TAX COURT OPINION

Case: Jeffrey L. Duke
Docket Number: 31106-12S
Judge: Marvel
Opinion Type: bench
Filed: 04/28/2014
Pages: 12

CMS UNITED STATES TAX COURT WASHINGTON, DC 20217 JEFFREY L. DUKE, Petitioner(s), v. ) ) ) ) ) Docket No. 31106-12S COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ORD ER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceedings in the above case before Judge L. Paige Marvel at St. Paul, Minnesota, on April 18, 2014, containing the Court's oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the Court's oral findings of fact and opinion, decision will be entered pursuant to Rule 155. (Signed) L. Paige Marvel Judge Dated: Washington, D.C. April 28, 2014 SERVED Apr 28 2014 Capital Reporting Company 3 1 Bench Opinion by Judge L. Paige Marvel 2 April 18, 2014 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jeffrey L. Duke v. Commissioner Docket No. 31106-12S THE COURT HAS DECIDED TO RENDER ORAL FINDINGS OF FACT AND OPINION IN THIS CASE AND THE FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF FACT AND OPINION. HE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986 as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986 as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code of 1986 as amended and in effect for the year in issue, and Rule 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 references are to the Tax Court Rules of Practice and Procedure. Jeffrey L4 Duke appeared pro se. Melissa J. Hedtke appeared ón behalf of the respondent. Respondent determined a deficiency of $4,350 in petitioner's Federal income tax for 2010. 7 After concessions, the issue for decision is whether 8 9 petitioner may deduct, under section 162, commuting and meal expenses rdlated to his employment with 10 Burlington Northern Santa Fe Railway (BNSF) in St. 11 12 13 14 15 16 17 18 Cloud, Minnesota during 2010. FINDINGS OF FACT Some of the facts have been stipulated. The stipulation of facts is incorporated herein by this reference. When he petitioned this Court, petitioner resided in Spicer, Minnesota. Between 1979 and 1990, petitioner was employed as a brakerñan/switchman with BNSF in 19 Willmar, Minnesota.. Willmar is approximately 11 20 miles from petitiondr's residence in Spicer. In 21 22 23 24 25 1990, petitioner began working as a yardmaster for BNSF in Willmar. He continued working in this position until BNSF eliminated all of its yardmaster positions. Petitioner's last day as a yardmaster was | November 29, 2009. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 BNSF fills open positions using a priority system in which current employees are given priority according to their seniority with the company. After BNSF eliminated the yardmaster positions, petitioner exercised his seniority with BNSF and accepted employment as a brakeman/switchman in St. Cloud, Minnesota. St. Cloud is approximately 54 miles from petitioner's residence in Spicer. 9 Petitioner accepted employment in St. Cloud because 10 there were no positions available with BNSF in 11 Willmar and he needed to work to support his family. 12 Petitioner's employment with BNSF in St. Cloud began 13 14 15 16 17 18 19 20 21 22 23 24 25 on January 1, 2010, and ended on November 12, 2010. At the time, a brakeman/switchman position opened in BNSF in Willmar, and petitioner exercised his seniority with BNSF and accepted the Willmar position. When petitioner took the brakeman/switchman position in St. Cloud, he reasonably expected that the position would be a temporary position until a position opened in Willmar became available. He had exercised his seniority rights in the past to move to a position he viewed as temporary until a more acceptable position opened up. Each time petitioner was able to exercise his seniority rights and move to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 a more acceptable pósition within months of taking the temporary position. Petitioner timely filed Form 1040, U.S. Individual Income Tax Return, for 2010. On his return, petitioner álaimed expense deductions on Schedule A, Itemized Deductions, of $12,820 for 7 mileage commuting to his employment in St. Cloud, and 8 9 10 11 12 13 14 15 16 17 18 $3,886 for meals while working overtime (more than 8 hours per day) in St. Cloud. Respondent disallowed these deductions in dfull. Respondent contends that petitioner's expenses related to his employment in St. Cloud were nondeductible personal expenses. DISCUSSION Genera.lly, a taxpayer is entitled to deduct