MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Chief*305 Judge: This case was assigned to and heard by Special Trial Judge Randolph F. Caldwell, Jr., pursuant to Rules 180 and 182, Tax Court Rules of Practice and Procedure. The parties have filed no exceptions of law or fact to Special Trial Judge Caldwell's report. The Court agrees with and adopts his opinion which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
CALDWELL, Special Trial Judge: This case is one of a group of 37 which were consolidated for trial but not for opinion. At the trial evidence was received which bears upon every case in the group. Such evidence relates to certain contractual arrangements between the husband- petitioners' employers, Lockheed Air Service Company (hereinafter, "Lockheed") and Dynalectron Corporation (hereinafter, "Dynalectron"), and the United States Air Force, as well as the employment arrangements between field team members (such as the husband-petitioners) and such employers.
Respondent determined a deficiency in petitioners' 1969 Federal income taxes in the amount of $656.45. There is but a single issue for decision: whether all or any portion of the per diem payments received by petitioner John Baldwin (hereinafter, "petitioner") *306 from Dynalectron in 1969 is includible in his gross income for that year under section 61(a)(1) of the Internal Revenue Code of 1954; 2 and, if so, whether petitioner is entitled to deduct an amount equal to any part or all of the includible per diem as away-from-home traveling expenses under section 162(a)(2). Respondent's partial disallowance of petitioner's claimed medical expense deduction was predicated solely upon his increase in petitioner's adjusted gross income consequent upon the inclusion of the per diem payments. Therefore the propriety of respondent's partial disallowance is dependent on the travel expense/per diem issue.
FINDINGS OF FACT
Petitioners, husband and wife, filed their 1969 Federal income tax return with the Internal Revenue Service Center at Chamblee, Georgia. Their residence at the time the petition was filed in this case was Knoxville, Tennessee.
During 1969, petitioner was employed as a member of field teams by Dynalectron. That corporation, as well as Lockheed, had a contract with the United States Air Force during 1969 to provide*307 field team services for the maintenance and modification of weapons systems (i.e., aircraft) and/or support equipment.
These contracts were called "basic contracts" and the Air Force entered into such a contract with each of three different contractors. The contracts were for three years maximum duration, and those involved here were for the three fiscal years, July 1, 1967-June 30, 1968; July 1, 1968-June 30, 1969; July 1, 1969-June 30, 1970. The contract was firm for the first of the three years; but the Air Force had the unilateral right to extend the contract for the second and third years of the three-year period. The contracts were so extended by the Air Force insofar as both Lockheed and Dynalectron were concerned. (The record herein does not identify the third contractor who had the basic contract.)
The basic contract did not, of itself, award any work to be performed thereunder. It did specify the wage rates which would be paid for services rendered by employees of the contractor, if the contractor got work to be performed under the contract. The contract also contained the following provisions relating to the payment of per diem:
(ii) Per Diem, not to exceed the applicable*308 amounts set out below, when actually paid by the Contractor and approved by the Administrative Contracting Officer, shall be reimbursed to the Contractor, without regard to the duration of the assignment; provided, however, that no per diem shall be authorized or paid to any employee whose actual residence is within 50 miles of the work station to which the employee is assigned, nor shall any per diem be paid to any employee who actually resides at and commutes from his actual residence during the period of his employment, regardless of the distance between said residence and his assigned work station: (See (ii)(e) below).
(a) In the CONUS (No quarters and messing facilities furnished by the Government)-- $11.00-Per day per man for Engineer and Leadman and $9.00-Per day per man for the remainder.
* * * * *
(e) For the purpose of this contract the term "actual residence" is defined as the fixed or permanent domicile of an employee. The employee shall certify to the location of his fixed or permanent domicile and this location, if accepted by the Contractor, shall be deemed, for the purpose of this contract, to be the employee's domicile in so far as per diem authorization against*309 this contract is concerned. However, this does not relieve the Contractor of his responsibility to ascertain that the certification is valid.
The opportunity for the contractor to perform under the basic contract arose from the issuance by the Air Force of a work order thereunder. Issuance of a work order was entirely within the discretion of the Air Force, and it alone had the discretion to select which one of the three holders of a basic contract that was to perform the work order. Performance under a work order might be at any place in the United States or at any place overseas where the Air Force maintained a base. Under the terms of the basic contract, work orders could only be issued during a given year of a basic contract. However, completion of a work order actually issued during such year might be effected after the end of the year.
When the Air Force had determined to issue a work order and had notified a contractor of its selection to perform that order, representatives of the Air Force and of the contractor would get together at a "pre-dock" meeting where the time for completion of the contract and the make-up of the contractor's projected field team complement would*310 be worked out. Determination of the time of performance entailed fixing an input-output schedule -- the schedule which showed the number of units coming into the contractor for its maintenance and modification services per day or week or month, and the number of units to be completed by the contractor per day or week or month.
After the projected field team complement had been worked out, the contractor would then proceed to get the team together. In assembling the team, the contractor would utilize two sources of manpower: (1) existing employees which it transferred from jobs under other work orders; and (2) new employees which it recruited.
