Case Name: S. M. R. O'Hara, Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Tax Court
Jurisdiction: United States
Decision Date: 1946-04-29
Citations: 6 T.C. 841
Docket Number: Docket No. 4326
Parties: S. M. R. O’Hara, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: Smith, ArNOld, DisNey, and Harron, JJ., agree with-the above.
Reporter: Reports of the Tax Court of the United States
Volume: 6
Pages: 841–851

Head Matter:
S. M. R. O’Hara, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 4326.
Promulgated April 29, 1946.
Fred L. Rosenbloom, Esq., for the petitioner.
Karl W. Windhorst, Esq., for the respondent.

Opinion:
OPINION.
ARUNdell, Judge:
The sole issue here is whether the expenditures in question were paid as "traveling expenses while away from home in the pursuit of a trade or business," deduction for which is provided in section 23 (a) (1), Internal Revenue Code, or whether the expenditures are to be regarded as personal, living, or family expenses, deduction of which is expressly prohibited by section 24 (a) (1), Internal Revenue Code.
Throughout the taxable years petitioner served as Secretary of the Commonwealth of Pennsylvania, a cabinet position, to which she was appointed by Governor Arthur H. James in 1939, at an annual salary of $10,000. Under the laws of Pennsylvania the central office of each administrative department and each independent administrative board and commission is required to be maintained at Harrisburg, and all administrative offices of the state government are required to be open for the transaction of public business at least eight hours each day except Saturdays, Sundays, and legal holidays. The petitioner was administrative head of one of the departments and it is clear that while she enjoyed that position the demands of her office were paramount to the claims of any other business upon her time and talent. Moreover, the circumstances were such that she could properly discharge her duties only by residing at or within commuting distance of Harrisburg during her tenure of office. Hence, it appears that she was free to devote to the conduct of her law practice in Wilkes-Barre only her "leisure time" during the course of her regular employment, and the record discloses that she went to Wilkes-Barre, for the most part, only on week ends, spending Saturday and Sunday there, and that she returned to Harrisburg Monday mornings. In these circumstances we think it must be said that Harrisburg was her principal place of business or post of employment.
The petitioner argues that she had two places of business. She contends that she maintained her home at Wilkes-Barre, that she had conducted a law practice there since 1913, and that she retained her business and social connections in that city. It is argued that her position as a cabinet member was a temporary one, the enjoyment of which was at the pleasure of the Governor alone, with the result that she is entitled to a deduction for the household expenses in Harrisburg. We are unable to agree with that conclusion. The law practice may well have been a trade or business carried on by her at Wilkes-Barre. However, her employment by the State of Pennsylvania was her mainstay or principal activity during the taxable years and, even though her term of office was at the pleasure of the Governor, that source of livelihood is not relegated to a position of secondary importance.
It seems to us that the petitioner's main interest in Wilkes-Barre during, the taxable years was to continue old contacts and cultivate new ones for future use in the event she should decide to return to that city to actively pursue her profession. It is not to be doubted that the petitioner did devote some time to the pursuit of her practice in the taxable years, but it does seem doubtful to us that a person of petitioner's talent and standing can be said to be in active pursuit of her profession when she devotes only Saturdays and Sundays to it and when the return therefrom is only approximately $1,800 in one year and $250 in another. Nor does it seem likely that an accrual basis of accounting in connection with her law business would reflect it as being an important source of livelihood to her in the/taxable years. At the time of the hearing petitioner had devoted átaout 70 percent of her time for six years to her cabinet duties in Harrisburg, and she had actually lived there five days out of each week during that period. It is probable that the word "temporary" is not descriptive of a period of time which embraces six years of an individual's productive business life. See Barnhill v. Commissioner, 148 Fed. (2d) 913.
We have long held that section 23 (a) (1), supra, may not be availed of to secure a deduction from gross income for "traveling expenses" paid or incurred by a taxpayer while at his principal place of business, post of duty, or principal place of employment. Mort L. Bixler, 5 B. T. A. 1181; Barnhill v. Commissioner, supra; George W. Lindsay, 34 B. T. A. 840; Jennie A. Peters, 19 B. T. A. 901; William Lee Tracy, 39 B. T. A. 578. The rationale of those decisions is none the less applicable in instances, such as here present, where it may be said that the taxpayer has two places of business. Walter M. Priddy, 43 B. T. A. 18. In that case the taxpayer derived compensation from a corporation located at the place of his residence and, at the same time, also received compensation from another concern located some distance away, in behalf of which a substantial part of his time and efforts were expended. We held that the taxpayer was not entitled to deduct traveling and living expenses paid or incurred at the headquarters of the latter corporation, for the reason that it was his principal post of duty or place of business. In Walter F. Brown, 13 B. T. A. 832; Joseph W. Powell, 34 B. T. A. 655 (affirmed on another point); and Charles G. Gustafson, 3 T. C. 998, we allowed deduction for traveling and living expenses where the taxpayer had his principal place of business and home in the same city but was obliged to be away from home in pursuit of his principal business or in pursuit of some minor business activity.
Moreover, we think it may not be said that the household expenses incurred by the petitioner at Harrisburg were in furtherance of or added anything to her law business in Wilkes-Barre. Nor can it be said that such expenditures were made in furtherance of or in pursuit of the business of her employer, the State of Pennsylvania. Hence, the expenditures in question do not appear to meet the test of having been incurred in pursuit of a trade or business. Cf. Flowers v. Commissioner, 326 U. S. 465. The Congress intended that a taxpayer should have deduction only for those expenses occasioned by the exigencies of a trade or business and it had no intention of opening the door to the deduction of expenditures which are inherently only the normal personal or living expenses of the taxpayer.
The petitioner relies upon Coburn v. Commissioner, 138 Fed. (2d) 763, and Wallace v. Commissioner, 144 Fed. (2d) 407. The Coburn case, supra, is distinguishable. The court found as a fact that Coburn's home and his principal place of business were in New York City and that he was only temporarily away from there in pursuit of his business as an actor. The Wallace case, supra, adopted a definition of "home" contrary to the established view of this court and to that extent it is contrary to the views expressed herein.
The petitioner claimed to have spent $30 in 1940 and $21 in 1941 for bridge tolls. These amounts are in addition to the household expenses above considered. The bridge tolls are not explained. In the circumstances, petitioner is not entitled to deduct them.
Keviewed by the Court.
Decision will be entered for the respondent.
SBC. 23. deductions FROM GROSS INCOME.
In computing net income there shall be allowed as deductions :
(a) Expenses.—
(1) Trape or Business Expenses.—
(A) In General. — All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for persona] services actually rendered : traveling expenses (including the entire amount expended for meals and lodging) while away from home it) the pursuit of a trade or business .
SEC. 24. ITEMS NOT DEDUCTIBLE.
(a) Generar Rule. — In computing net income no deduction shall in any case bo allowed in respect of—
(1) Personal, living, or family expenses;
Purdon's Pennsylvania Statutes Ann., Title 71, § 80.
Purdon's Pennsylvania Statutes, Ann., Title 71, § 81.