DocketNumber: No. 18428-97
Citation Numbers: 1999 T.C. Memo. 184, 77 T.C.M. 2106, 1999 Tax Ct. Memo LEXIS 221
Judges: Gerber,Joel
Filed Date: 6/7/1999
Status: Non-Precedential
Modified Date: 4/18/2021
*221 Decision will be entered under Rule 155.
MEMORANDUM FINDINGS OF FACT AND OPINION
*222 GERBER, JUDGE: Respondent, by means of a statutory notice of deficiency, determined a deficiency in petitioners' 1995 income tax of $ 8,938 and a
The issues for our consideration are: (1) Whether the correspondence in this case from respondent's employee estopped respondent from determining a deficiency in petitioners' 1995 Federal income tax; (2) whether respondent correctly determined that petitioners must recognize income from Social*223 Security benefits in the amount of $ 7,643 for the taxable year 1995; (3) whether petitioners are entitled to deduct $ 11,282 in alleged job-hunting expenses; (4) whether petitioners are entitled to deduct temporary living expenses of $ 5,240; (5) whether petitioners' gambling losses are limited to their income from gambling for taxable year 1995; and (6) whether petitioners are liable for the accuracy-related penalty under
I. 1994 REFUND LETTER
FINDINGS OF FACT
At the time of the filing of the petition in this case, petitioner John Allen Lyle resided in El Paso, Texas. Petitioner Glenna A. Lyle resided in Nashville, Tennessee. Glenna A. Lyle is a petitioner in this case because she joined in filing Federal income tax returns with her husband John Allen Lyle (petitioner).
On November 21, 1995, petitioners sent a letter to the Problem Resolution Office of the Internal Revenue Service concerning*224 the status of their request for refund on their additional amended income tax return filed for 1994. The Problem Resolution caseworker replied, in a letter dated June 11, 1996, that the refund had been allowed and indicated that it would be used to offset petitioners' 1995 tax account. The letter further indicated that "Since only $ 1,314 of the $ 1,682 [refund] from 1994 was needed to full pay the 1995 account, you will also receive a refund for 1995 of $ 371.54."
OPINION
We must decide whether the letter from respondent's caseworker estops respondent from determining a deficiency for petitioners' 1995 Federal income tax. Petitioners assert that because the letter indicated that only $ 1,314 was needed to "full pay" petitioners' 1995 Federal tax liability, respondent has forfeited the right to determine a deficiency for petitioners' 1995 Federal income tax. Respondent contends that the doctrine of equitable estoppel should not be applied in this case. We agree with respondent.
The doctrine of equitable estoppel is applied against the Government only with utmost caution and restraint. See
Petitioners have failed to establish that all of the elements for equitable estoppel have been satisfied. The correspondence which petitioner relies on to support his contention simply described how the allowed refund for 1994 would be applied to petitioners' tax account. The correspondence did not make any representation that petitioners owed no additional 1995 tax. Therefore, petitioners have failed to establish that there has been a false representation by respondent.
*226 Moreover, it was not reasonable for petitioners to rely on the letter from respondent's caseworker for the proposition that petitioners owed no additional income tax for 1995. The letter was written in response to petitioners' request for refund on an amended income tax return filed for 1994. The letter does not purport to be a determination regarding petitioners' 1995 return and does not state that petitioners' 1995 income tax return has been accepted as filed, nor does it address any of the specific issues encompassed in the notice of deficiency. Accordingly, respondent is not estopped from determining a deficiency in petitioners' 1995 income tax.
FINDINGS OF FACT
Petitioners reported receiving Social Security benefits of $ 8,993 on their 1995 income tax return. Petitioners did not, however, compute the taxable portion of their Social Security benefits to be included in their gross income. Respondent treated their failure to enter the taxable portion as a computational adjustment and determined that the taxable portion of the benefits was $ 7,643.
OPINION
FINDINGS OF FACT
In August 1994 petitioners moved to Nashville, Tennessee, from El Paso, Texas, after Mrs. Lyle accepted a job in Nashville. Petitioner, who had 10 years of experience as an El Paso public school teacher, attempted to find employment in the Nashville area. From January to March 1995, petitioner had three interviews with the following prospective employers: Three Springs*228 Wilderness program; a Christian academy; and the Metro Nashville school district. At the time of the interviews, petitioner was living in an apartment in Nashville. Petitioner drove the following distances (one way) for his three interviews: 70 miles for the first interview, 5 miles for the second interview, and 30 miles for the third interview. None of the interviews resulted in employment.
On April 1, 1995, petitioner left Nashville for Las Vegas, Nevada, for the joint purposes of gambling and finding a job in the teaching profession. Mrs. Lyle remained in Nashville. Petitioner drove to Las Vegas from Nashville, a distance of about 1,311 miles. Petitioner had three job interviews while in Las Vegas. The first job interview was in Bull Head City, Arizona, a distance of about 100 miles from the hotel that petitioner was residing in. The record does not disclose the distances petitioner traveled for his second and third interviews. Petitioner was unable to secure a teaching position in the Las Vegas area. While in Las Vegas, petitioner contacted a high school principal he knew in El Paso, Texas, who hired petitioner over the telephone.
Petitioner gambled every day from his arrival *229 in April until he left Nevada for El Paso, Texas, in late July 1995. Petitioners claimed $ 9,764 in job-hunting expenses on their 1995 Federal income tax return. Respondent disallowed the claimed expenses.