Whenever a contractor hired a new employee for field team work, that employee was advised that he was subject to being sent anywhere that the contractor might be called upon to perform a work order, and that if the employee was unwilling to travel where thus directed to go, his only alternative was to resign. The employee was also advised that the contractor only had a basic contract for a year and that it had no way of knowing whether or when it would receive work orders under that contract. It was also made clear to the employee that, while*311 the contractor would endeavor to continue to utilize the services of the employee after completion of the work order in connection with which he was hired, it could not guarantee any such further employment; and if none were available, the employee would be laid off. Neither Lockheed nor Dynalectron maintained any pool or central area where an employee who had completed an assignment could be sent pending the contractor getting another work order on which such employee could be used.
Both Lockheed and Dynalectron were involved in the performance of work orders at Key Field in Meridian, Mississippi, during the years involved. 3Lockheed had first come to Meridian in 1965 and it remained there until June 30, 1969, at which time (although it did not lose its status as holder of one of the three basic contracts) it was supplanted by Dynalectron. During the fiscal year ended June 30, 1969, Lockheed received two work orders to be performed at Meridian; and during the succeeding fiscal year, Dynalectron likewise received two work orders. While in most instances, the contractor's field teams were sent to the location where the aircraft were located, in the case of the work orders performed*312 at Meridian, the aircraft were brought by the Air Force to that work site from other locations.
During the performance of a work order, the Air Force always had an on-site representative, monitoring the performance of the contractor. One of the areas of concern was to determine whether the field team was over strength or under strength, as well as the quality of work of the field team members. Instances occurred when the composition of the field team was changed as the result of the recommendation of the Air Force's on-site representative. For this reason, as well as for the reason that the composition of the field team varied according to the nearness in point of time to the beginning or the end of the performance under the work order, the projected field team complement as worked out at the pre-dock meeting might vary as much as 10 to 20 percent during the performance of the contract.
When an employee was hired, or rehired, by a contractor,*313 he was required to certify to the contractor his "permanent or domicile" address (in the case of lockheed) or his "fixed or permanent domicile" (in the case of Dynalectron). If the address so certified was further than 50 miles from the job site where the employee was to work and if the employee did not drive back and forth to work, irrespective of the address which he had furnished, he was paid the per diem mentioned and described above. The per diem payments made by the contractors were included in their invoices to the Air Force, solely for the purpose of being reimbursed. There was no element of profit to the contractors in the per diem for which they sought reimbursement.
Per diem paid to the field team employees who qualified therefor was at the rate of $11 per day for a leadman and an engineer, and $9 per day for the other members of the field teams. Per diem was paid for seven days per week, although the regular work week for field team members was a 5-day, 40-hour week. Field team members also received per diem during their initial travel to a work site, for days of travel when transferred to different work sites, and for a maximum of three days for return to their homes, *314 in the event they were laid off. They did not receive per diem during vacation periods; but they did receive per diem for three days up to a maximum of six days if they were sick.
Neither Lockheed nor Dynalectron withheld Federal income tax from the per diem payments made to their employees.
Petitioner was rehired by Dynalectron on March 16, 1964, and was assigned to Point Mugu Naval Air Station in California where he remained until November 23, 1965. He was then transferred to McGuire Air Force Base in New Jersey where he remained for approximately six months. He was then transferred in 1966 to Detroit, Michigan, where he remained until July 30, 1968, when he was sent back to McGuire. Thereafter, on August 5, 1969, petitioner was transferred to Key Field at Meridian, Mississippi, where he continued to be assigned until October 30, 1970, on which latter date he was assigned back to McGuire.
When petitioner was assigned to Meridian, it was for the purpose of working on a crash damaged R.F. 8H aircraft. On his arrival, he was told that the crash damage program would end on June 30, 1970. Delays in starting the crash damage repair program, as well as the Air Force's decision to*315 enlarge and extend the program to November 30, 1970, coupled with the Air Force's desire to take advantage of petitioner's skills in the program, all resulted in his move out of Meridian being delayed until October of 1970.
Petitioner was born and raised in Knoxville, the town which he advised Dynalectron was his actual residence (fixed or permanent domicile). Petitioner and his wife have owned a residence there since 1941. Mrs. Baldwin and their widowed daughter resided in the Knoxville residence while petitioner was away on his assignments. Petitioner returned to Knoxville during his vacations and when the distance from his work site assignment to Knoxville was not too great, on long weekends.
Petitioner received per diem payments of $3,105 from Dynalectron during 1969, none of which was included in his gross income for that year. In his statutory notice of deficiency, respondent determined that petitioner had received $3,150 of per diem payments, all of which was includible in his gross income under section 61.
OPINION
It must first be determined whether the per diem payments received by petitioner from Dynalectron in 1969 are includible in his gross income for that year. *316 It is believed that they are.
