Court Opinion

ID: 4479557
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:44.934759+00
Date Added: 2024-06-11T14:53:58.078563
License: Public Domain

Opper, J., concurring: To keep the record straight, the rule that payment of the moving expenses of a “new employee” is neither excludable from income nor deductible by the employee is at least as old as 2 B.T.A.1 Regardless of earlier errors, John E. Cavanagh, 36 T.C. 300 (1961), we have now again held that a payment by an employer in connection with a change in the location of an employee’s home is compensatory in natnre. Harris W. Bradley, 39 T.C. 652 (1963). Whether the Commissioner of Internal Revenue was correct in his conclusion that payments to “old employees” are not income, see Old Colony Tr. Co. v. Commissioner, 279 U.S. 716 (1929); Commissioner v. LoBue, 351 U.S. 243 (1956), or even in discriminating automatically in favor of “old employees,” see Fulton Freeman, Memorandum Opinion of this Court, dated March 31,1952, is not now before us. Be that as it may, although the benefit to the “old employee” may be no less than that to the “new,” that is not the issue. The issue presented, whether framed as an exclusion or a deduction,2 is the old familiar but still apparently difficult one of distinguishing between personal and business expenses. See, e.g., Commissioner v. Flowers, 326 U.S. 465 (1946). If the employee is forced to change the location of his home for the convenience of his employer as an alternative to being dismissed, the situation may lose the aspect of personal expense and come under the familiar rule exemplified by such situations as the cost of education to retain an existing job as contrasted with obtaining a new one,3 or the cost of room or meals where an employer and not the employee insists upon the employee’s location.4 Cf. William I. Olkjer, 32 T.C. 464 (1959), with. Herman Martin, 44 B.T.A. 185 (1941). But here, As a matter of law, these payments are no different than had [the employer] given the taxpayers, cash to pay outstanding obligations, or for the payment of living expenses for a specified period after their arrival * * *. The form of payment, to constitute income, is immaterial. The statute explicitly declares that gross income shall include compensation for personal services of whatever kind and in whatever form it is paid. * * * These payments come within the statutory description of gross income. * * * * * * * While it may appear to be equitable that expenses incurred in seeking and obtaining employment, or in traveling to the place of employment, should be treated as though they had been incurred in the performance of one’s duty as an employee, it has, nevertheless, been long recognized that deductions are matters of legislative grace, allowable only when there is a clear provision for them, and' do not turn upon equitable considerations. * * * What should be allowed as an expense deduction is a matter of policy for Congress, not the Courts. United States v. Woodall, 255 F. 2d 370, 372-373 (C.A. 10, 1958), certiorari denied 358 U.S. 824. And see especially sec. 119, I.R.C. 1954, and footnote 2, supra. The result reached seems to me inescapable. Tietjens, PieRce, and Mttlkoney, JJ., agree with this concurring opinion.   In Appeal of Baxter D. McClain, 2 B.T.A. 726 (1925), we said (at p. 726) : “Sternhagen : The petition contains an argument that since the contract of employment provides for the payment by the employer of the moving expenses, they are therefore business expenses. It may be that the payment made by the employer is a business expense so far as he is concerned, but the mere fact that the taxpayer receives this amount under the contract does not determine the character of the expenditure made by the taxpayer. * * * The taxpayer changed the place of residence of himself and his family to another city, for the purpose of entering upon new employment in that city. As compensation under the contract of employment, he received, in addition to salary, the amount of the moving expenses. The expenditure when made by him, we think, was purely a personal and family expense, and we can see no basis in reason for finding that they were incurred in carrying on a trade or business, or in pursuit of a trade or business of either the taxpayer or his employer.” (Emphasis added.) See also Walter Schmidt, 11 B.T.A. 1199 (1928) ; George B. Lester, 19 B.T.A. 549 (1930).    “* * * Under existing law, payments or reimbursements to a new employee of moving or relocation expenses come within the statutory description of gross income, and the expenses incurred by a new employee in moving his family and household goods are not expenditures for which deductions may be taken in computing income taxes. * * *” S. Rept. No. 1393, to accompany H.R. 10087 (Pub. L. 86-780), 86th Cong., 2d Sess., p. 17 (1960). (Emphasis added.) In addition, see sec. 116(k), I.R.C. 1939, as added by sec. 1051 of Pub. L. 724, 79th Cong., 2d Sess. (1946), and see also H. Rept. No. 2508, to accompany H.R. 6967, Reorganization of the Foreign Service, Committee on Foreign Affairs, 79th Cong., 2d Sess., p. 151 (1946).    Cf. Robert S. Green, 28 T.C. 1154 (1957), with Sandt v. Commissioner, 303 F. 2d 111 (C.A. 3, 1962), affirming a Memorandum Opinion of this Court.    “To bring the tax treatment of subsistence allowances for police officials in line with the treatment * * * of other taxpayers, your committee’s bill * » * repeals t * » this * * * exclusion.” (Emphasis added.) S. Rept. No. 1983, to accompany H.R. 8381, Technical Amendments Act of 1958, 85th Cong., 2d Sess., p. 14 (1958), repealing sec. 120, I.R.C. 1954.