Bell v. United States

per curiam:

This case comes before the court on review of the trial judge’s recommended opinion and findings of fact. This is an income tax refund suit in which plaintiff1 claims that he was improperly denied deductions for traveling expenses under 26 U.S.C. § 162(a)(2). The trial judge found that plaintiff was not entitled to recover because the expenses had not been incurred while away from home nor in pursuit of a trade or business.2 After careful consideration of oral argument, the briefs and other papers before us, we conclude that the trial judge’s result was correct and affirm it solely on the basis that the claimed expenses were not incurred while away from home.3

Plaintiff, during the tax years in question, 1968 and 1971, was employed by the United States Information Agency (USIA) as a foreign service information officer. Both in 1968 and in 1971 plaintiff was ordered to take "home leave” by the USIA pursuant to 22 U.S.C. § 1148(a). Home leave is a leave of absence from regular duties which must be taken in the United States, its territories or possessions. It is earned by employees according to several factors, the most important of which is the length of time they have spent in continuous service outside the United States.

In 1968 plaintiff was stationed in Tehran, Iran. Prior to taking home leave, plaintiff was advised that his position was being abolished and that he would be transferred after completion of home leave to a new post in Dacca, Pakistan. Plaintiff and his family moved out of their residence there. Their household effects and personal effects were packed for shipment to. Dacca, plaintiffs next duty station, and they sold their car. Throughout the period during which taxpayer took home leave in 1968, the Bells’ household effects and much of their personal effects were stored in a warehouse in Tehran. These goods were later transferred *155to Dacca after plaintiff commenced his assignment there. Throughout the periods during which taxpayer took home leave in 1971, the Bells’ household goods, automobile and most of their personal effects remained at their duty station in Dacca. Thereafter, they were transferred to Washington, D. C., plaintiffs next duty post after he completed home leave. Plaintiff abandoned his abode when departing on home leave. The Bells did not maintain a residence in Tehran or Dacca during the period of plaintiffs home leave in 1968 and 1971, respectively, and had no continuing living costs whatever associated with either location. For ministerial purposes, át all times while plaintiff was on home leave in 1968 and 1971, his fitness reports, personnel file and pay records were retained at his old duty posts. These records remained at his old duty posts and plaintiff was retained on the payroll of his old duty posts at all times until he was reassigned and until he actually reported to his new duty posts.

During his home leave, plaintiff and his family traveled around the United States primarily for their personal pleasure. He personally incurred expenses for travel, meals and lodging which he seeks to deduct4 from his gross income as a business expense under section 162(a)(2) of the Internal Revenue Code.5

In Commissioner v. Flowers, 326 U.S. 465 (1946), the Supreme Court set forth three conditions which had to be satisfied before a travel expense deduction would be allowed under the 1939 Internal Revenue Code.6 The conditions were as follows:

(1) The expense must be a reasonable and necessary traveling expense, as that term is generally understood. *156This includes such items as transportation fares and food and lodging expenses incurred while traveling.
(2) The expense must be incurred "while away from home.”
(3) The expense must be incurred in pursuit of business. This means that there must be a direct connection between the expenditure and the carrying on of the trade or business of the taxpayer or of his employer. Moreover, such an expenditure must be necessary or appropriate to the development and pursuit of the business or trade.

Commissioner v. Flowers, supra, 326 U.S. at 470. It is the second condition which concerns us here.

The parties disagree as to the proper place for fixing a taxpayer’s "tax home” for the purposes of the deduction. Plaintiff alleges that a taxpayer’s tax home is the locality of his principal place of business, citing, among other cases, Commissioner v. Stidger, 386 U.S. 287 (1967); Ney v. United States, 171 F.2d 449 (8th Cir.1948); and Henson v. United States, 338 F.Supp. 599 (S.D. Tex. 1971). Defendant, on the other hand, claims that a taxpayer’s tax home, under the unique facts of this case, is his personal residence, citing, among others, Brandl v. Commissioner, 513 F.2d 697 (6th Cir. 1975); Rosenspan v. United States, 438 F.2d 905 (2d Cir.), cert. denied, 404 U.S. 864 (1971); Scotten v. Commissioner, 391 F.2d 274 (5th Cir. 1968); and James v. United States, 308 F.2d 204 (9th Cir. 1962).

The Supreme Court in Flowers deliberately declined the opportunity to decide between these differing definitions of a taxpayer’s home. Commissioner v. Flowers, supra, 326 U.S. at 472. When faced with the problem of whether the taxpayer’s tax home was at his residence or at his place of business, it examined instead the business necessity, under the third condition, for the taxpayer’s expenditures to, from, and at his employer’s principal place of business and found it wanting. In Stidger, the Supreme Court did resolve the conflict between a military serviceman’s actual residence and his place of business (duty post) in favor of his duty post. The Court, however, resolved this issue on the unique facts applicable to military taxpayers and found it unnecessary to accept this choice "in all of its myriad applications.” Commissioner v. Stidger, supra, 386 U.S. at 292.

*157As remarked by the Court in Flowers, "[w]hether particular expenditures fulfill these three conditions so as to entitle a taxpayer to a deduction is purely a question of fact in most instances.” Commissioner v. Flowers, supra, 326 U.S. at 470. We believe that much of the problem in differing definitions is the result of attempting to conceptualize the reasons for decisions which are based on widely varying factual situations. However, we think that there is one important factual predicate upon which the existence of the controversy hinges. The Tax Court, in Kroll v. Commissioner, 49 T.C. 557, 561-62 (1968), has stated as follows:

This Court has long and consistently held that "home” as used in section 162 means the vicinity of the taxpayer’s principal place of employment and not where his personal residence is located, if such residence is located in a different place from his principal place of employment.

Thus, the conflict depends on the presence of differing situs and the perceived necessity for making a choice of the taxpayer’s home between them. Where two competing sites do not exist, however, there is no reason for abandoning the commonsense meaning of the word home as a person’s residence or abode. See Rosenspan v. United States, supra. The trial judge found that plaintiff did not have a residence or abode or any living expense in Tehran in 1968 or in Dacca in 1971 during the periods of home leave, and had no place of residence in the United States. The trial judge’s findings of fact are presumed correct and we see no basis for disturbing these. See Rule 147(b).

Brian Bell’s spouse, Sue R. Bell, is also a plaintiff in this case on account of having filed a joint federal income tax return. Hereinafter, we will refer only to Brian Bell as plaintiff.

We find that it is unnecessary to reach the question of whether the expenses were incurred in pursuit of a trade or business.

For this opinion, we have drawn liberally from the trial judge’s well-reasoned report, which the parties have received and which we find unnecessary to reproduce here, although we adopt his findings and conclusions to the extent addressed herein.

Plaintiff only claims deductions for his own expenses and not for those of his family. Plaintiff had some brief duty assignments while in the United States for which he received per diem and travel expenses.

26 U.S.C. § 162(a) provides:

"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, including—
"(2) traveling expenses * * * while away from home in the pursuit of a trade or business; and

Int. Rev. Code of 1939, ch. 1, § 23(a)(1)(A), 56 Stat. 819 (now I.R.C. § 162(a)(2)) is the same as section 162(a)(2) in all relevant aspects.