Crowther v. Commissioner

Charles Crowther and Ivy L. Crowther, Petitioners, v. Commissioner of Internal Revenue, Respondent. Charles E. Crowther and Ivy L. Crowther, Petitioners, v. Commissioner of Internal Revenue, Respondent Crowther v. Commissioner Docket Nos. 58108, 61840 United States Tax Court 28 T.C. 1293; 1957 U.S. Tax Ct. LEXIS 76; September 30, 1957, Filed *76 Decisions will be entered under Rule 50. 1. During the taxable years the petitioner was employed in cutting or sawing down timber and sawing it into logs at designated "layouts" in woods which were 40 miles or more from his home where he resided with his family. Living accommodations for him and his family were not available at or near the layouts, nor was any public transportation available between his home and the layouts. None of his employers provided him with transportation, nor did any of them impose upon him any requirement as to where he or his family should reside or as to the means that he should employ in traveling between his home and the layouts. Petitioner used his automobiles or his jeep in making daily trips between his home and the layouts, at the same time carrying with him certain tools and equipment he used in his work. Held, that such use of the automobiles and jeep was for the dual purpose of petitioner's commuting between his home and his work and for transporting tools and equipment used by him in his trade or business. Held, further, that to the extent the costs and expenses of operating the automobiles and jeep represented commuting expense, *77 they were personal expenses and not deductible, and that to the extent they represented expense of transporting the tools and equipment, they were ordinary and necessary business expenses. Deductible amounts of ordinary and necessary business expenses determined. 2. Fee paid by petitioners in 1954 for preparation of their 1953 income tax return held deductible for 1954. 3. Respondent's disallowance of a portion of a deduction taken for 1954 for medical expenses sustained. 4. Tax Court is without jurisdiction to determine the propriety of Commissioner's motives in making determinations of deficiencies in tax, or the propriety of the administrative policy and procedures he employs prior to making determinations of deficiencies. Morris M. Grupp, Esq., and Leon Schiller, Esq., for the petitioners. Thomas M. Mather,*78 Esq., for the respondent. Withey, Judge. WITHEY *1294 The respondent has determined deficiencies of $ 324.76 and $ 191.40 in the income tax of the petitioners for 1951 and 1954, respectively. Issues presented for determination are the correctness of the respondent's action (1) in disallowing a portion of certain deductions taken for 1951 and 1954 for automobiles, jeep, and other expenses incurred in those years, (2) in disallowing as a deduction for 1954 a fee paid in that year for the preparation of the income tax of the petitioners for 1953, and (3) in disallowing a portion of a deduction taken for 1954 as medical expenses. FINDINGS OF FACT. Charles E. Crowther and Ivy L. Crowther are husband and wife and are and were in 1951 and 1954 residents of Fort Bragg, California. They filed a joint Federal income tax return for 1951 with the collector of internal revenue for the first district of California and filed a joint Federal income tax return for 1954 with the district director for the San Francisco district. Since petitioner Ivy L. Crowther is joined here only by virtue of such joint returns, the term "petitioner" will hereinafter be used with reference to Charles *79 E. Crowther. *1295 During 1951 and 1954 the petitioner was employed as a "faller" in which he engaged in "falling" or cutting or sawing down trees and "bucking" or sawing them into marketable logs at a stated amount per thousand board feet of logs. Upon petitioner's entering the employment of an employer a certain boundary of timberland or "layout" was designated as the site on which he would work. When that was cut over, another layout was designated, and so on until the employer's logging operations were completed or were suspended. The petitioner's employer did not require him to work any specified number of days per week, nor was petitioner required to report for work at any particular hour on the days which he worked. During the years here involved the petitioner's average gross income per day that he worked was approximately $ 40. The petitioner provided certain equipment which he used in his employment during 1951 and 1954. This consisted of 1 chain saw, an extra bar and an extra chain for the saw, a gasoline can, springboards, gun sticks, axes, sledge hammers, from 4 to 14 wedges, and minor tools and spare parts for on-the-job repairs. He also provided lubricating*80 oil for his chain saw. In addition he provided a special safety hat and caulk boots for his personal wear. At the end of a day's work the petitioner would take home with him his gasoline can and any tools or parts of tools that were broken and in need of repair or sharpening. Spare tools such as a spare sledge hammer and a spare axe and spare wedges ordinarily would not be removed from his automobile and consequently were transported back and forth daily. The chain saw and