ordinary and necessary expenses paid or incurred in carrying on a trade;or business. See sec. 162(a); --- ß66 LP > Am. Stores Co. v. Commissioner, 114 T.C. 458 (2000) . A An expense is ordinary if it is customary or usual 19 within the particulár trade, business, or industry or i 20 21 22 23 24 if it related to a tiransaction "of common or frequent occurrence in the type of business involved." Deputy v. du Pont, 308 U.S. 488, 495 (1940). An expense is necessary if it is áppropriate and helpful i for the development of the business. See Commissioner v. 25 Heininger, 320 U.S. 467, 471 (1943). Personal, 866.488.DEPO www.CapitalReportingCompany.com 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 Capital Reporting Company 7 living, or family expenses generally are not deductible. See sec. 262(a). Commuting Expenses Generally) expenses incurred by a taxpayer commuting between his home and his place of business are personal and nondeductible. See, e.g., Curphey v. Commissioner, 73 T.C. 766, 777 (1980) . There are at least two exceptions to this general rule. See Rehman v. Commissioner, T.C. Memo. 2013-71. One exception, the so-c lled home-office exception, requires that a taxpayer's residence be his or her principal place of business. See Strohmaier v. Commissioner, 113 T C. 106, 113-114 (1999) . It allows a deduction for commuting expenses incurred between the taxpayer's principal place of business (his or her residence) and another place of business. There is no evidence in the record that petitioner's residence was his principal place of business and petitioner does not so contend. The second exception, the so-called temporary-distant-worksite 1 exception, applies to commuting expenses incurred traveling outside the metropolitan area of the taxpayer' s residence. See Schuret . Commissioner, 3 T.C. 544, 547 (1944); Bogue v. Commissioner, T.C. Memo. 2011-164. Petitioner contends his employment 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 at BNSF in St. Cloud was temporary and that he falls the temporary-distant-worksite exception to the A general rule. The determination of whether employment is temporary or indefinite is a question of fact. Peurifoy v. Commissioner, 358 U.S. 59, 61 (1958) . he fact finder mus objectively determine the length A of employment the taxpayer should have foreseen in the new location." Ellwein v. United States, 778 F.2d 506, 510 (8" Cïr. 1985). The employment must be temporary in contemplation at the time of its acceptance and not I indeterminate in fact as it develops. McCallist er v. Commissioner, 70 T.C. 505, 509 (1978) . A taxpayer may meet his burden of proving his employment was temporary, see Rule 142 (a) , by showing that there was a reasonable expectation that his employment would terminate within a short period. See Albert v. Commihsioner, 13 T.C. 129, 131 (1949); I Broome v. Commissioner, T. C. Memo. 1985-321. 21 Conversely, the taxpayer will not carry his burden if 22 23 24 25 the evidence indicates that his employment was I indefinite, that is, its termination could not have been foreseen withid a fixed or reasonably short period of time. See Stricker v. Commissioner, 54 ! 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 T.C. 355, 361 (1970), aff'd, 438 F.2d 1216 (6 Cir. 1971). Finally, the taxpayer must also show that the commuting expenses in question were incurred travelling to a temporary worksite unusually distant from the area where he or she lives and normally 6 works. See Bogue v. Commissioner, T.C. Memo. 2011- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 164 (citing Ellwein v. United States, 778 F.2d 506, 511 ( 8° Cir. 1985) ) . Petitioner testified that he expected his employment at BNSF in St. Cloud to be temporary. He accepted employment in St. Cloud only after his position in Willmar was eliminated and he could not find similar employment in Willmar. See, for example, Saunders v. Commissioner, T.C. Memo. 1977- 427 (finding a taxpayer's employment was temporary in part because he maintained strong economic and social ties to his residenäe community, accepted a position outside his residence community only after local employment was not available, and did not intend to work outside his re idence community ore than a temporary period). Petitioner further testified that he believed when accepting employment in St. Cloud that his seniority with BNSF would permit him to take a position with BNSF in Willmar within a relatively short period. Indeed, under BNSF's seniority system, I 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 petitioner could exercise his seniority to take the first available position in Willmar befo.re any employee with a junior seniority status. Further, throughout his employment in St. Cloud, petitioner 5 maintained ties with the local union in Willmar and 6 consistently monitored BNSF's job postings in 7 Willmar. 