SCOTUS Reports

Tag: Peurifoy v. Commissioner

  • Peurifoy v. Commissioner, 37 T.C. 377 (1961): Deductibility of Travel Expenses When Assignment is Indefinite

    Peurifoy v. Commissioner, 37 T. C. 377 (1961)

    Travel expenses are not deductible when an employee’s work assignment is indefinite rather than temporary.

    Summary

    In Peurifoy v. Commissioner, the Tax Court denied a taxpayer’s deduction for living expenses incurred during a work assignment at Boeing, ruling that the assignment was indefinite rather than temporary. The taxpayer, employed by GAC, was assigned to Boeing for an unspecified duration, which the court deemed as not being “away from home” for tax purposes. This case clarified that for travel expenses to be deductible, the assignment must be temporary, not indefinite, impacting how taxpayers and tax professionals assess the deductibility of such expenses.

    Facts

    During the first six months of 1967, the petitioner received a living allowance from GAC while working at Boeing. The total allowance was $1,830, which he included in his reported income. The taxpayer claimed this as a deductible expense under section 162(a)(2), arguing his “home” for tax purposes was in Akron, Ohio, while working in Seattle or Renton, Washington.

    Procedural History

    The case was initially heard by the Tax Court, which denied the deduction. The court’s decision was based on the determination that the taxpayer’s assignment at Boeing was indefinite, not temporary. There is no mention of further appeals in the provided text.

    Issue(s)

    1. Whether the taxpayer’s work assignment at Boeing was “temporary” or “indefinite” under section 162(a)(2).
    2. Whether the taxpayer’s living expenses at Boeing were deductible as expenses incurred “away from home. “

    Holding

    1. No, because the assignment to Boeing was deemed indefinite rather than temporary.
    2. No, because the expenses were not incurred “away from home” as the assignment was not temporary.

    Court’s Reasoning

    The court applied the temporary-indefinite test, which distinguishes between temporary assignments (deductible) and indefinite or substantial assignments (not deductible). The court found the taxpayer’s assignment at Boeing to be indefinite, as its termination could not be foreseen within a fixed or reasonably short period. The court also considered the Harvey test from the Ninth Circuit, which similarly concluded that an indefinite assignment does not qualify as “away from home” if there is a reasonable probability of long-term employment. The court quoted the Ninth Circuit’s opinion, emphasizing that if an employee knows there is a reasonable probability of a long-term stay, it is unreasonable to expect them not to move their permanent residence, thus not qualifying for the deduction. The court held that the taxpayer’s circumstances at Boeing did not meet the criteria for a temporary assignment, hence the expenses were not deductible.

    Practical Implications

    This decision affects how taxpayers and tax professionals evaluate the deductibility of travel expenses. It establishes that for expenses to be deductible under section 162(a)(2), the work assignment must be temporary, not indefinite. Taxpayers must carefully assess the nature of their work assignments to determine if they qualify for such deductions. This ruling has influenced subsequent cases, such as Doyle v. Commissioner, reinforcing the temporary-indefinite distinction. For legal practitioners, understanding this case is crucial for advising clients on tax planning related to travel and living expenses during work assignments.

  • Peurifoy v. Commissioner, 37 T.C. 377 (1961): Deductibility of Expenses When Employment is Indefinite

    Peurifoy v. Commissioner, 37 T. C. 377 (1961)

    Expenses incurred while working away from home are not deductible if the employment is for an indefinite or substantial period of time.

    Summary

    In Peurifoy v. Commissioner, the Tax Court ruled that a taxpayer’s living expenses in Seattle were not deductible because his employment there was indefinite rather than temporary. The taxpayer, who was assigned to Boeing in Seattle for an indefinite period, sought to deduct his living expenses under Section 162(a)(2). The court, applying the temporary-indefinite test and the Harvey test from the Ninth Circuit, determined that the taxpayer’s assignment was not temporary, and thus, his expenses were not deductible. This decision underscores the importance of the duration and foreseeability of employment when determining the deductibility of living expenses.

    Facts

    The petitioner, assigned to work at Boeing in Seattle starting June 10, 1966, received a living allowance of $10 per day from GAC during the first six months of 1967, totaling $1,830. He included this amount in his reported income and sought to deduct it under Section 162(a)(2) as a business expense. The petitioner argued that his home was in Akron, Ohio, while the Commissioner contended that his home was in Seattle or Renton, Washington, where he was working.

    Procedural History

    The case was brought before the United States Tax Court, where the petitioner sought to deduct his living expenses. The Tax Court, applying its own temporary-indefinite test and the Ninth Circuit’s Harvey test, determined that the petitioner’s assignment to Boeing was indefinite and substantial, not temporary, and thus denied the deduction.

    Issue(s)

    1. Whether the petitioner’s employment at Boeing was considered “temporary” under Section 162(a)(2) for the purpose of deducting living expenses?