other equipment ordinarily would be left overnight at the layout where petitioner was working. Beginning about the middle of January 1951 and continuing until its annual suspension of logging operations shortly before Christmas of that year, the petitioner was employed by Rockport Redwood Mills which has offices in Rockport, California. Rockport is on the Pacific coast and is about 29 miles north of Fort Bragg, California, where the petitioner resided with his family in a house owned by him. During 1951 the petitioner worked at three layouts on the site of the company's logging operations. Dependent on how far the cutting of a layout had progressed, the petitioner walked from one-fourth of a mile to two miles*81 from where he parked his car to reach the particular spot on the layout where he was cutting timber. The layouts at which the petitioner worked were between 13 and 15 miles from Rockport. The highway between Fort Bragg and Rockport is paved. For petitioner to reach the layouts at which he worked it was necessary for him, after leaving the highway, to travel over one of two routes. About one-half of one route was a public road and the remainder was an unimproved private logging road. This route required the fording of a creek *1296 which was at an impassable depth during the winter months. The other route, which was used during the winter months, was entirely over an unimproved private logging road. The logging roads were rough, winding, and steep. The distance traveled by petitioner in going from his home to the layouts was approximately 40 miles. During 1951 Rockport Redwood Mills furnished gasoline to fallers and "buckers" for their chain saws but did not furnish them any transportation between their homes and the layouts. Nor was there any public transportation available between the petitioner's home and the layouts where he worked. The petitioner worked as a faller*82 and bucker for two different companies during 1954. He worked for H. A. Christie Company, Inc. (sometimes hereinafter referred to as Christie Company), Ukiah California, during the first part of 1954 and until July or August of that year when it completed its logging operations under the contract under which it had been operating. The petitioner worked for Christie Company at two separate layouts which were about 4 miles apart. To reach the layouts the petitioner traveled about 30 miles south from Fort Bragg. About one-half of the distance was over a public road and the remainder was over a private logging road. Christie Company did not provide the petitioner with transportation between his home and the layouts, nor was there any public transportation available between his home and the layouts. Within 2 or 3 days after the termination of his employment with Christie Company, the petitioner began working for Hildebrands, Inc., Ukiah, California, and continued to work for that company through 1 week in January 1955 when he was laid off. During the first 6 weeks of his employment he cut over a layout which he reached from his home by traveling over 35 miles of a paved road and *83 9 miles of logging road. Thereafter, until in January 1955, he worked on another layout which he reached from his home by traveling over 35 miles of paved road and 6 miles of logging road. Hildebrands did not provide petitioner with transportation between his home and the layouts, nor was any public transportation available between his home and the layouts. No living accommodations for the petitioner and his family were available at or near the layouts where he worked in 1951 and 1954. None of the petitioner's employers in 1951 and 1954 imposed upon him any requirements as to where he or his family should live or as to the means that he should employ in traveling between his home and the layouts where he worked. When petitioner was out of work, he used his automobile to drive to various lumber mills in search of employment. In 1950, the petitioner purchased for $ 2,805 a 1947 model Cadillac automobile which he continued to own throughout the years 1951 and *1297 1954 and to the time of the trial herein. About July 1951, the petitioner purchased for $ 125 a 1937 model Plymouth automobile and after using it for about a year junked it. About November 1953, the petitioner purchased*84 for $ 400 a jeep which he continued to own throughout 1954 and afterwards. From the time he began working for Rockport Redwood Mills about the middle of January 1951, until about July when he purchased the Plymouth automobile, the petitioner used his Cadillac automobile to drive to and from work. The Cadillac was not suited for driving over logging roads. After purchasing the Plymouth, the petitioner generally used it to drive to and from work, using the Cadillac only when the Plymouth was not in running condition. The petitioner generally worked 6 days a week while working for Rockport Redwood Mills in 1951. During the portions of 1954 that petitioner worked for Christie Company and Hildebrands, he generally used the jeep to drive to and from work. Occasionally he exchanged rides with another fellow worker who owned a jeep. On other occasions when the petitioner's jeep was not in running condition he used his Cadillac to drive to