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Geiman v. Commissioner (T.C. Memo. 2021-80)

On June 30, 2021, the Tax Court issued a Memorandum Opinion in the case of Geiman v. Commissioner (T.C. Memo. 2021-80). The primary issue presented in Geiman was whether the petitioner was a tax “itinerant” or whether he had a tax home, for purposes of unreimbursed business expenses.

Background

The petitioner is a union electrician who spent most of 2013 on jobs in various parts of Wyoming and Colorado. He claimed on his 2013 Federal income tax return: an unreimbursed employee business expense deduction of $39,392 for meals, lodging, vehicle expenses, and union dues and a (2) deduction for “other” expenses of $6,025.

The petitioner was a licensed journeyman electrician who owned a trailer home in Clifton, Colorado, as well as a rental property in nearby Grand Junction, Colorado. He had lived in Clifton since at least 2007 with his 2013 tax return showing that he claimed a home mortgage interest deduction of $6,802 for that year. The petitioner voted, registered his vehicles, received his mail, spent time with friends, and rafted whitewater rapids in the greater Grand Junction area.

Home is Where the Deductions Lie

A taxpayer may deduct reasonable and necessary travel expenses such as vehicle expenses, meals, and lodging incurred “while away from home in the pursuit of a trade or business.” IRC § 162(a)(2). He must show, however, that he was away from home when he incurred the expense, that the expense is reasonable and necessary, and that the expense was incurred in pursuit of a trade or business. See Commissioner v. Flowers, 326 U.S. 465, 470 (1946). This deduction is meant to alleviate the burden on taxpayers whose business or employment require them to incur duplicative living expenses. See, e.g., Kroll v. Commissioner, 49 T.C. 557, 562 (1968).

For purposes of IRC § 162(a)(2), the word “home” has been given a specialized meaning that differs from ordinary usage. See, e.g., Henderson v. Commissioner, 143 F.3d 497, 499 (9th Cir. 1998), aff’g T.C. Memo. 1995-559; see also Daly v. Commissioner, 72 T.C. 190, 195 (1979), aff’d, 662 F.2d 253 (4th Cir. 1981). Specifically, the Tax Court has interpreted a taxpayer’s home to refer to the vicinity of a taxpayer’s principal place of business rather than his personal residence. See, e.g., Mitchell v. Commissioner, 74 T.C. 578, 581 (1980); Yanke v. Commissioner, T.C. Memo. 2008-131, *3.

“When different from the vicinity of his principal place of employment, a taxpayer’s residence may be treated as his tax home if his principal place of business is ‘temporary’, rather than ‘indefinite’.” Yanke, T.C. Memo. 2008-131, *3; see also Peurifoy v. Commissioner, 358 U.S. 59, 60 (1958). A taxpayer must have incurred substantial continuing living expenses at the permanent place of residence. See James v. United States, 308 F.2d 204, 207-208 (9th Cir. 1962); Barone v. Commissioner, 85 T.C. 462, 465-466 (1985), aff’d without published opinion, 807 F.2d 177 (9th Cir. 1986).

“If a taxpayer cannot show that he had both a permanent and temporary abode for business purposes during the year at issue, he is not entitled to the deduction.” Minick v. Commissioner, T.C. Memo. 2010-12, *3; see also Deamer v. Commissioner, 752 F.2d 337, 339 (8th Cir. 1985) (explaining that one who has no principal place of business or a permanent residence is considered an itinerant, who may not deduct expenses under IRC § 162), aff’g T.C. Memo. 1984-63; Stewart v. Commissioner, 77-2 U.S. [*13] Tax Cas. (CCH) para. 9617 (10th Cir. 1972), aff’g per curiam T.C. Memo. 1971-307; Lyseng v. Commissioner, T.C. Memo. 2011-226, *3. “Only a taxpayer who lives one place, works another and has business ties to both is in the ambiguous situation that the temporary employment doctrine is designed to resolve.” Hantzis v. Commissioner, 638 F.2d 248, 255 (1st Cir. 1981), rev’g T.C. Memo. 1979-299.

In determining whether a taxpayer has a tax home, the Tax Court has often considered three factors set forth in Rev. Rul. 73-529. See, e.g., Lyseng, T.C. Memo. 2011-226 at *3; Minick, T.C. Memo. 2010-12 at *4; see also Henderson, 143 F.3d at 500. Specifically, the Tax Court has examined whether the taxpayer (1) incurs duplicate living expenses while traveling and maintaining the home, (2) has personal and historical connections to the home, and (3) has a business justification for maintaining the home. See Lyseng, Lyseng, T.C. Memo. 2011-226 at *3; Yanke, T.C. Memo. 2008-131 at *3.

On the facts before it, the Tax Court concluded that the petitioner had a tax home of Clifton, Colorado, for 2013. As an initial matter, the Tax Court found that the petitioner’s work consisted of a series of temporary jobs in Wyoming and Colorado, each of which lasted no more than a few months. Given the nature of these jobs, the Tax Court concludes that the petitioner did not have a principal place of business in 2013.

The factors set forth in Rev. Rul. 73-529, supra, support the conclusion that the petitioner was not an itinerant but had a tax home in Clifton. First, the record shows that the petitioner incurred substantial continuous living expenses in the form of mortgage payments, as evidenced by both his 2013 tax return on which he claimed the home mortgage interest deduction and his monthly credit card statements showing mortgage payments. Second, the petitioner had significant personal and historical ties to Clifton, persuasively testifying at trial that he had been a resident at least since 2007 and that his nonwork life was firmly centered there.

Finally, the petitioner’s relationship with his home local union gives him an adequate business justification for making his home in Clifton. See Lyseng, T.C. Memo. 2011-226 at *3; Williams v. Commissioner, T.C. Memo. 1990-467. The Tax Court has previously identified a taxpayer’s membership in and continued contacts with a local union as a business justification for maintaining a tax home away from temporary jobs. Id. Accordingly, the Tax Court concluded that the petitioner was away from home for purposes of IRC § 162(a)(2) during the year at issue.

As such, the petitioner was entitled to IRC § 162(a) deductions, to the extent that he could substantiate them.

(T.C. Memo. 2021-80) Geiman v. Commissioner

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