Court Opinion

ID: 9467130
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:39:19.284865+00
Date Added: 2024-06-11T17:40:10.625656
License: Public Domain

SPROUSE, Circuit Judge,
dissenting:
I respectfully dissent.
Under the Internal Revenue Code, § 162(a)(2), deductions are permitted for traveling expenses while away from home. They are allowed for expenses necessitated by the pursuit of a trade or business, not for personal, living, or family expenses. Although the line is often difficult to draw, I cannot say that the Tax Court’s factual resolution in this instance is clearly erroneous, and I believe it should be affirmed.
The Dalys decided to reside in McLean, Virginia, rather than within Mr. Daly’s sales territory, to avoid the inconvenience of moving and so Mrs. Daly would remain close to Washington, D. C., where she was then employed. Although Daly did some paperwork at his residence in McLean, he testified that “selling is 85% of the job.” Daly’s sales territory consisted of parts of the states of Pennsylvania, Delaware, and New Jersey. The great majority of his sales trips took him to the Philadelphia area. The Tax Court thus concluded that Daly’s reasons for residing in McLean instead of within the sales territory were personal, not business, and that the travel expenses engendered by that choice, like those of the traveling lawyer in Commissioner v. Flowers, 326 U.S. 465, 66 S.Ct. 250, 90 L.Ed. 203 (1946), were “ ‘as unnecessary and inappropriate to’ the conduct of his employer’s business as ‘were his personal and living costs’ in McLean.” Absent clear error, this factual resolution should stand. Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1199, 4 L.Ed.2d 1218 (1960); Miller v. Commissioner, 421 F.2d 1405, 1407 (4th Cir. 1970).
In Flowers, 326 U.S. at 470, 66 S.Ct. at 252, the Supreme Court abstracted from section 162(a)(2) three conditions which a taxpayer must satisfy to deduct a traveling expense:
(1) The expense must be reasonable and necessary; and
(2) The expense must be incurred while away from home; and
(3) The expense must be incurred in pursuit of business.
“Failure to satisfy any one of the three conditions destroys the traveling expense deduction.” 326 U.S. at 472, 66 S.Ct. at 253.
In the majority’s view, the “sole issue” in this case concerns the second condition: whether Daly’s principal place of business or tax home was in Philadelphia. The third condition must also be considered: whether, as expressed in Flowers, the expense was motivated by the “exigencies of business” rather than the “personal conveniences and necessities” of the taxpayer. 326 U.S. at 474, 66 S.Ct. at 254. It makes no difference here whether we consider the third condition as an independent requirement or as a probative element shedding, light on the issue of the location of Daly’s tax home.
*355In Flowers the Supreme Court expressly left undecided the meaning of “home.” This court, however, has charted the route we must follow here in Babeaux v. Commissioner, 601 F.2d 730 (4th Cir. 1979); Commissioner v. Peurifoy, 254 F.2d 483 (4th Cir. 1957), aff’d per curiam, 358 U.S. 59, 79 S.Ct. 104, 3 L.Ed.2d 30 (1958); and Barnhill v. Commissioner, 148 F.2d 913 (4th Cir. 1945). Our decisions leave no doubt that the tax home must be determined by reference to the general locus of the taxpayer’s employment.
Judge Soper, in construing section 162(a)(2) in Barnhill, observed that “in allowing deductions for traveling expenses to one who is away from home on business, the statute implies that the home and the place of business must be in the same general locality.” 148 F.2d at 917. To be sure, we declined to construe “home” as completely synonymous with “place of business.” We defined “home” in light of the congressional purpose of allowing a deduction for business trips. We held:
[I]t is not reasonable to suppose that Congress intended to allow as a business expense those outlays which are not caused by the exigencies of the business but by the action of the taxpayer in having his home, for his own convenience, at a distance from his business. Such expenditures are not essential to the prosecution of the business and were not within the contemplation of Congress which proceeded on the assumption that a business man would live within reasonable proximity to his business.
148 F.2d at 917. Thus, while we did not arbitrarily equate “home” with “place of business,” we noted that “in most cases ... the result will be the same.” Id.
In Peurifoy, we held that the taxpayers, construction workers, were not entitled to deduct their living expenses while employed at a construction site some distance from their homes, or their travel expenses at the termination of their employment. Of course, the construction site in Peurifoy constituted a single, fixed place of employment. And a primary concern there, not present here, was whether the employment was temporary. But those considerations do not render what we said in Peurifoy entirely inapposite.