In very broad language, section 61(a)(1) provides that "gross income means all income from whatever source derived." The Supreme Court has construed this "broad phraseology" to evince a Congressional intention "to tax all gains except those specifically exempted." Commissioner v. Glenshaw Glass Co.,348 U.S. 426, 430. The per diem payments were "undeniable accessions to wealth, clearly realized and over which the [petitioner had] complete dominion," ( Commissioner v. Glenshaw Glass Co.,supra, p. 431); and the Code contains no provision exempting per diem payments from taxation. Manifestly, then, the respondent was correct in including in petitioner's gross income for 1969, the per diem payments which he received from Dynalectron in that year. Leo C. Cockrell,38 T.C. 470, 477-478; affd. (C.A. 8) 321 F.2d 504; Darrell Spear Courtney,32 T.C. 334, 341. 4 However, the amount of such per diem payments was $3,105, rather than $3,150 as determined by respondent.
The question remains whether petitioner*317 is entitled to deduct under section 162(a)(2) an amount equal to any part or all of the per diem payments included in his income, as expenses of travel while away from home in pursuit of his trade or business as an employee of Dynalectron, Leo C. Cockrell,supra, p. 479. In the Cockrell case, it was pointed out that the Supreme Court, in Commissioner v. Flowers,326 U.S. 465, rehearing denied 326 U.S. 812, had laid down three requirements that a taxpayer must meet to be entitled to deduct away-from-home expenses: The expenses must be (1) reasonable and necessary traveling expenses,
(2) incurred by the taxpayer while away from home, and
(3) incurred in pursuit of business. In the present case, the parties differ only on the point of whether petitioner was away from home.
In the case of Truman C. Tucker,55 T.C. 783, 786, the factors to be considered in determining whether a taxpayer should be treated as away from home for tax purposes were crystallized. It was there said:
The purpose of allowing the deduction of living expenses while a taxpayer is "away from home" is "to mitigate the burden of the taxpayer*318 who, because of the exigencies of his trade or business, must maintain two places of abode and thereby incur additional and duplicate living expenses." Ronald D. Kroll,49 T.C. 557, 562 (1968). In furtherance of this purpose, when a taxpayer with a principal place of employment goes elsewhere to take work which is merely temporary, he may deduct the living expenses incurred at the temporary post of duty, because it would not be reasonable to expect him to move his residence under such circumstances. Emil J. Michaels,53 T.C. 269 (1969); Ronald D. Kroll,supra.For this purpose, temporary employment is the type which can be expected to last for only a short period of time. Beatrice H. Albert,13 T.C. 129, 131 (1949).
On the other hand, if a taxpayer chooses for personal reasons to maintain a family residence far from his principal place of employment, then his additional traveling and living expenses are incurred as a result of that personal choice, and are therefore not deductible. Commissioner v. Flowers, supra; Ronald D. Kroll, supra at 561-562; Floyd Garlock,34 T.C. 611, 614 (1960);*319 Mort L. Bixler,5 B.T.A. 1181, 1184 (1927). Similarly, if a taxpayer accepts indefinite employment outside the vicinity in which he lives, but he does not change his family residence, the travel to his new place of employment and the aditional living costs which he incurs there result, not from his employment, but from his decision not to move his residence. Rendell Owens,50 T.C. 577 (1968); Maurice M. Wills,48 T.C. 308 (1967), affd. 411 F.2d 537 (C.A. 9, 1969). Thus, the deductibility of traveling expenses and duplicate living expenses depends upon the ultimate question of whether the taxpayer, under all the circumstances, could reasonably have been expected to move his residence to the vicinity of his employment.
There is no question in this case that petitioner did maintain two places of abode during 1969 and did incur duplicate and additional living expenses. Respondent does not contend otherwise. He does contend, however, that petitioner's 1969 assignments to McGuire Air Force Base in New Jersey and Key Field at Meridian were indefinite, as opposed to temporary. It is not believed that respondent's contention*320 is meritorious.
Bearing in mind the contractual arrangements between Dynalectron and the Air Force, the employment arrangements between petitioner and Dynalectron especially those surrounding the Key Field assignment, and his employment history which was one of moving around from one place to another on assignments of relatively short periods -- all as described in the Findings of Fact -- the conclusion should be that the two disputed 1969 assignments were only temporary and not indefinite. It is not believed that petitioner should have been required to uproot his family from the long-time family residence in Knoxville, and bring them to either New Jersey or Mississippi.
Petitioner should be allowed a deduction of $3,105, an amount equal to the per diem payments includible in his gross income for 1969, as away-from-home traveling expenses under section 162(a)(2). A decision of no deficiency for 1969 should be entered.
* * * * *
In accordance with the foregoing,
Decision will be entered for petitioners.
Footnotes
1. DeQuincy V. Sutton was counsel of record for petitioners at the time of trial. Mr. Sutton died in August 1974, shortly after the last brief was filed. There is presently no counsel of record for petitioners.↩
2. All section references are to the Internal Revenue Code of 1954, unless otherwise specified.↩
3. The petitioner-husband in the present case, as well as all the other husband-petitioners, worked at Key Field in Meridian. It is this work at Meridian that is the common element that prompted the consolidation of the cases for trial.↩
4. See also Fred W. Phillips,T.C. Memo. 1973-58↩.