Expenditures for meals by a military officer stationed at a
permanent duty post to which his dependents were prohibited from
accompanying him held not to constitute deductible "traveling
expenses . . . [incurred] while away from home" within the meaning
of § 62(a)(2) of the Internal Revenue Code of 1954. A military
taxpayer's permanent duty post is his "home" within the meaning of
the statute. Pp.
386 U. S.
289-296.
355 F.2d 294, reversed.
MR CHIEF JUSTICE WARREN delivered the opinion of the Court.
In this case, we are required to determine whether, under the
1954 Internal Revenue Code, expenditures for meals by a military
officer stationed at a post to which his dependents were prohibited
from accompanying him were deductible "traveling expenses . . .
[incurred] while away from home" within the meaning of § 162(a)(2)
[
Footnote 1]
Page 386 U. S. 288
or whether, instead, they were nondeductible "personal, living,
or family expenses" within the meaning of § 262. [
Footnote 2] At all pertinent times,
respondent [
Footnote 3] was a
captain in the United States Marine Corps, attached to an aviation
squadron. Immediately prior to October, 1957, his permanent duty
station was a Marine Corps base located at El Toro, California, and
he lived nearby with his wife and children. On October 1, 1957,
however, respondent and his squadron were transferred to Iwakuni,
Japan, where they were to be based while serving a standard
15-month tour of duty in the Far East. Because dependents were
prohibited from accompanying Marine Corps personnel to that duty
station, respondent's wife and children remained in California.
Of the 14 1/2 months' actual duration of respondent's Far
Eastern tour of duty, he was physically located at the Iwakuni base
for 10 months. The remaining time was consumed by travel and short
periods of duty at various other military bases; respondent was
declared to be in a "travel status" for a period of 49 days, and he
received additional compensation for those days on a
per
diem basis. During the entire period of his service as a
Marine Corps captain, both while he served at bases in the United
States and while he served abroad away from his family, respondent
also received tax-free monthly allowances for quarters and
subsistence.
On his 1958 income tax return, respondent claimed
Page 386 U. S. 289
a deduction of $650, representing the cost of his meals at a
rate of $65 per month for the 10 months spent at the Iwakuni base.
The Commissioner of Internal Revenue disallowed the deduction,
ruling that the expenditure for meals was a "personal, living"
expense under § 262, and not a travel expense under § 162(a)(2). In
the Commissioner's view, respondent's "home" during the period in
question was his permanent duty station at Iwakuni, rather than
California, where his family resided; therefore, he was not "away
from home" when he incurred the expenditure. The Tax Court upheld
the Commissioner (40 T.C. 896), and respondent petitioned for
review in the Court of Appeals for the Ninth Circuit. That court,
in a per curiam decision with one judge dissenting, reversed the
Tax Court and rejected the Commissioner's definition of "home" for
purposes of the deduction. 355 F.2d 294. The majority of the Court
of Appeals ruled that the word "home" as used in § 162(a)(2) of the
Code must be given its usual meaning as the place of residence, not
the place of business, of the taxpayer and his family. And since it
was not reasonable for this taxpayer to move his family residence
closer to his place of business, the "ordinary and necessary"
requirement applicable to all § 162 deductions was met, and the
cost of meals at Iwakuni was deductible. To resolve a direct
conflict between this decision and a 1948 decision of the Court of
Appeals for the Fourth Circuit in another case involving a military
officer,
Bercaw v. Commissioner, 165 F.2d 521, we granted
certiorari. 385 U.S. 809.
This case then requires us to focus upon one of the three
conditions which must be met before an item is deductible as a
travel expense under § 162(a)(2). There is no question but that the
expenditure here was "ordinary and necessary" and that there was a
"direct connection
Page 386 U. S. 290
between the expenditure and the carrying on of the trade or
business of the taxpayer or of his employer."
Cf. Commissioner
v. Flowers, 326 U. S. 465,4
326 U. S. 70
(1946);
Peurifoy v. Commissioner, 358 U. S.
