1 All section references are to the Internal Revenue Code in

effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

T.C. Memo. 1998-358

UNITED STATES TAX COURT

TRAVIS AND JAYNE SANDERSON, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8698-97. Filed October 5, 1998.

Travis and Jayne Sanderson, pro sese.

Franklin R. Hise, for respondent.

MEMORANDUM OPINION

GOLDBERG, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A and Rules 180, 181, and 182.1

Respondent determined a deficiency in petitioners' Federal
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income tax for 1994 in the amount of $2,280 and an accuracyrelated penalty of $456 under section 6662(a). 

The issues for decision are: (1) Whether petitioners are

entitled to deduct unreimbursed employee expenses under section

162 in the net amount of $15,123 for the 1994 tax year; (2)

whether petitioners overpaid their 1994 Federal income taxes; and

(3) whether petitioners are liable for an accuracy-related

penalty under section 6662(a) for the 1994 tax year.

Petitioners in their trial memorandum have also requested an

award of litigation costs. Such a request is premature. Rules

230-233.

The exhibits received into evidence are incorporated herein

by this reference. At the time the petition was filed,

petitioners resided in Austin, Texas. References to petitioner

are to Travis Sanderson. References to petitioner wife are to

Jayne Sanderson.

Background

Petitioner has an engineering degree from the University of

Texas at Arlington. At the time the petition was filed,

petitioner was working as an engineer for Dell Computers in

Austin, Texas. Petitioner wife is a certified public accountant

and has previously worked for the Internal Revenue Service as a

revenue agent in the Dallas/Fort Worth area. 

In 1994, petitioner quit his job as a manufacturing test

engineer at Nokia Mobil Phones (Nokia) in Fort Worth, Texas. At
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that time, petitioner and his family lived in Arlington, Texas. 

Petitioner had worked at Nokia for about a year and a half and

quit because Nokia wanted to transfer him to Finland. 

Petitioner was then hired by Motorola in Seguin, Texas. 

Petitioner signed an employment agreement with Motorola on August

3, 1994. The agreement characterized petitioner as an at-will

employee, listed his yearly salary, and contained procedures by

which Motorola would pay petitioner's moving and relocation

costs. Petitioner began working as a test engineer with Motorola

on August 22, 1994.

Motorola agreed to pay closing costs and appraisal fees

associated with the purchase of a home in the Seguin area.

Motorola also agreed to reimburse petitioner for temporary

apartment and utility expenses for up to 3 months or until a

permanent residence was established, whichever occurred first. 

Petitioner agreed to reimburse Motorola for these expenses if he

voluntarily terminated employment within 12 months of his

starting date. Motorola reported petitioner's salary on a Form

W-2. 

During the time petitioner worked for Motorola, he lived in

a small furnished apartment in New Braunfels, Texas. Petitioner

continued to interview with engineering companies in other parts

of Texas. Petitioner wanted more job security and a healthier

work environment at a geographic location where there were more

trees and less flat landscape.
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Petitioner wife and petitioners' two children continued to

live in Arlington while petitioner lived in New Braunfels. 

Petitioner wife did not want to live in New Braunfels. She

thought petitioner's apartment was too small and her sleep was

disturbed by nightly train traffic. Furthermore, because

petitioners' sons were attending high school in Arlington,

petitioners wished to remain in Arlington until their sons

graduated.

In early 1995, petitioner gave Motorola oral notice that he

would be leaving. Petitioner had secured a job at Dell Computers

in Austin, Texas, and decided to leave Motorola after he

completed his current project. Petitioner left Motorola on

February 10, 1995.

Petitioner moved to Austin, Texas, to work for Dell

Computers in February of 1995. Petitioner's family did not

initially move with petitioner to Austin because petitioner wife

was working in Arlington and petitioners' sons were still in high

school. Petitioner wife moved to Austin in April 1995 shortly

before petitioners' youngest son graduated from high school. 

Petitioners' youngest son lived with a friend in Arlington for 2

months until his high school graduation. 

