Iatridis v. Commissioner ( 1971 )

Harry Iatridis and Gloria Iatridis v. Commissioner.

Iatridis v. Commissioner

Docket No. 2086-70 SC.

United States Tax Court

T.C. Memo 1971-80; 1971 Tax Ct. Memo LEXIS 254; 30 T.C.M. (CCH) 327; T.C.M. (RIA) 71080;

April 21, 1971, Filed.

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Harry Iatridis, pro se, 2 Country Lane, Hillsdale, N. J.James A. McNabb, Jr., for the respondent. 328

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JOHNSTON

Memorandum Findings of Fact and Opinion

JOHNSTON, Commissioner: The respondent determined a deficiency of $1,148.48 in petitioners' income tax for the taxable year 1966. The issue for decision is whether the petitioner is entitled to a deduction in the amount of $4,950. The petitioner claims the deduction as an education expense which would fall under section 162 of the Internal Revenue Code of 1954 but his argument appears to be that the expenditure represents a loss deductible under section 165. ^{*256 was to signify his agreement.}

Under the employment agreement he was, among other things, entitled to an education allowance in the amount of $1,450 for each child who attended school away from his post of duty. School allowances paid under the AID Program are not includible in gross income and are exempt from taxation. Section 912 Internal Revenue Code.

On February 20, 1966, the petitioner reported to the AID in Washington, D.C. for training. Petitioners left for Thailand about mid-March, 1966. En route to Thailand they placed their five children in a school, College Du Leman Versoix, at Geneva, Switzerland for the term ending June 24, 1966. When the petitioners arrived at the school in Geneva, the school demanded immediate payment of tuition in the amount of $4,950. The petitioners borrowed that sum and paid the school before they departed for Thailand. On March 21, 1966, petitioners arrived in Bangkok, Thailand to commence his regular duties. Upon their arrival they were told he was being reassigned to a security sensitive area which was in Laos. The petitioner balked at the reassignment on the ground that he did not agree to such an assignment originally. He insisted that he would only take the original job upcountry in Thailand. However, the AID insisted that the petitioner take up the assignment in Laos. The petitioners remained in Bangkok while discussing their differences with the AID and the possibilities of assignment to another country such as Yemen. These differences were never resolved and no other assignment was made so petitioner left Bangkok about the end of April 1966 section 162 of the Internal Revenue Code and the regulations thereunder. Nor, are they entitled to claim any loss under section 165 or any other section of the Internal Revenue Code because it is conceded that their claim for reimbursement had not been finally rejected in the taxable year. However, we feel impelled to state that even if his claim is ultimately rejected he would not be entitled to the claimed deduction as a loss. In our view, Mr. Iatridis is really suing for lost income. While it is true the educational allowances are tax exempt they are nevertheless part of his compensation for his employment. What his argument amounts to is that because AID did not pay the full amount to which he believes he was entitled, he suffered a loss to the extent he advanced the monies to the school in expectation of reimbursement. His loss, if any, occurred because he was not reimbursed. However, it is well established that failure to receive wages, salary or other compensation or a loss of 329 earnings, whether through the election of the taxpayer or because of some supervening cause such as cancellation of a contract or illness, does not result in a loss which the taxpayer may deduct for Federal income tax purposes. Palmer Hutcheson, 17 T.C. 14">17 T.C. 14 (1951). The expense of maintaining petitioners' children in boarding school in Switzerland is a personal living or family expense the deduction of which is prohibited under section 262 of the Internal Revenue Code.

Reviewed and adopted as the report of the Small Tax Case Division.

To reflect respondent's concessions.

Decision will be entered under Rule 50.

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Footnotes

• 1. All code section references are to the Internal Revenue Code of 1954.↩

• 2. On brief petitioners state they "requested to be returned to the United States which took place in June 1966."↩