59 (1958). The essence of the case is whether respondent
was "away from home" when he incurred the expenditure. And the
answer to that question turns upon a determination of whether,
under the circumstances related above, respondent's "home" in 1958
was his permanent duty station at Iwakuni, Japan, or, instead, the
residence of his family in California.
From the Revenue Act of 1921 [
Footnote 4] down to § 162(a)(2) of the 1954 Internal
Revenue Code, Congress has provided a deduction from taxable income
for travel expenses, including amounts expended for meals and
lodging, while "away from home." Although Congress has not defined
the crucial phrase "away from home," administrative rulings and
regulations have been directed toward that problem. In 1921, a
general rule was established to the effect that "home" meant the
taxpayer's principal place of business or employment, whether or
not it coincided with his place of residence. [
Footnote 5] This interpretation prevented
deductions of day-to-day commuting expenses which were not the
unusual type of "traveling expense" to which the statute was
directed.
Cf. Commissioner v. Flowers, 326 U.
S. 465,
326 U. S. 470
(1946). Its logic has been applied to a host of other situations.
Although certain refinements have been added, [
Footnote 6] the essential position of the
Commissioner has remained unchanged.
Page 386 U. S. 291
While the court below, [
Footnote
7] together with the Courts of Appeals for the Fifth [
Footnote 8] and Sixth [
Footnote 9] Circuits, has not always agreed
with this interpretation, the Tax Court [
Footnote 10] and all of the other courts of appeals
which have considered it have sustained the Commissioner. [
Footnote 11] The Commissioner's
interpretation of the word "home" in connection with travel expense
deductions was also made clear to Congress when, in 1936, it was
held that Members of Congress could not deduct expenses which they
incurred in Washington, D.C. even though each also maintained a
residence in the district from which he had been elected.
Lindsay v. Commissioner, 34 B.T.A. 840. Congress did
Page 386 U. S. 292
not respond to this ruling by amending the statutory language
generally to provide that "home" was intended to be synonymous with
"residence," but instead merely carved out an exception to cover
the special travel expense problems inherent in service as a
national legislator. [
Footnote
12]
The Commissioner argues that the fact that Congress has reviewed
and reenacted the pertinent language with an awareness of the
administrative interpretation constitutes a legislative endorsement
of the Commissioner's position, and is sufficient reason for
reversing the judgment below.
Helvering v. Winmill,
305 U. S. 79
(1938). But it is not necessary for us to decide here whether this
congressional action (or inaction) constitutes approval and
adoption of the Commissioner's interpretation of "home" in all of
its myriad applications, since, in the context of the military
taxpayer, the Commissioner's position has a firmer foundation. The
Commissioner has long held that a military taxpayer's permanent
duty station is also his home for purposes of determining
deductibility of travel expenses. This position builds on the
terminology employed by the military services to categorize various
assignments and tours of duty, and also on the language and policy
of the statutory provisions prescribing travel and transportation
allowances for military personnel. For example, a Marine Corps
directive, which was effective during respondent's Far
Page 386 U. S. 293
Eastern tour of duty, defined the length of standard tours of
duty in terms of the commencement and termination dates of
"permanent change[s] of station." [
Footnote 13] (Emphasis supplied.) Similarly, eligibility
for certain statutory travel allowances turns upon whether an
assignment constitutes a "change of
permanent station"
(emphasis supplied) or whether the serviceman is "away from his
designated post of duty." 37 U.S.C. § 404(a)(1). Thus, the
Commissioner's position recognizes, as do the relevant statutes and
the military services themselves, that the "permanence" of location
in civilian life cannot find a complete parallel in military life
which necessarily contemplates relatively frequent changes of
location.
The nondeductibility of expenses incurred by a military taxpayer
while at a permanent duty station was previously challenged in
Bercaw v. Commissioner, 165 F.2d 521 (C.A.4th Cir.1948).
