TAX COURT OPINION

Case: Shiekh B. Iqbal & Amla J. Iqbal
Docket Number: 4198-15
Judge: Kerrigan
Opinion Type: bench
Filed: 02/09/2016
Pages: 8

RS UNITED STATES TAX COURT WASHINGTON, DC 20217 SHIEKH B. IQBAL & AMLA J. IQBAL, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. ) ) ) ) 4198-15. ORD E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Kathleen Kerrigan at San Diego, California on January 11, 2016, containing her oral findings of fact and opinion rendered at the conclusion of the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Kathleen Kerrigan Judge Dated: Washington, D.C. February 9, 2016 SERVEDFeb 112016 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Bench Opinion by Judge Kathleen Kerrigan January 13, 2016 Shiekh B. Iqbal and Amla J. Iqbal v. Commissioner Docket No. 4198-15 The Court has decided to render in this case the following as its oral Findings of Fact and Opinion in this case which shall not be relied upon in any other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code, and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, 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. By notice of deficiency dated January 23, 2015, the Internal Revenue Service determined a deficiency in the Federal income tax of petitioners for the year .19 2012. The issue for consideration is whether 20 21 22 23 24 25 petitioners are entitled to claim any of the disallowed unreimbursed employee expenses for tax year 2012. Trial of this case was conducted on January 11, 201 , in San Diego, California. The petitioners represented themselves, and Moncia I. Cendejas 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 represented respondent. The parties Stipulation of Facts was admitted in evidence along the attached exhibits. We find the following facts: Findings Petitioners resided in California when the petition was filed. From January 2000 to May 2012, petitioner wife worked for United Airlines (United) as an assistant 9 manager in Oakland, California. From 2000 to March 10 11 12 13 14 15 2010, petitioners lived in Union City, California. Around March 2010 petitioners purchased a house in Rancho Cucamonga, California in order to be closer to their children. After the purchase of the house in Rancho Cucamonga petitioners lived in a rented apartment in San Leandro, California during the week 16 until September 2011. They went to Rancho Cucamonga 17 18 on the weekends. In early 2011, petitioner wife requested that 19 United transfer her from its Oakland office to its 20 Ontario, California office. She believed there would 21 22 be an opening in that office. She planned to work in the Oakland office until there was an opening. 23 United did not guarantee the transfer would occur and 24 25 it did not provide a time frame for a transfer. In December 2011, United informed petitioner 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 wife that her transfer request was denied and that 2 the Oakland office was closing in May of 2012. 3 United offered petitioner wife the choice of working 4 in the San Francisco office, retiring early, or 5 working in the Oakland office until it closed. 6 Petitioner chose to continue working in the Oakland 7 8 9 10 11 12 13 14 15 16 17 18 office while commuting from Rancho Cucamonga. During 2012 petitioner husband retired and lived in Rancho Cucamonga. From approximately October 2011 through June 2012, petitioner wife would stay in hotels such as the Red Lion Hotel in the Oakland area during the week. She would spend weekends in Rancho Cucamonga. For tax year 2012 petitioners deducted $15,705 of unreimbursed employee expenses on their Schedule A, Itemized deductions. Petitioners calculated the $15,705 using the per diem rate multiplied by the number of nights petitioner wife stayed in a hotel. 19 Petitioners do not have a reimbursement policy from 20 United. 21 22 Opinion Gross income includes all income from 23 whatever source derived. Sec. 61(a). Deductions are 24 25 a matter of legislative grace, and taxpayers bear the burden of proving that they have met all requirements 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 necessary to be entitled to the claimed deductions. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Section 162(a) allows a deduction for ordinary and necessary business expenses paid or incurred in carrying on a trade or business. A trade or business includes the trade or business of being an employee. 8 O'Malley v. Commissioner, 91 T.C. 352, 363-364 9 (1988). 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I. Tax Home A taxpayer may deduct reasonable and necessary travel expenses such as those for vehicles, meals, and lodging incurred while away from home in pursuit of a trade or business. See secs. 162(a)(2), 262. A taxpayer must show that he or she was away from home when he or she incurred the expense, that the expense is reasonable and necessary, and that the expense was incurred in pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465, 470 (1946). The word "home" for purposes of section 162(a) (2) has a special meaning. It generally refers to the area of a taxpayer's principal place of employment, not the taxpayer's personal residence. Daly v. Commissioner, 72 T.C. 190, 195 (1979), aff'd 662 F.2d 253 (4th Cir. 1981). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 All the facts and circumstances are considered in determining whether a taxpayer has a tax home. See Rev. Rul. 73-529, 1973-2 C.B. 37 (describing objective factors the Commissioner considers in determining whether a taxpayer has a tax home). The taxpayer must generally have some business justification to maintain the first residence, beyond purely personal reasons, to be entitled to deduct expenses incurred while temporarily away from that home. Hantzis v. Commissioner, 638 F.2d 248, 255 (1st Cir.1981) rev'g T.C. Memo. 1979-299. Where a taxpayer has no business connections with the primary residence, there is no compelling reason to maintain that residence and incur substantial, continuous, and duplicative expenses elsewhere. See Henderson v. Commissioner, 143 F.3d 497, 500 (9th Cir. 1998), 17 aff'g T.C. Memo.1995-559. In that situation, the 18 19 20 21 22 23 24 expenses incurred while temporarily away from that residence are not deductible. See Wasisk v. Commissioner, T.C. Memo. 2007-148. Petitioners did not have any business justification to maintain the Rancho Cucamonga residence. Although petitioners hoped that petitioner wife would be able to get a transfer to 25 Ontario so that she would work near her residence, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 she did not have any guarantees or even a timeline from United that this would occur. Petitioner wife's tax home was in Oakland, where she worked. II. Temporary Employment There is an exception to the general rule that a taxpayer's tax home is his or her principal place of employment. Peurifoy v. Commissioner, 358 U.S. 59, 60 (1958). The taxpayer's tax home may be the taxpayer's personal residence if the taxpayer's employment away from home is temporary. Id. The exception does not apply and the taxpayer's tax home remains the principal place of employment if the employment away from home is indefinite. Kroll v. Commissioner, 49 T.C. 557, 562 (1968). A taxpayer 15 will not be treated as being temporarily away from 16 17 18 19 20 21 22 home during any period of employment exceeding one year. Sec. 162(a). Petitioner wife had worked at the United office in Oakland for more than 11 years. Although petitioner wife knew that the Oakland office would be closing in May 2012, she could not claim that her employment at that office was temporary. Petitioner 23 wife's employment in Oakland was not temporary. 24 25 A decision will be entered for respondent. This concludes the Court's oral findings of Eact 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 and Opinion in this case. (Whereupon, at 8:55 a.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com