. The taxpayer flew between his residence and the various
ports. His employer was required by union contract to pay only
half the expense of one round-trip ticket a month that he
“actually incurred” in travel originating in New York. The
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taxpayer offered no evidence of where he had boarded or
disembarked from the boat for a crew change or whether he had
boarded or disembarked more frequently in New York than somewhere
else. The Court held that the taxpayer had not shown that his
tax home was other than New York. Unlike the taxpayer’s
situation in Dady, the record here shows that almost all of
petitioner’s embarkations were from the New York City area and
most of his disembarkations were there as well.
On the basis of the stipulated facts and the inferences
reasonably to be drawn from them, the Court finds that
petitioner’s tax home in 2004 and 2005 was in the New York City
area. Petitioners are not entitled to deduct petitioner’s
unreimbursed employee expenses.
Conclusion
We have considered all of the parties’ arguments, and, to
the extent not addressed herein, we conclude that the arguments
are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.