There, the taxpayer, a reserve army officer who was called to
active duty and assigned to Fort Meade in Maryland, where there
were no quarters for dependents, sought to deduct expenditures for
his meals and janitorial service as costs of traveling "away from
home" in pursuit of his trade or business. The Court of Appeals
affirmed the Tax Court's disallowance of the deduction,
stating:
"The taxpayer was engaged in the business of an Army officer.
His place of business was his particular Army post. If his Army
duties required him to travel, he would have received a
per
diem travel allowance which would not have been taxable. . . .
But whenever he made a permanent change of station, that place of
duty became his place of business, and there was his 'home'
Page 386 U. S. 294
within the meaning of Section 23(a)(1)(A)."
"Thus, the expenditures for meals . . . while at this post were
personal living expenses and nondeductible. . . ."
165 F.2d at 524. Since the
Bercaw decision, the
Commissioner has reiterated his position in Rev.Rul. 55-571, 1955-2
Cum.Bull. 44. And until the decision of the court below in the
present case, neither the courts nor Congress had disturbed the
Commissioner's interpretation of "home" as it pertained to military
personnel.
Additional support for the Commissioner's position is found in
the fact that Congress traditionally has provided a special system
of tax-free allowances for military personnel. [
Footnote 14] These allowances now range
from monthly payments for quarters [
Footnote 15] and subsistence [
Footnote 16] to
per diem payments when the
serviceman is declared in a "travel status." [
Footnote 17] Provision may also be made for
financial relief to assist dependents in relocating when they are
prohibited from accompanying a serviceman on a change of permanent
duty station. [
Footnote 18]
In the present case, respondent received the
per diem
payments while he was away from his permanent duty station. His
quarters at Iwakuni were provided without cost to him, and, at the
same time, he continued to receive a tax-free quarters allowance of
approximately $102.50 per month; [
Footnote 19] he also
Page 386 U. S. 295
received a tax-free subsistence allowance of approximately
$42.50 per month at all relevant times. Moreover, because his
assignment to Iwakuni was a change of permanent station, his wife
and children could have moved their residence to another part of
the United States at the Government's expense; however, they
elected not to exercise that option.
Underlying the system of special allowances is congressional
recognition of the fact that military life poses unusual financial
problems. [
Footnote 20] The
system is designed to provide complete and direct relief from such
problems, as opposed to the incomplete and indirect relief which an
income tax deduction affords to a civilian business traveler.
[
Footnote 21] If the system
of allowances is, in fact, inadequate,
Page 386 U. S. 296
or if there are inconsistencies in the Commissioner's
application of the travel expense provision to military personnel,
[
Footnote 22] it is the
province of Congress and the Commissioner, not the courts, to make
the appropriate adjustments. Given the Commissioner's longstanding
and judicially approved interpretation, the knowledge of that
interpretation by Congress, and the fact that Congress has chosen
to deal specially by tax-free allowances with the financial
problems peculiar to military life, we must agree with the
Commissioner that the military taxpayer is not "away from home"
when he is at his permanent duty station, whether or not it is
feasible or even permissible for his family to reside with him
there. The judgment is, therefore,
Reversed.
Page 386 U. S. 297
[
Footnote 1]
"There shall be allowed as a deduction all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business, including --"
"
* * * *"
"(2) traveling expenses (including the entire amount expended
for meals and lodging) while away from home in the pursuit of a
trade or business. . . ."
§ 162(a)(2) of the Internal Revenue Code of 1954, 26 U.S.C. §
162(a)(2) (1958 ed.).
[
Footnote 2]
"Except as otherwise expressly provided in this chapter, no
deduction shall be allowed for personal, living, or family
expenses." § 262 of the Internal Revenue Code of 1954, 26 U.S.C. §
262.
[
Footnote 3]
Since a joint income tax return was filed by Captain and Mrs.
Stidger, both are respondents here. In this opinion, however, the
terms "respondent" and "taxpayer" refer only to Captain
Stidger.
[
Footnote 4]
Revenue Act of 1921, c. 136, § 214(a), 42 Stat. 239.
