Davis v. Commissioner

OPINION.

Fat, Judge:

The first question is whether the $2,016.19 expended by petitioner for the European trip in 1956 is deductible as an ordinary and necessary expense incurred in the pursuit of his trade or business under the provisions of section 162 of the Internal Revenue Code of 1954. The pertinent provisions of this section are set forth in the margin.1

Petitioner’s principal argument in support of the deduction is that research and writing are a part of being a professor at a liberal arts college and that his trip and work in England were a natural outgrowth of this occupation. In addition, petitioner contends that the research and writing undertaken by him were necessary for the preservation and maintenance of his status as a professor at Pomona College. Petitioner does not contend that he is in the business of research or writing.

The question is one of fact and the burden is on the petitioner to show that the expense was both ordinary and necessary in the carrying on of his business as a professor. Commissioner v. Heininger, 320 U.S. 467 (1943); Richard Seibold, 31 T.C. 1017 (1959).

Our consideration and study of the facts in the record before us lead us to the conclusion that the first issue in this case should be governed by Manoel Cardozo, 17 T.C. 3 (1951). In the Cardozo case the taxpayer was an assistant professor of history and Romance languages at The Catholic University of America. During the summer months of 1947 he, at his own expense and for the purpose of research and study, made a trip to Europe. The taxpayer was not required by the authorities of the university, by the rules and regulations of the university, or by his contract of employment to make the trip. The taxpayer testified that the purpose of his trip was to increase his prestige, improve his reputation for scholarship and learning, and to better fit him to perform the duties for which he was employed. Under such circumstances, we held that the expenses of the trip were personal in nature and were not incurred to maintain the taxpayer’s present position.

Similarly, we do not think that the petitioner here has satisfactorily established that engaging in research and writing was necessary to the continuance of his employment at Pomona College. The record discloses that petitioner as a full professor with permanent tenure was no longer subject to periodic reviews of his contract and unless he created some extremely difficult situation, he would remain a member of the faculty until he reached retirement age. In addition, petitioner admitted that he was not required by Pomona College to undertake his research project ajid that he was unaware of any faculty member at Pomona College who had ever been dropped for failure to do academic research.

It is urged, however, that a professor even after achieving permanent tenure was expected by Pomona College to continue his research and writing. This expectation was considered to be manifested by such things as the president’s request prior to the preparation of his annual report for a report by the faculty with regard to the research and writing they had done during the year, the aid which the college gave for attendance at professional meetings where research problems were discussed and research papers were read, and, lastly, the interest of one’s colleagues in his work. We believe such matters indicate nothing more than that the college expressed an interest in and, to a degree, encouraged the research and writing activities of its faculty.

It is also worthy of note that the petitioner during his tenure as a full professor between 1944 and 1959 produced only one article for publication, a fact which further tends to vitiate the petitioner’s argument that the college required its professors to be engaged in continuous writing activity. '

The cases of Brooks v. Commissioner, 274 P. 2d 96 (C.A. 9, 1960), reversing Matilda M. Brooks, 30 T.C. 1087 (1958) ; Alexander Silverman, 6 B.T.A. 1328 (1927); and HUI v. Commissioner, 181 F. 2d 906 (C.A. 4, 1950), reversing Nora Payne Hill, 13 T.C. 291 (1949), cited by the petitioner are distinguishable. In each of these cases the Court was able to find as a fact that the action of the petitioner giving rise to the expense was required or expected by his employer.

The record here does not warrant such a finding. The petitioner’s research and writing activities were voluntary on his part and were undertaken for the purpose of study and to increase his prestige as a scholar. Expenditures made to acquire reputation and learning are not ordinary and necessary business expenses. Manoel Cardozo, supra; Welch v. Helvering, 290 U.S. 111 (1933). Our finding regarding the purpose of petitioner’s trip makes it unnecessary to consider whether the cost of the trip is deductible as an education expense. Accordingly, we hold that the respondent’s disallowance of the claimed deduction was proper.

The remaining issue concerns whether the petitioner is entitled to deductions in 1956 and 1957 for depreciation and expenses relating to a study maintained by him at his residence. Respondent disallowed the deductions on the ground that the study was merely for petitioner’s personal convenience. The office facilities available to petitioner at Pomona College during 1956 and 1957 consisted of a cubicle in a campus office building and, upon request, a cubicle in the new library building. Petitioner admitted that he was not required by Pomona College to do work at home and that the study was used, in part, in connection with his research project. When questioned about the facilities afforded him by Pomona College, petitioner stated that they were “not quite adequate in my own department at that particular time.” (Emphasis added.)

We believe under such circumstances the petitioner has failed to establish that the expenses of maintaining his study were ordinary and necessary business expenses. It follows that petitioner is not entitled to deductions for depreciation or expenses relating to the maintenance of the study. Eespondent is sustained on this issue as well.

Eeviewed by the Court.

Decision will loe entered for the respondent.

FisheR, /., dissents. Scott, dissents as to Issue 1 only.

SEC. 102. TRADE OR BUSTNESS EXPENSES.

(a) In Gbnhbal. — There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year In carrying on any trade or business, » * *