    Holding

    1. No, because the petitioner’s assignment to Boeing was for an indefinite and substantial period, not temporary, under both the temporary-indefinite test and the Harvey test.

    Court’s Reasoning

    The court applied the temporary-indefinite test, which distinguishes between temporary and indefinite employment periods. Employment is deemed indefinite if its termination cannot be foreseen within a fixed or reasonably short period. The court also considered the Ninth Circuit’s Harvey test, which states that an employee might change their tax home if there is a reasonable probability that they will be employed for a long period at the new station. In this case, the court found that the petitioner’s assignment to Boeing was indefinite and substantial, not temporary, as he knew there was a reasonable probability of long-term employment. The court cited John J. Harvey and Ronald D. Kroll to support its position. The court concluded that the petitioner’s living expenses were not deductible because he was not away from home in the context of Section 162(a)(2).

    Practical Implications

    This decision impacts how taxpayers and their advisors should approach the deductibility of living expenses when employment is for an indefinite or substantial period. It clarifies that only temporary assignments qualify for such deductions, emphasizing the need to evaluate the foreseeability and duration of employment. Practitioners must carefully assess whether a client’s work assignment is temporary or indefinite to determine the deductibility of living expenses. This ruling may influence business practices, particularly in industries with frequent relocations, encouraging employers to clearly define the expected duration of assignments. Subsequent cases like Doyle v. Commissioner have affirmed this approach, reinforcing the importance of this distinction in tax law.

  • Peurifoy v. Commissioner, T.C. Memo. 1958-6: Distinguishing Temporary from Indefinite Employment for Travel Expense Deductions

    Peurifoy v. Commissioner, T.C. Memo. 1958-6

    For purposes of deducting travel expenses while ‘away from home’ under Internal Revenue Code Section 162(a)(2), employment expected to last for a substantial or indefinite period is not considered ‘temporary’, even if the taxpayer maintains a residence elsewhere.

    Summary

    The Tax Court disallowed a boilermaker’s deductions for living expenses in Rome, Georgia, where he worked for nearly two years, finding his employment ‘indefinite’ rather than ‘temporary.’ Peurifoy argued his job was temporary because his union could have reassigned him. The court distinguished this case from prior rulings where employments were clearly temporary and held that employment expected to last for a considerable or indefinite period at a specific location constitutes the taxpayer’s ‘home’ for tax purposes, thus precluding deductions for living expenses at that location.

    Facts

    Petitioner, a boilermaker, worked on several temporary jobs away from home in early 1953. He then accepted employment with Babcock & Wilcox in Rome, Georgia, to install boilers for Georgia Power Company. This was the largest job he had ever undertaken, and he anticipated it would last one to two years. He worked in Rome from April 27, 1953, to April 22, 1955, with two brief strike-related interruptions. He deducted $5 per day for meals and lodging in Rome, which the Commissioner disallowed, arguing Rome was his ‘post of duty’.

    Procedural History

    The Commissioner of Internal Revenue disallowed a portion of Peurifoy’s claimed deductions for ‘Board & Lodging away from home.’ Peurifoy petitioned the Tax Court to contest the deficiency determination.

    Issue(s)

    1. Whether the petitioner’s employment in Rome, Georgia, with Babcock & Wilcox was ‘temporary’ within the meaning of Internal Revenue Code Section 162(a)(2), allowing him to deduct expenses for meals and lodging while ‘away from home’.

    Holding

    1. No, because the petitioner’s employment in Rome was ‘indefinite’ in duration, not ‘temporary’, despite the possibility of union reassignment.

    Court’s Reasoning

    The court distinguished this case from Schurer and Leach, where employments were clearly temporary with taxpayers returning home between short-term jobs. Here, Peurifoy’s Rome job lasted nearly two years and was expected to be of considerable duration. The court emphasized the difference between ‘indefinite’ and ‘temporary’ employment, citing Beatrice H. Albert, which denied deductions for ‘indefinite’ employment, even without permanence. The court stated, “The employment * * * lacked permanence, but, on the other hand, was indefinite in duration rather than obviously temporary, in that it was not the sort of employment in which termination within a short period could be foreseen…” While Peurifoy argued union reassignment made his job temporary, the court noted the union did not reassign him, and he worked in Rome for a substantial period. The court concluded, “Under these facts, we do not think petitioner’s employment at the Rome, Georgia, job in 1953 and 1954 can be characterized as ‘temporary’.”

    Practical Implications

    Peurifoy clarifies the distinction between ‘temporary’ and ‘indefinite’ employment for travel expense deductions. Taxpayers accepting employment at a specific location expected to last a substantial or indefinite period, even if not permanent, will likely be considered to have established their ‘tax home’ there. This case highlights that the anticipated duration of employment at a location, not just the existence of a permanent residence elsewhere or the possibility of job termination, is crucial in determining deductibility of living expenses under Section 162(a)(2). Later cases applying Peurifoy often focus on the expected or actual duration of the employment to determine if it qualifies as ‘temporary’ for tax deduction purposes.