and from work. During 1954 when the petitioner did not use the Cadillac to go to and from work, Mrs. Crowther used it on occasions for shopping and other personal purposes. The petitioner generally worked 5 days a week while working for Christie Company*85 and Hildebrands in 1954. In his work for Christie Company and Hildebrands during 1954, the petitioner provided gasoline for his chain saw. With ordinary repairs, the useful economic life of the chain saws used by the petitioner in his work in 1951 and 1954 was approximately 1 year. During 1951 and 1954 the petitioner at all times kept possession of his chain saws and other equipment and used it himself in the course of his employment. He did not rent equipment to anyone during those years. In "Schedule F. -- Income from Rents and Royalties" of their income tax return for 1951, the petitioners reported a loss of $ 1,974.81 which they deducted in computing their taxable income for that year. No rental income was shown in the schedule but instead was the statement, "Chain Saw & Equipment rental -- was included in wages prior to Sept. 1951." The remainder of the schedule showed only deductions. Included among the deductions taken as attributable to rental were the following items: Depreciation on automobile (Cadillac) $ 701.00 Saw and equipment repairs 519.31 Gas and oil 245.55 Insurance 141.75 Jallopy (cost of Plymouth automobile) 125.00 *1298 In determining the*86 deficiency for 1951, the respondent determined that 80 per cent of the deductions taken for depreciation on automobile, gas and oil, insurance, and the cost of the Plymouth automobile represented personal expenses of Crowther and disallowed that portion of those deductions. The respondent determined that the deduction taken for saw and equipment repairs represented a capital expenditure and disallowed it, but allowed depreciation thereon based on a useful life of 3 years. The amount of $ 519.31 deducted for saw and equipment repairs did not represent a capital expenditure but represented an ordinary and necessary expense of petitioner's trade or business. Deductible depreciation of the petitioner's Cadillac and Plymouth automobiles sustained as a result of their use in petitioner's trade or business during 1951 amounted to $ 210 and $ 30, respectively. Of the deductions taken for oil and gas and for insurance, the amounts of $ 140 and $ 42, respectively, represented ordinary and necessary expenses of the petitioner's trade or business. Under the heading of "Losses from fire, storm, or other casualty, or theft" in their income tax return for 1951, the petitioners deducted $ 108 *87 which was explained on the return as representing casualty insurance. The respondent determined that the amount represented a personal expense and held that it was not deductible from income. The deduction was taken on account of automobile casualty insurance purchased, and $ 28 of the amount deducted represented an ordinary and necessary expense of petitioner's trade or business. In "Schedule F. -- Income from Rents and Royalties" of their income tax return for 1954, the petitioners reported a loss of $ 837.97 which they deducted in computing their taxable income for that year. In the schedule an amount of $ 1,166.98 was shown as income received from "Equipment Rental." From that amount the petitioners deducted the following items as attributable to rental in computing the above-mentioned amount of $ 837.97: Depreciation on automobile (Cadillac) $ 702.00 Depreciation (jeep) 200.00 Repairs: Parts 301.66 Saw 225.00 Jeep 113.06 Gas 327.26 Oil 43.17 Insurance 92.80 In determining the deficiency for 1954, the respondent disallowed the deduction taken for depreciation on the Cadillac automobile and disallowed $ 125 of the total of $ 313.06 taken for depreciation*88 on and repairs to the jeep. The foregoing amounts were disallowed on the ground that they represented personal expenses. *1299 Deductible depreciation of the petitioners' Cadillac automobile sustained as a result of its use in petitioner's trade or business during 1954 amounted to $ 70. In their income tax return for 1954, the petitioners deducted $ 44.20 for medical expense. The respondent disallowed $ 33.08 of the deduction. Under the heading of "Miscellaneous" expenses in their return for 1954, the petitioners took a deduction of $ 65 which was explained on the return as "Income Tax Service." The respondent disallowed the deduction for lack of substantiation. The deduction was taken for a fee of $ 65 paid by petitioners to Ted Watkins in 1954 for the preparation of their income tax return for 1953. OPINION. The question presented as to the first issue is whether the entire amounts of the deductions taken by petitioners with respect to the automobiles, jeep, and chain saw, and their use are deductible as ordinary and necessary business expenses incurred by Crowther in his employment, as petitioners contend, or whether only the portions thereof allowed by respondent are so*89 deductible, as the respondent contends. Crowther sought and obtained employment at various successive layouts in timberlands which were 40 miles or more from Fort Bragg where he lived, and continued to live, in his own home with his family. No