Court Opinion

ID: 4481619
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:59.510712+00
Date Added: 2024-06-11T07:57:55.471987
License: Public Domain

Stereett, J,, dissenting: The issue presented is an uncomplicated one. Is a “section 217 moving expense” subject to the allocation provisions of section 911 ? For convenience, the applicable portion of section 911(a) is repeated herewith: An individual shall not be allowed, as a deduction from bis gross income, any deductions (other than those allowed by section 151, relating to personal exemptions) properly allocable to or chargeable against amounts excluded from gross income under this subsection. Since the statute excludes from its scope only the section 151 deduction for personal exemptions, it follows that all other amounts otherwise deductible must be disallowed if they are “allocable to or chargeable against amounts excluded” from the taxpayer’s income. In analyzing whether the expenses incurred by the petitioner in moving to Australia were related to the tax-exempt income he earned there, the majority begins by recalling that moving expenses had been termed a personal expense by many courts prior to the enactment of section 217. The following portion of regulations section 1.911-1(a) (3) is then cited for the proposition that personal expenses are not allocable to exempt income: However, items which are not properly chargeable against or allocable to ex-cludable earned income are deductible in their entirety (subject to any specific statutory limitations relating to such items). Examples of such items include personal and family medical expenses, real estate taxes on a personal residence, interest on mortgage on personal residence, and charitable contributions. [Emphasis added.] It then follows, so the majority seems to reason, that moving expenses, having once been labeled personal in nature, cannot be allocable to exempt income within the meaning of the above regulation.1  In my view the majority misconstrues the import of the regulation. It seems apparent from the nature of the items which are recited as examples of nonallocable personal expenses that the regulation is concerned with expenses which axe not related to income from any source, whether exempt or not. In contrast, here, we have an expense which seems to be as related to earned income as any expense incurred by an individual can be, namely, an amount paid to move to the site where the individual will earn his income. If an employment fee paid to obtain a job is deemed related to the earning of income from the new employment, David J. Primuth, 54 T.C. 374 (1970), surely the expense incurred to reach the .location of the new employment is comparably related. Cf. David E. Deason, 41 T.C. 465 (1964). 'Furthermore, Congress, in placing moving expenses in the category of items deductible from gross income to reach adjusted gross income, seemed clearly to be conceding that such an expense is income-related. Sec. 62(8). Otherwise such an expense would be allowable only as an itemized deduction similar to the ones listed in the above-quoted regulation. This interpretation of the applicable committee reports seems more reasonable than that proffered by the majority. Thus, it is that, in my judgment, the issue presented herein can be rosolved through a common sense analysis of the statute involved and the underlying regulation rather than resurrecting as authority language found in some of the conflicting cases now rendered obsolete by the enactment of section 217. ■It follows from the foregoing discussion that I would disallow the deduction at issue as being chargeable to exempt income within the purview of section 911. DREnnen, Raum, Atkins, and Irwin, JJ., agree with this dissent.   It Is not clear whether the majority Is of the opinion that all personal expenses are per se nonincome related. Under any circumstances, It is doubtful that the theory of the non-deductibility of personal expenses is premised solely on any such concept: for example, what about commuting expenses ?