Schmidt v. Commissioner

WALTER SCHMIDT, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Schmidt v. Commissioner Docket No. 11548. United States Board of Tax Appeals 11 B.T.A. 1199; 1928 BTA LEXIS 3662; May 7, 1928, Promulgated *3662 Petitioner, who was under contract in 1921 to play baseball with a ball club at Pittsburgh, Pa., paid traveling expenses of his wife and child from their home to Pittsburgh, his own traveling expenses to the club's training camp, and, at the end of the season paid the traveling expenses of himself, his wife, and child from Pittsburgh to his home. Held, the amounts so expended are not deductible as business expenses. Walter Schmidt pro se. John W. Fisher, Esq., for the respondent. ARUNDELL *1199 This proceeding results from the respondent's determination of a deficiency in the amount of $36.66 in income tax for the calendar year 1921. Petitioner alleges that respondent erred in disallowing a deduction in the amount of $660 as an ordinary and necessary business expense incurred in playing professional baseball under contract. FINDINGS OF FACT. For a number of years, including 1921, petitioner has been a resident of Modesto, Calif., where he owned and maintained a home and fruit ranch. For several years prior and subsequent to they year 1921 petitioner has played professional baseball with various clubs, the ball season lasting for*3663 about seven months out of the year. Shortly prior to March, 1921, petitioner signed a contract to play baseball with the Pittsburgh club during the ball season of that year for an agreed salary of $8,000. Petitioner's contract required him to report at the time and place designated for spring training. At or about March 1, 1921, petitioner traveled by rail from Modesto, Calif., to Hot Springs, Ark., where he began spring training with the Pittsburgh club. The club paid all of petitioner's traveling *1200 expenses from Hot Springs to Pittsburgh, and also to the various locations where the ball club played ball. Petitioner's wife and child left their home in Modesto and traveled to Pittsburgh, where they lived until the 1921 baseball season terminated, at which time petitioner and his family traveled by rail direct to their home. Petitioner kept no itemized account of the traveling expenses, but made a note of the total cost of railroad fares, plus Pullman service and an estimate of the cost of meals for himself, wife and child, which totaled $660. Petitioner deducted the amount of $660 from his gross income for the year 1921, as an ordinary and necessary business expense*3664 incurred in carrying on his business while away from home. The Commissioner disallowed the said deduction on the ground that the total amount was a personal expense, which action resulted in the deficiency in question. OPINION. ARUNDELL: The expenses incurred by petitioner's wife and child in traveling from Modesto, Calif., to Pittsburgh, Pa., and return are personal living expenses which are not deductible from petitioner's gross income as provided by section 214(a)(1) of the Revenue Act of 1921. We have held in the cases of ; ; and , that the cost of transportation of a taxpayer from his home to his place of business is not a business expense. In the Bixler case the taxpayer was employed at Hammond, La. While so employed he made two or three trips to visit his family at Mobile, Ala., where he maintained his residence, and one trip to Houston, Tex., to secure employment. He obtained the employment sought, returned to Hammond and resigned from his position there, and then proceeded to Houston. He claimed a deduction in the amount*3665 expended for railroad fare, and for lodging, meals, and laundry while on these trips. We held that: We think the Commissioner in this case correctly held that railroad fare and living expenses paid out by this petitioner during the year 1922 were not deductible from gross income * * *. In the opinion of the Board, traveling and living expenses are deductible under the provisions of this section [214(a)(1), revenue Act of 1921] only while the taxpayer is away from his place of business, employment, or the post or station at which he is employed, in the prosecution, conduct, and carrying on of a trade or business. A taxpayer may not keep his place of residence at a point where he is not engaged in carrying on a trade or business, as this petitioner testified was true in this instance, and take a deduction from gross income for his living expenses while away from home. We think section 214(a)(1) intended to allow a taxpayer a deduction of traveling expenses while away from his post of duty or place of employment on duties connected with his employment. *1201 In the case of *3666 , we referred to the Sullivan case, supra, which involved automobile transportation from the taxpayer's residence to his place of business, with the explanation that: Fundamentally, the reason for this is that the proximate cause of the automobile transportation is not the place of location of the business, but the place of location of the residence. We accordingly hold that the expenses paid by petitioner in traveling from his home in Modesto, Calif., to Hot Springs, Ark., and from Pittsburgh, Pa., to Modesto are not deductible as business expenses. Reviewed by the Board. Judgment will be entered for the respondent.