living accommodations for him and his family were available at or near the layouts. Nor was public transportation available between the home and the layouts. None of Crowther's employers provided him with transportation between his home and the layouts, nor did any of them impose upon him any requirement as to where he or his family should reside or as to the means that he should employ in traveling between his home and the layouts where he worked. The petitioners contend that in the foregoing situation it was inherently necessary that Crowther own and use automotive transportation in his employment and that the entire amounts of depreciation and other expenses incurred by him in providing himself with such transportation constituted deductible business expenses. The evidence clearly shows that Crowther's use of the automobiles and jeep to travel between his home and the layouts was for the dual purpose of commuting between his home and *90 his work and for transporting tools and equipment used by him in his employment. It has long been established that commuting expenses, or expenses incurred in traveling from home to one's place of business or employment, are not deductible as business expenses. ; ; ; *1300 ; Regs. 111, sec. 29.23 (a)-2. The rule is the same regardless of the distance traveled between home and the place of business, , and regardless of any equitable consideration which makes the use of a particular mode of transportation necessary, . The fact that public transportation is not available does not require that an exception be made to the rule, since if public transportation were available the fares paid for its use clearly would not be deductible. Consequently, automobile and jeep expenses incurred in lieu of such fares are*91 not entitled to any different treatment, irrespective of whether public transportation is available or not. Nor do we think that the fact that living accommodations for Crowther and his family were not available at or near the layouts provides any stronger basis for an exception to the rule than the fact that public transportation was not available between his home and the layouts. Because of factual differences, cases cited by the petitioners, such as , , and , on appeal C. A. 4, involving the deductibility of traveling expenses of persons who were in a travel status and temporarily living away from home, and cases, such as , involving the deductibility of traveling expenses of judges of a State Supreme Court who were required by the constitution of their State to reside in the district from which they were elected but who were called upon to render the principal part of their services at the State Capitol which was outside of their*92 districts, are without application here. In view of what has been said above, we hold that to the extent the automobile and jeep expenses in question represented commuting expense of Crowther, they were personal expenses and are not deductible as ordinary and necessary business expenses. In allowing a portion of the deductions taken for automobile and jeep expenses, the respondent has recognized, and we think properly so, that the automobiles and jeep, in addition to being used by Crowther to commute between his home and the various layouts at which he worked, also were used by him in his business or trade. In our opinion, the record, in some instances, warrants the allowance for such use of larger amounts than were allowed by the respondent. In those instances, we have found as best we could the amounts which constituted ordinary and necessary business expenses. In other instances, we are unable to find that the record warrants the allowance of any greater amounts than respondent has allowed. The respondent on brief concedes the deductibility for 1951 of $ 519.31 deducted for that year for saw and equipment repairs and the deductibility for 1954 of $ 65 paid in that year as a *93 fee for the preparation of the income tax return of the petitioners for 1953. *1301 The petitioners have alleged error as to respondent's disallowance of a portion of the deduction taken by them as medical expenses for 1954. The respondent has denied the allegation and petitioners have not submitted any evidence bearing on the question. In this situation the respondent's action is sustained. In their petitions the petitioners have assigned certain errors and made certain allegations of fact, all of which the respondent has denied in his answer, and on brief have advanced certain contentions challenging the propriety of the administrative policy and procedures employed by respondent prior to his determination of the deficiencies here involved and challenging the propriety of his motives in making such determinations. We have jurisdiction to consider and determine, and have considered and determined in the light of the evidence of record, the correctness of the respondent's determinations of the deficiencies here involved. But we are without jurisdiction to consider and determine the propriety of the respondent's motives in making such determinations, ,*94 or the propriety of the administrative policy and procedures he employed prior to making such determinations, ; ; . Decisions will be entered under Rule 50.