[
Footnote 5]
O.D. 864, 4 Cum.Bull. 211 (1921); O.D. 1021, 5 Cum.Bull. 174
(1921).
[
Footnote 6]
See, e.g., I.T. 1490, I-2 Cum.Bull. 89 (1922); Rev.Rul.
60-189, 1960-1 Cum.Bull. 60.
See also note
22 infra.
[
Footnote 7]
In addition to the instant case,
see also Wright v.
Hartsell, 305 F.2d 221 (C.A. 9th Cir.1962).
[
Footnote 8]
Steinhort v. Commissioner, 335 F.2d 496 (C.A. 5th
Cir.1964);
United States v. Le Blanc, 278 F.2d 571 (C.A.
5th Cir.1960).
[
Footnote 9]
Burns v. Gray, 287 F.2d 698 (C.A. 6th Cir.1961).
[
Footnote 10]
See, e.g., Friedman v. Commissioner, 37 T.C. 539
(1961);
Carroll v. Commissioner, 20 T.C. 382 (1953). The
facts of the
Carroll case are closely analogous to the
circumstances surrounding the claimed deduction here. The taxpayer
there was an employee of the War Department who, in 1947, was
transferred to a "permanent duty station" in Korea for a minimum of
one year. His wife and child remained in the United States. A
deduction for the cost of meals and lodging while in Korea was not
allowed by the Tax Court, which noted that the taxpayer's employer
(1) designated Korea as a "permanent duty station" and (2) granted
per diem travel allowances only while the taxpayer was en
route to and from Korea, not while he was based there.
See also
Todd v. Commissioner, 10 T.C. 655 (1948).
[
Footnote 11]
See, e.g., O'Toole v. Commissioner, 243 F.2d 302
(C.A.2d Cir.1957);
Coerver v. Commissioner, 297 F.2d 837
(C.A.3d Cir.1962),
affirming 36 T.C. 252 (1961);
Bercaw v. Commissioner, 165 F.2d 521 (C.A.4th Cir.1948);
England v. United States, 345 F.2d 414 (C.A. 7th
Cir.1965);
Cockrell v. Commissioner, 321 F.2d 504 (C.A.
8th Cir.1963), and
York v. Commissioner, 82 U.S.App.D.C.
63, 160 F.2d 385 (1947). The Courts of Appeals for the First and
Tenth Circuits apparently have not taken a position on this
question.
[
Footnote 12]
66 Stat. 467. The exception was carried over to the 1954 Code,
and now reads:
"For purposes of the preceding sentence, the place of residence
of a Member of Congress . . . within the State, congressional
district, Territory, or possession which he represents in Congress
shall be considered his home, but amounts expended by such Members
within each taxable year for living expenses shall not be
deductible for income tax purposes in excess of $3,000."
26 U.S.C. § 162(a).
[
Footnote 13]
Marine Corps Order 1300.8B, c. 1, issued Jul 1, 1958. Record, p.
24.
[
Footnote 14]
See generally Advisory Commission on Service Pay,
Career Compensation for the Uniformed Forces, Appendix 13-18
(1948).
[
Footnote 15]
37 U.S.C. § 403
[
Footnote 16]
37 U.S.C. § 402
[
Footnote 17]
37 U.S.C. § 404.
See also 37 U.S.C. §§ 405-412.
[
Footnote 18]
37 U.S.C. § 406(h).
[
Footnote 19]
37 U.S.C. § 403(d) provides:
"A member of a uniformed service who is assigned to quarters of
the United States or a housing facility under the jurisdiction of a
uniformed service may not be denied the basic allowance for
quarters if, because of orders of competent authority, his
dependents are prevented from occupying those quarters."
[
Footnote 20]
In 1948, the Hook Commission, which had been appointed by the
Secretary of Defense to study military compensation, issued its
report and recommendations. Advisory Commission on Service Pay,
Career Compensation for the Uniformed Forces (1948). That report
formed a principal basis for the Career Compensation Act of 1949,
c. 681, 3 Stat. 802. On the subjects of subsistence and quarters
allowances, the Commission stated (Appendix, p. 17):
"The theory behind the subsistence allowance is that, since the
officer is required to arrange and provide his subsistence at all
times and since he has no choice as to the place where he is to be
stationed, and therefore does not have the choice of the average
citizen as to the place and manner of subsisting himself, it is
necessary to provide him with an allowance at all times so that he
may bear that expense wherever stationed."