OPINION
In order to be allowed as a deduction under
Respondent has two alternative theories for denying the job-hunting expenses. First, respondent contends that petitioner had no tax home in 1995, and therefore none of the traveling expenses can be deducted because they were not incurred "while away from home". Id. In the alternative, respondent contends that, even if *231 petitioner's tax home was Nashville, only the portion of the expenses directly attributable to job hunting are deductible.
Generally, a taxpayer's "home", for purposes of
While the subjective intent of taxpayers is to be considered in determining whether they have tax homes, this Court and others consistently*232 have held that the objective financial criteria bear a closer relationship to the underlying purpose of the deduction. See
In the present case, petitioner's testimony pertaining to these objective factors was vague at best. Petitioner testified concerning his expenditures in Nashville and Las Vegas; however, his explanations were lacking in meaningful detail. Although petitioner did not have a principal place of business during much of 1995, several objective factors indicate that Nashville, during the period from January through July 1995, was petitioner's permanent place of residence. First, petitioners resided in Nashville from August 1994 through March 1995, a period of 8 months. Second, during the period beginning January and until August 1995, petitioners paid rent on an apartment in Nashville, a substantial living expense.
Since Nashville was petitioner's permanent place of residence, he was not away from home during his job-searching in Nashville, and therefore*233 the expenditures for lodging in Nashville are not deductible. Petitioner drove a total of 210 miles to various job interviews in the Nashville area, and is entitled to a travel deduction of $ 63 as a job-hunting expense (210 miles times 30 cents per mile). See
Petitioner also claimed significant travel expenses for the period beginning April through July 1995. Since we have determined that petitioner's tax home was Nashville, the expenses must be allocated between petitioner's gambling and job-hunting activities. It is difficult to discern the amount of time petitioner spent on his gambling versus his job-hunting activities. Considering all of the facts and circumstances, we conclude petitioner spent approximately one-quarter of his time job-hunting in Las Vegas. Accordingly, petitioner is entitled to a $ 700 deduction for food and lodging. No amount for postage, long-distance telephone calls, *234 or car insurance is allowable because petitioner has not substantiated that these expenses were related to his job-hunting.
If an employee travels to an area to seek new employment and also engages in personal activities, traveling expenses are deductible only if the trip is related primarily to seeking new employment. See
FINDINGS OF FACT
After accepting a teaching position in El Paso, Texas, over the telephone, petitioner left Las Vegas *235 in late July 1995. Petitioner's job commenced on August 1, 1995. As of September 8, 1997, 2 years after the job commenced, petitioner continued to reside in El Paso, and his wife continued to reside in Nashville.
OPINION
Petitioner asserts that he is entitled to deduct $ 5,240 in living expenses as "temporary living expenses". These expenses were incurred during the period from August through December 1995. Petitioner contends that he is entitled to deduct his living expenses during this period because he lived in El Paso for less than 6 months during 1995. We find petitioner's argument to be flimsy and farfetched.
The fact that petitioner lived at a certain address for less than 6 months during the taxable year is not necessarily relevant or important to the question of whether he is entitled to deduct living expenses. An employee employed temporarily at a distance from his home is allowed to deduct the costs of meals and lodging at his temporary job site on the theory that he is "away from home".
Petitioner has not established that his job in El Paso was temporary. He offered no evidence that the teaching position was for a limited time after which he intended to return to Nashville. On the contrary, the entire record indicates that El Paso had become petitioner's principal place of business following his move from Las Vegas. Petitioner arrived in El Paso in late July for a job commencing on August 1, 1995. As of September 8, 1997, 2 years after the job commenced, petitioner continued to reside in El Paso. Accordingly, petitioners are not entitled to deduct the $ 5,420 in living expenses as temporary living*237 expenses.
FINDINGS OF FACT
Petitioner gambled every day from April until he left Las Vegas in late July 1995. Petitioners claimed "gaming wins" of $ 1,200 and gambling expenses and losses of $ 35,034 on their 1995 Federal income tax return. Respondent disallowed petitioners' gambling expenses and losses in excess of gambling winnings.
OPINION
Petitioners maintain that, pursuant to
Petitioner relies on
Respondent also determined that petitioners were negligent and liable for an accuracy-related penalty under
In determining whether petitioners were negligent in the preparation of their returns, we take into account petitioner's tax experience. Petitioner, a self-proclaimed "trained tax specialist", should have realized that the deduction of 7 months of living expenses as job-hunting expenses after a limited job-hunting effort was not reasonable. Combining that with petitioner's gambling losses presents a situation that was "too good to be true" within the meaning of
To reflect the foregoing,
Decision will be entered under Rule 155.
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year under consideration, and all Rule references are to this Court's Rules of Practice and Procedure.↩
2. Petitioners made several other arguments which we found to be outlandish, such as their request for $ 15 billion in punitive damages. To the extent we have not addressed petitioners' other arguments we find them to be without merit.↩
Ludwig H. Brandl v. Commissioner of Internal Revenue , 513 F.2d 697 ( 1975 )
Johannessen v. United States , 32 S. Ct. 613 ( 1912 )
Peurifoy v. Commissioner , 79 S. Ct. 104 ( 1958 )
Commissioner v. Groetzinger , 107 S. Ct. 980 ( 1987 )
Primuth v. Commissioner , 54 T.C. 374 ( 1970 )
Tucker v. Commissioner , 55 T.C. 783 ( 1971 )
Cremona v. Commissioner , 58 T.C. 219 ( 1972 )
Mitchell v. Commissioner , 74 T.C. 578 ( 1980 )