On their 1994 Federal income tax return, petitioners claimed

unreimbursed employee expenses in the amount of $16,150, less the

2-percent AGI floor of $1,027, or $15,123. Petitioners reported
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unreimbursed employee expenses for the 1994 tax year on Form 2106

in the following amounts:

Expenses Amount

Vehicle expenses $4,048

Meal and entertainment expenses 6,422

Travel and lodging expenses 5,680

 Total 16,150

Respondent determined that petitioners were not entitled to

deduct unreimbursed employee expenses in the amount of $15,123 as

traveling expenses incurred while away from home because

petitioner's employment with Motorola was for an indefinite term,

and, therefore, respondent disallowed the amount. Petitioners

contend that petitioner's home was in Arlington, Texas, and that

petitioner incurred deductible unreimbursed employee expenses

while petitioner was temporarily working for Motorola in Seguin,

Texas. 

Discussion

1. Unreimbursed Employee Expense Deductions

Deductions are a matter of legislative grace. New Colonial

Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers bear

the burden of proving that they are entitled to the deductions

they claim. Welch v. Helvering, 290 U.S. 111, 115 (1933).

Section 162(a) allows a taxpayer to deduct all ordinary and

necessary business expenses paid or incurred during the taxable

year in carrying on any trade or business. No deduction is

allowed for personal, living, or family expenses. Sec. 262. 
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Taxpayers may deduct traveling expenses incurred while away

from home. Sec. 162(a)(2). Traveling expenses include amounts

spent for meals and lodging while away from home. Sec.

162(a)(2). A taxpayer may deduct traveling expenses under

section 162(a)(2) if they satisfy the following three conditions: 

(1) The expenses must be reasonable and necessary; (2) they must

be incurred while away from home; and (3) they must be incurred

in the pursuit of a trade or business. Commissioner v. Flowers,

326 U.S. 465, 479 (1946). 

Petitioners contend that petitioner's traveling expenses

were incurred in the pursuit of a trade or business while away

from petitioner's home in Arlington and are therefore deductible

as unreimbursed employee expenses within the meaning of section

162(a)(2). 

However, "home" as used in section 162(a)(2) is generally

considered by this Court to mean the vicinity of a taxpayer's

principal place of employment rather than the location of his

personal or family residence. Mitchell v. Commissioner, 74 T.C.

578, 581 (1980); Daly v. Commissioner, 72 T.C. 190, 195 (1979),

affd. 662 F.2d 253 (4th Cir. 1981). Where a taxpayer's principal

place of employment is other than his residence and he chooses

not to move his residence for personal reasons, the taxpayer's

additional living and traveling expenses are a result of that

personal choice and are not ordinary and necessary business

expenses. Tucker v. Commissioner, 55 T.C. 783, 786 (1971).
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2 Petitioners, as an alternative argument, contend that

petitioner was an independent contractor for Motorola. As near

as we can understand it, petitioners' contention seems to be that

Motorola hired petitioner as an independent contractor for one

discrete work project, and petitioner's job was therefore

temporary in nature, and that as an independent contractor,

petitioner's income should have been reported on Schedule C and

he would have been entitled to deduct his unreimbursed travel

There is an exception to the general rule. A taxpayer may

claim his family residence as his home in situations where the

taxpayer is away from home on a temporary, rather than an

indefinite basis. Peurifoy v. Commissioner, 358 U.S. 59, 60

(1958). Petitioner contends that his home for section 162(a)(2)

purposes was his Arlington family residence and that he was

temporarily away from his home while working in Seguin, Texas. 

Petitioners contend that petitioner's employment at Motorola

was temporary rather than indefinite because petitioner always

intended to pursue career opportunities in other locations. 

Additionally, petitioners contend that Motorola hired petitioner

for a single work project and that petitioner had no intent, and

no option, to remain with Motorola after the completion of that

work project. 

Petitioners’ contentions are not supported by the evidence.

Petitioner's employment agreement with Motorola does not

reference a particular work project nor a specific time limit for

petitioner's employment. Petitioner signed an employment

agreement which created an open-ended, at-will employer/employee

relationship with Motorola for an indefinite period of time.2
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expenses on Schedule C. We find that petitioner was not hired by

Motorola for one discrete work project. Petitioner would be

unable to deduct the travel expenses in question because he has

not shown that he was away from home in either event.

