Brown v. Commissioner , 13 B.T.A. 832 ( 1928 )

WALTER F. BROWN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Brown v. Commissioner

Docket No. 12748.

United States Board of Tax Appeals

13 B.T.A. 832; 1928 BTA LEXIS 3163;

October 9, 1928, Promulgated

---

">*3163 Where one accepts a Governmental appointment which requires his presence and work in Washington about half the time, and who retains his home and professional connections in a distant city, held, that his expenses for travel to and from Washington, D.C., for meals and lodging while there, and the like, are properly deductible from gross income as "ordinary and necessary expenses incurred" in carrying on a trade or business.

George Roscoe Davis, Esq., for the petitioner.

J. L. Backstrom, Esq., for the respondent.

---

MARQUETTE

">*832 This proceeding is for the redetermination of a deficiency in income taxes, asserted by the respondent for the year 1921. The deficiency arises from the disallowance by the respondent of a deduction for traveling and living expenses incurred in the discharge of the petitioner's duties as chairman of the Reorganization Committee at Washington, D.C. The amount of the deficiency is $612.88.

FINDINGS OF FACT.

During the entire year of 1921 the petitioner was in active law practice as senior member of a firm located in Toledo, Ohio. He maintained his home there, without dimunition of service or expense, during">*3164 1921.

On May 5, 1921, the petitioner was appointed chairman of the Congressional Joint Committee on Reorganization of Executive Departments. The salary had been fixed by Congress at $7,500 per year, but the resolution under which the appointment was made did not make any specific provision for traveling expenses or subsistence.

">*833 The petitioner accepted the appointment with the distinct understanding with President Harding that the work involved would not interfere with the petitioner's law practice. All the meetings of the Committee, which, with the exception of the petitioner, was composed of Senators and Representatives, were hled in Washington; all of the work of the Committee was done in Washington. The petitioner spent an average of about two weeks each month in Washington in the work of the Committee. He found it advisable to maintain continuously an apartment at the Wardman Park Hotel.

Up to the end of the year 1921 the petitioner received $4,875 as salary as chairman of the Committee. His claimed expenses in that connection were as follows:

Traveling between Toledo and Washington	$960.25
Lodging at hotels in Washington	1,766.00
Sustenance by meals	910.15
Telegraph, telephone, taxi and other miscellaneous	75.35
Total	3,711.75

">*3165 This amount the petitioner deducted from gross income in his income tax return for 1921 as a necessary traveling expense in carrying on the work of the Committee. The respondent disallowed such deduction on the ground that the petitioner's business did not require him to travel and therefore the expenses were personal, rather than traveling expenses.

OPINION.

MARQUETTE: The Revenue Act of 1921 contains the following provisions, which are here applicable:

SEC. 214. (a) That in computing net income there shall be allowed as deductions:

(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including * * * traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; * * *.

SEC. 215. (a) That in computing net income no deduction shall in any case be allowed in respect of -

(1) Personal living, or family expenses; * * *.

It is the contention of the petitioner that he was "way from home in the pursuit of his trade or business" when, approximately every two weeks from May to December, 1921, he came to Washington to carry on">*3166 the work of the Committee, of which he was chairman. This work was not a part of the petitioner's law practice which he carried on in Toledo; it was a service to and for the United States Government, performed, and apparently intended by Congress to be performed, in Washington. Nevertheless, it was a part of the petitioner's business, his gainful occupation, during the taxable year. This Board has recognized that a person may be regularly ">*834 engaged in more than one trade or business at the same time. Louis M. Goldberg, B.T.A. 1355.

The respondent concedes that the petitioner "was engaged in business as a member of the said joint committee in Washington, D.C.," but takes the position that Washington was the petitioner's home while he was chairman of the Joint Committee; and, therefore, no traveling expenses may be deducted from gross income under the statute above cited. The facts, we think, do not sustain that theory. It would probably make very little difference, if any, whether we consider the petitioner's home to have been in Toledo or in Washington. If the latter, he would have been compelled to travel to Toledo to carry on his law practice. Such expenses">*3167 would be deductible. He was engaged, during the taxable year, in two occupations; he divided his time equally between the two, in two separate cities. The authority under which the petitioner was appointed chairman of the Joint Committee did not specify any amount of time he must devote to the work; that was left to the discretion of himself and the Committee. The respondent's suggestion, in his brief, that in creating this Joint Committee Congress did not contemplate any necessity for travel by the Committee, may be perfectly true; but it is not persuasive as an argument. Many instances may be found where legislatures have failed to contemplate all the effects of some law they have enacted. In this case, the petitioner had a definite understanding with the President that his law practice in Toledo should not be interfered with.

In the case of , this Board allowed as deductions the amounts paid for an apartment in Paris for three years, Griesemer being there on business for his firm; other expenses while in Paris were not allowed because of lack of proof of the amounts. In that case, as in the present one, the respondent">*3168 contended that the expenses claimed as deductions were personal in their nature, and therefore not deductible under section 215 of the Act. On this point the Board said:

We are convinced that the terms "personal, living, or family expenses" referred to in section 215, supra, were intended by the Congress to be applied in the ordinarily accepted sense of those words and not in the broad and sweeping sense in which the respondent is seeking to apply them. Simply because the amounts in question happen to be "living" expenses in a strict sense does not prevent them from being deductible if they are ordinary and necessary and are shown to have been incurred in carrying on his trade or business and are clearly in addition to his living expenses at the usual place of abode which he maintains for his mother and sister. The Congress undoubtedly intended that the taxpayer's personal expenditures in maintaining his usual place of abode should not be deducted, but that all expenditures made by the taxpayer in addition to those amounts if incurred in carrying on a trade or business should be deducted in determining net income.

">*3169 ">*835 We are of opinion that the rule announced in the Griesemer case as quoted above, is applicable to the state of facts in the appeal under consideration. See also, . We are not convinced, however, that it was reasonably and fairly necessary for the petitioner to maintain an apartment at the Wardman Park, by the year. It was doubtless more convenient than to have registered and obtained rooms anew, every two weeks, but the evidence does not show the yearly rental to have been necessary, or less expensive. We think deductions for lodging should be confined to the time such lodgings were occupied, and therefore the amount claimed by the petitioner, $1,766, is reduced to $883. The other items of expenses should be allowed as deductions, as claimed.

The petitioner's income tax for the year 1921 should be recomputed. allowing him as deductions for necessary traveling expenses the sum of $2,828.75.

Reviewed by the Board.

Judgment will be entered under Rule 50.