TAX COURT OPINION

Case: Marc A. Henig
Docket Number: 9243-10S
Judge: Colvin
Opinion Type: bench
Filed: 02/24/2011
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 MARC A. HENIG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) Docket No. 9243-10S. O R D 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 the pages of the to Petitioner and to respondent a copy of transcript of the trial in the above case before Special Trial Judge John F. Dean at San Francisco, California, on February 1, 2011, containing his oral fact and opinion rendered at the conclusion of findings of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) John F. Dean Special Trial Judge Dated: Washington, D.C. February 24, 2011 SERVED FEB 28 2011 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 Bench Opinion by Special Trial Judge John F. Dean February 1, 2011 Marc A. Henig v. Commissioner Docket No. 9243-10S 3 THE COURT: The Court has decided to render oral I findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. In this bench opinion, all section numbers refer to the Internal Revenue Code in effect for the taxable year at issue, and all rule references are to the Tax Court Rules of Practice & Procedure. This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time the petition was filed. The decision to be entered is not reviewable by any other Court and this opinion should not be cited as authority. The issue for decision is whether Petitioner is entitled to deduct unreimbursed employee business expenses of $23,991 for 2007. The stipulated facts and exhibits are incorporated herein by reference. Petitioner resided in California at the time the petition in this case was filed. Petitioner, a union member of the Ironworkers local, lived in Sacramento, California, in 2006 and 2007. In December of 2006 he accepted a union Heritage Reporting Corporation (202) 628-4888 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 4 assignment to work at the Lawrence Livermore National Laboratory in Livermore, California. Petitioner commuted about 190 miles round trip between Sacramento and Livermore from December 2006 throughout 2007 and through the time the petition in this case was filed. Petitioner's job required that he use certain tools, some of which he carried on a tool belt and others of which he left in his vehicle. On his federal income tax return, Petitioner deducted unreimbursed employee business expenses of $23,991, using the standard mileage rate. In general, the Commissioner's determination set forth in a notice of deficiency is presumed correct and the taxpayer bears the burden of showing that the determination is in error. Rule 142(a); Welch v. Helvering, 290 US 111, 115 (1933). Pursuant to section 7491(a), the burden of proof as to factual matters shifts to the Commissioner under certain circumstances. Because Petitioner's not alleged or shown that the requirements of section 7491(a) have been met, the burden of proof does not shift to Respondent. Petitioner argues that his employment was temporary, not permanent or indefinite. His employment was not directly with the employer but was through the union, he further argues, and his employment could have been Heritage Reporting Corporation (202) 628-4888 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 5 terminated at any time, although he admitted that that was unlikely. In general, a taxpayer may deduct ordinary and necessary expenses paid or incurred in connection with the operation of a trade or business. Section 162(a); Boyd v. Commissioner, 122 TC 305, 313 (2004). However, section 262 disallows any deduction for personal, living, or family expenses, including meals and travel expenses. Normally, transportation expenses incurred as a result of travel between one's residence and one's principal place of business (a jobsite) are referred to as commuting expenses and are non-deductible personal expenses under section 262. Fausner v. Commissioner, 413 US 838 (1973); Commissioner v. Flowers, 326 US 465 (1946). Under an exception to this rule, a taxpayer may deduct transportation expenses associated with employment away from the taxpayer's home that is temporary, as opposed to indefinite in duration. Section 162(a) (2); Peurifoy v. Commissioner, 358 US 59 (1958). The exception does not apply if the employment away from home is indefinite. Kroll v. Commissioner, 49 TC 557, 562 (1968). Unless termination of the employment is foreseeable within a short period of time, employment that merely lacks permanence, is considered indefinite, not Heritage Reporting Corporation (202) 628-4888 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 6 temporary. See Neal v. Commissioner, 681 F.2d 1157, 1159 (9th Cir. 1982) (following Kasun v. United States, 671 F.2d 1059, 1061 (7th Cir. 1982)) affg. per curiam TC Memo 1981- 407. In 1992 Congress amended section 162(a) for costs paid or incurred after December 31st, 1992, to provide that the taxpayer shall not be treated as being temporarily away from home during any period of employment if such period exceeds one year. Energy Policy Act of 1992, Publ. L. 102- 486, section 1938(a), 106 Stat. 3033. Work that starts as temporary can later become indefinite, in which case the location of the taxpayer's work location becomes his or her home for tax purposes. Chimento v. Commissioner, 52 TC 1067, 1073 (1969) affd. 438 F.2d 643 (3rd Cir. 1971); Johnson v. Commissioner, TC Memo 1999-153. The taxpayer will not be treated as being temporarily away from home during any period of work if such period lasts more than one year. Section 162(a). Although Petitioner's employment initially lacked permanence, it became indefinite as of December 2007. At the time Petitioner filed his 2007 tax return in April 2008, he had been working in Livermore for 15 months. The Court concludes that the tools that Petitioner used in the conduct of his employment were the 'incidentals Heritage Reporting Corporation (202) 628-4888 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 7 of his occupation', and his commuting expenses would have been incurred regardless of whether or not he had to carry his tools. See Fausner v. Commissioner, 413 US 27 (1971); McCabe v. Commissioner, 76 TC 876 (1981); McLaughlin v. Commissioner, TC Memo 1982-636. Respondent's determination that Petitioner is not entitled to deduct his employee business expenses for transportation from his home to his place of work is sustained. Decision will be entered for Respondent. This concludes the Court's oral findings of fact and opinion in this case. Court will be in recess for as long as it takes. THE CLERK: All rise. (Whereupon, at 10:12 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // Heritage Reporting Corporation (202) 628-4888