Dickason v. Commissioner , 20 B.T.A. 496 ( 1930 )

W. S. DICKASON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Dickason v. Commissioner

Docket No. 14845.

United States Board of Tax Appeals

20 B.T.A. 496; 1930 BTA LEXIS 2107;

August 6, 1930, Promulgated

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In the circumstances herein the respondent properly disallowed a deduction for damages, court costs and attorney's fees, paid by petitioner in settlement of a judgment against him for personal injuries resulting from an automobile accident.

Charles H. Garnett, Esq., for the petitioner.

Arthur Carnduff, Esq., for the respondent.

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LANSDON

The respondent has asserted a deficiency in income tax for the calendar year 1921 in the amount of $557.05. The deficiency arises from the respondent's disallowance of a deduction of $5,118.50, which amount represents damages, court costs and attorney's fees paid in settlement of a judgment for personal injuries resulting from an automobile accident.

FINDINGS OF FACT.

The petitioner is an individual residing at Tulsa, Okla. During the taxable year he lived in Kansas City, Mo., where he was an officer, a director, and general manager of the Dickason-Goodman Lumber Co.

During 1919 the petitioner owned a Paige automobile which he maintained for business purposes and for pleasure and family use. He also owned a Dodge sedan, which was used exclusively by his family. In June or July of 1919 one Arthur C. Porter, who was employed as auditor by the lumber company, wired that he was coming to Kansas City, bringing his wife from Mayo's Hospital, Rochester, Minn., and that he would stop over in Kansas City for one day so that his wife might rest before continuing to their home in Tulsa, Okla. On the following morning petitioner, accompanied by his son, drove his Paige automobile from his residence to the Union Station in Kansas City, where he met Mr. and Mrs. Porter and took them to the Savoy Hotel. Leaving his son in the car, petitioner accompanied his friends to their room, where he stayed approximately 20 minutes. Upon his return to the street, he found that his son had gone with the car, so he walked to his office, which was two or three blocks away. Within a short time he was informed by telephone that his son had been in an accident with the car while proceeding home down Broadway Street, and that the man with whom he had collided had been injured.

Shortly thereafter a suit was filed against petitioner for damages resulting from the personal injuries sustained in the accident. The first trial of the case resulted in a hung jury. The following trial resulted in a judgment against the petitioner of $7,500, plus costs. Rather than appeal and continue the litigation, petitioner settled the judgment in 1921 by paying $4,500 and court costs and attorney's fees in the amount of $618.50.

As general manager of the Dickason-Goodman Lumber Co., petitioner was required to visit the various yards throughout Kansas, Missouri, and Oklahoma, and in purchasing lumber, merchandise and supplies, most of which was done in Kansas City, it was necessary for him to visit various plants and offices daily. Until 1918 the company had furnished him an automobile for such business trips, but he found that employees at the various yards where he stopped, knowing that it was a company car, used it for personal and business trips. Believing that they would not use petitioner's personal car to such an extent, he purchased the Paige automobile above referred to and thereafter used it for his business trips. He included that portion of the automobile expense incurred on business trips in his regular expense account, which was paid by the company. It had been his practice for many years to drive from his home to the company's office and he usually kept the car down town, using it for business purposes whenever the occasion required. During 1918 and 1919 he had been troubled with asthma, so that he did not always feel able to drive his own car to the office and home. On such occasions and when he did not intend to use the car during the day, his son or daughter drove him to the office and called for him in the evening.

At the time of the accident herein involved, the petitioner's son was 15 years of age and had no driver's permit. At both trials of the suit for damages against his father, young Dickason testified that the motorcycle which ran into him was traveling 35 or 40 miles an hour and that he was driving alone approximately 15 miles an hour.

OPINION.

LANSDON: The single question to be determined here is whether the petitioner is entitled to deduct the amount paid in settlement of the judgment for damages on his income-tax return for 1921. The petitioner contends that the loss was sustained in carrying on a business and that it is therefore deductible.

The facts disclose that petitioner's automobile was used for both personal and business purposes and that the lumber company reimbursed the petitioner for all expenses of the car resulting from use in business. Title to the car was in petitioner's name and he had absolute control of its use. We have held on numerous occasions that expenses incurred in going from home to the place of business are not ordinary and necessary business expenses. ; . If, as petitioner contends, the loss here sustained resulted from use of the car for business purposes, the lumber company was liable, and should have reimbursed the petitioner for the amount expended. If it was a personal expenditure, as we think it was, it is not deductible in computing petitioner's net income for 1921.

We have made a distinction between cases involving damage to the property of a taxpayer and those where damages were paid because of injury to the person of another. . In that case we denied the taxpayer a deduction of an amount paid as damages for personal injuries resulting from the operation of his automobile by his minor son. The facts there presented are very similar to those of the instant proceeding, and upon the authority of our decision in that case, which we think is controlling here, the respondent's determination is approved. See also ; .

Decision will be entered for the respondent.