[T]he expense, in order to be deductible, must be “required by the exigencies” of the employer’s business, not those of the calling of the employee. “The job, not the taxpayer’s pattern of living, must require the travel.” ... That an employee for reasons personal to himself and his family maintains a home at a distance from his business does not serve the business of the employer and ordinarily his travel expense and the expense of his maintenance at either place is not deductible (citations omitted).
254 F.2d at 486. We recently affirmed Puerifo/s vitality in Babeaux.
The majority apparently agrees with these principles but holds that Daly did not have a principal place of business in the Philadelphia area. This decision is based solely on the fact that Daly maintained no office or residence in the Philadelphia area. I feel this conclusion is overly broad. The majority’s solution would just as well permit Daly to reside in Nassau as in McLean. So long as he maintained no fixed business address within his sales territory in the Northeast, he could deduct the expenses of his travel to and from the Caribbean. I do not believe that Congress intended so to subsidize the personal lifestyle of selected taxpayers. The absence of a single, fixed office or local headquarters, of course, raises a factual question as to the location of the principal place of doing business, but this question cannot be avoided simply because no single business headquarters exists. See Babeaux v. Commissioner, 601 F.2d 730 (4th Cir. 1979); Bunevith v. Commissioner, 52 T.C. 837, aff’d, 25 A.F.T.R. 70-935 (1st Cir. 1970); Commissioner v. Peurifoy, 254 F.2d 483 (4th Cir. 1957), aff’d per curiam, 358 U.S. 59, 79 S.Ct. 104, 3 L.Ed.2d 30 (1958).
In Bunevith, the taxpayer’s job entailed his traveling to various towns within a work area confined to northeastern Massachusetts. He had no office or fixed locale *356within his working area. For personal reasons, unrelated to his job, the taxpayer chose to reside in central Massachusetts outside his work area. The employer’s headquarters were in yet another area. The taxpayer claimed a deduction for the added traveling expenses attributable to his living outside the work area. The Court of Appeals for the First Circuit affirmed the Tax Court’s conclusion that the travel expenses were not deductible. That his work location could only be defined in terms of a general geographic area did not foreclose the critical inquiry into the reason for the expenditures.
Daly maintains his home far from the primary area of his income-producing activity. This circumstance does not differ from those of the state supreme court justices involved in Barnhill or the construction workers in Puerifoy and Babeaux. It is true that the justices in Barnhill were required to maintain offices in the state capital. The taxpayers in Peurifoy and Ba-beaux worked at a specific site. A permanent physical facility and a specific work site, however, are not the only indicia of the place where business is conducted. Many interesting and lucrative businesses operate without fixed quarters in the area where their principal income is produced. The “work site” for many is a broad geographical area. Although the majority’s approach would avoid this sometimes tedious chore of ascertaining the principal place of business when no single headquarters exists, the holding runs counter to the rationale of section 162(a)(2).
The majority suggests that disallowing the deduction here would impose upon the taxpayer the burden of maintaining two homes, one near the center of his income-producing activity, another where his family is established.1 I agree that Congress did not intend that harsh result, but neither did it intend to federally subsidize personal choices as to life style. The subjective consideration of the reasonableness of the taxpayer’s moving his residence closer to the area of his work plays no role in determining the deductibility of traveling expenses. Peurifoy, 254 F.2d at 487. “Business trips are to be identified in relation to business demands .... The exigencies of business rather than the personal conveniences and necessities of the traveler must be the motivating factors.” Flowers, 326 U.S. at 474, 66 S.Ct. at 254.
The facts are undisputed. The Commissioner determined that Daly’s decision to live well outside his sales territory was personally motivated and that the interests of his employer were not thereby served. In the Tax Court Daly failed to carry his burden of proving the Commissioner wrong. I would affirm the Tax Court’s decision.

. The majority finds support in Schreiner v. McCrory, 186 F.Supp. 819 (D.Neb.1960), for its conclusion that the concentration of the taxpayer’s income-producing activity does not determine the tax home. Schreiner lived in Omaha, which was part of a large sales territory. Daly’s circumstances would only parallel Schreiner’s if Daly’s residence were in his sales territory. In dismissing the factual differences between this case and Schreiner, the majority writes that “the distinction between residing in or out of the sales territory is unimportant.” Supra at 353, n. 3. This does not square with the majority’s acceptance of the rule that an acknowledged place of business is unquestionably the tax home.