8 In less than one year from the date 9 petitioner took the position in St. Cloud and 10 consistent with petitioner's expectation, a position 11 with BNSF in Willmar became available and petitioner 12 13 14 15 accepted that position. We conclude that at the time petitioner accepted his employment in St. Cloud, he had a reasonable expectation that his employment in St. Cloud would be temporary. Petitioner's seniority 16 with BNSF and his e perience with similar situations 17 18 19 20 21 in other years made i oreseeable that he would obtain employment in Willmar within a short period. Because St. Cloud is approximately 54 miles from petitioner's residence in Spicer, we further conclude that St. Cloud is outside of the 22 metropolitan area of petitioner's residence as 23 required by the temporary-distant-worksite exception. 24 Accordingly, petitioner is entitled to deduct his 25 commuting expenses under section 162(a) from his 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company residence in Spicer to his temporary employment in 11 St. Cloud. Traveling Expenses Traveling expenses are treated differently from commuting expenses. gome traveling expenses, including amounts e pended for meals and lodging, may be deducted if they are incurred while the taxpayer is away from home in the pursuit of a trade or business. Sec. 162(a)(2). To deduct a travel expense, the taxpayer must show that (1) he or she was away from home when he or she incurred the expense, (2) the expense is reasonable and necessary, and (3) the expense was incurred in pursuit of a trade or business. Strohmaier v. Commissioner, 113 T.C. at 115. Under the rule of United States v. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Correll, 389 U.S. 299 302-303 (1967), a taxpayer is 17 18 19 20 21 22 23 24 25 "away from home" within the meaning of section 162(a)(2) when he o she is on a trip that requires stopping for sleep or a substantial period of rest. This Court has held that as a general rule the term "home" for purposes of section 162 means the vicinity of a taxpayer's principal place of employment rather t an the location of his personal res,idence. See Daly v. Commissioner, 72 T.C. 190, 195 (1979), aff'd, 662 F.2d 253(4th C 98 ) Where 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 a taxpayer's principal place of employment is other than his residence and he chooses not to move his residence for personal I reasons, the taxpayer's additional living and traveling expenses are a result of a personal choice and are not ordinary and necessary business expenses. Tucker v. Commissioner, 55 T.C. 783, 786 (1971). However, if a taxpayer's principal place of employment at a distant location I is temporary, he may claim his personal residence as his tax home for purposes of section 162. See Peurifoy v. Commissioner, 358 U.S. at 60; Broome v. Commissioner, T.C. 1985-321. We have already held that petitioner's employment with BNSF in St. Cloud was temporary and not indefinite and thus petitioner may claim his residence as his ta home for purposes ection 162. However, petitioner has not met his burden or showing that his trïps to St. Cloud required an overnight stay or a substantial period of rest. 20 United States v. Correll, 389 U.S. at 302-303. 21 22 23 24 25 Although the recordj does contain evidence that petitioner sometimes worked for more than 8 hours per I day, there is no credible evidence that petitioner was required to rest for any period of time because of the extended work day or to stay overnight in St. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 2 3 4 Cloud. Without such evidence we cannot conclude that petitioner is entitled to claim a deduction for meal expenses during 2010. Accordingly, we sustain respondent's determination with respect to 5 petitioner's claimed deduction for meal expenses under section 162. To reflect the parties' concessions and the foregoing, decision will be entered pursuant to Rule 155. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 9:46 a.m., the above- entitled matter was concluded.) 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