Employment is defined as "temporary" only if the taxpayer

can foresee its termination within a reasonably short period of

time or it is for a fixed duration. Boone v. United States, 482

F.2d 417, 419 (5th Cir. 1973). Whether a taxpayer's job is

temporary or indefinite is determined by the facts and

circumstances. Peurifoy v. Commissioner, supra at 61. 

Petitioner wife contends that the subjective intent of

petitioner to stop working for Motorola after he completed his

first project is enough to comply with section 162(a)(2) and

classify petitioner's Motorola job as "temporary". We disagree. 

This Court has held that a taxpayer's subjective intent as

to the length of time he may wish to remain in an indefinite

position is not controlling but that the ultimate question is

whether the decision not to move his family residence while he

works somewhere else is attributable to personal choice rather

than to exigencies of his trade or business. Tucker v.

Commissioner, supra at 786; Hendry v. Commissioner, T.C. Memo.

1981-740.

Further, we have said that when a taxpayer had no business

ties to the area of his previously established family residence,

and when the prospects for employment in his chosen profession

are better away from the area of that residence than in it, then
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we may regard his decision to keep his family there as motivated

by personal reasons unrelated to his trade or business. This is

so even though his job in another place lasts for less than a

year. Tucker v. Commissioner, supra at 787.

Based on the facts of this case, petitioner's reliance on

Rev. Rul. 93-86, 1993-2 C.B. 71, is misplaced. Revenue rulings

do not have the force of law, and courts are not bound by them. 

Foil v. Commissioner, 920 F.2d 1196, 1201 (5th Cir. 1990), affg.

per curiam 92 T.C. 376 (1989); Estate of Leach v. Commissioner,

82 T.C. 952, 961 (1984), affd. without published opinion 782 F.2d

179 (11th Cir. 1986). In any event, we believe that the revenue

ruling cited by petitioners is factually distinguishable and that

petitioners' position is not supported by case law. 

The nature of petitioner's position with Motorola was such

that he could reasonably have been expected to move his residence

were it not for the personal considerations that kept his family

in Arlington. Petitioner's employment agreement with Motorola

contained express language concerning Motorola's reimbursement

obligations for petitioner's moving, storage, and temporary

housing costs. The agreement expressly provided for Motorola to

pay petitioner's closing and appraisal costs for a house in

Seguin, Texas. 

On the basis of the record, it is clear that petitioners

chose not to move their residence in Arlington for personal

reasons. We find that petitioner's employment with Motorola was
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not temporary and hold that petitioners cannot deduct

unreimbursed employee expenses for the 1994 tax year. Respondent

is sustained on this issue.

2. Overpayment

Petitioners claim an overpayment for the 1994 tax year of

$20. On the basis of the record and our findings that

petitioners were not entitled to deduct unreimbursed employee

expenses for the 1994 tax year, we hold that petitioners are not

entitled to an overpayment for the 1994 tax year.

3. Accuracy-Related Penalty

Section 6662(a) imposes an accuracy-related penalty equal to

20 percent of the portion of any underpayment of tax that is due

to negligence or disregard of rules or regulations. Under

section 6662(c), negligence is any failure to make a reasonable

attempt to comply with the provisions of the Code and the term

"disregard" includes any careless, reckless, or intentional

disregard. Negligence includes the failure to exercise the due

care of a reasonable and ordinarily prudent person under the

circumstances. Allen v. Commissioner, 925 F.2d 348, 353 (9th

Cir. 1991), affg. 92 T.C. 1 (1989); Neely v. Commissioner, 85

T.C. 934, 947 (1985). 

Petitioners' interpretation of a "home" as used in section

162(a)(2) was not reasonable. Petitioner wife is a certified

public accountant and had previously worked for the Internal

Revenue Service as a revenue agent but disregarded established
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case law in contending that petitioner's employment with Motorola

was temporary. On the basis of the record, we hold that

petitioners did not comply with the requirements of section

162(a)(2) and are therefore liable for the accuracy-related

penalty on the underpayment for the 1994 tax year. 

To reflect the foregoing,

Decision will be entered

for respondent.