"
* * * *"
"Because an officer is transferred frequently from place to
place and is required to dig up his roots at the old station and
transplant them to the new station, the Government has acknowledged
for years its obligation to furnish quarters to the officer for
occupancy by himself and his dependents."
[
Footnote 21]
Congress has through the years evidenced a determination to
maintain the various allowances at levels consistent with the
necessary financial burdens borne by servicemen.
See, e.g.,
id. at 35 and Appendix 13-18; H.R.Rep. No. 779, 81st Cong.,
1st Sess., p. 19. In 1963, Congress enacted yet another measure
designed to provide direct relief for dependents separated from
servicemen on permanent duty outside this country or in Alaska. 37
U.S.C. § 427(b). Under specified conditions, this provision
authorizes an allowance of $30 monthly. It was established because
Congress recognized that separated families incur additional
expenses.
See H.R.Rep. No. 208, 88th Cong., 1st Sess., p.
29. That recognition is, of course, the same one that, underlies
the travel expense deduction for civilian taxpayers.
[
Footnote 22]
The Commissioner has taken the position that a naval officer may
deduct as a traveling expense the cost of his meals aboard ship
while the ship is away from its home port. Rev.Rul. 55-571, 1955-2
Cum.Bull. 44. It is contended that respondent's situation at
Iwakuni was directly analogous to that of a naval officer on a ship
at sea for an extended period of time. The Commissioner justifies
the discrepant treatment by arguing that a naval officer should be
treated like the engineer of a train, a bus driver, or an airplane
pilot for purposes of the travel expense deduction; the principal
place of business of such taxpayers is their home terminal, and
they are allowed the deduction when away from that terminal on
business trips. We are not convinced that respondent's situation
was in all relevant respects analogous to that of a naval officer
at sea. In any event, during oral argument, we were advised that
the Commissioner is reexamining his position with respect to naval
officers.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK and MR. JUSTICE
FORTAS concur, dissenting.
The resolution of this case depends upon whether respondent was
"away from home" when he incurred the expenses. [
Footnote 2/1] The term "home" is not defined.
The Treasury's administrative rulings for many years have indeed
treated the statutory word "home" as meaning a taxpayer's principal
place of business or employment.
See Commissioner v.
Flowers, 326 U. S. 465,
326 U. S.
471-472. To me it is clear that home means residence,
with the qualification that a taxpayer should establish his
residence as near to his place of employment as is reasonable.
Ibid. Here, the taxpayer was forbidden by military orders
to take his family with him. He was, in other words, barred from
taking his home with him whenever he went on military orders. The
Commissioner points to the difficulty of having any rule other than
the fixed one that "home" means the taxpayer's principal place of
business or employment. It is said that, if the rule is not rigid,
a great complex of facts would have to be considered: adequacy of
housing at the new post, expense of moving, school facilities,
health of the family, the need to care for elderly or ailing
relatives, and the like. Only a fixed rule provides certainty, it
is said; any other would threaten the desire for uniformity.
Page 386 U. S. 298
While equity is seldom an ingredient of the tax laws, while they
are indeed inherently discriminatory in many ways, reflecting
perquisites obtained by pressure groups, [
Footnote 2/2] we need not increase their harshness by
giving simple words unusual or strained meanings -- unless, of
course, Congress has plainly made an arbitrary choice.
If the taxpayer chooses to maintain his residence at a place far
removed from his place of business, the travel expenses are not
"ordinary and necessary," since not dictated by business needs.
Commissioner v. Flowers, supra. On the other hand, if the
taxpayer cannot reasonably maintain his residence at his place of
business, the travel expenses are "ordinary and necessary," and
hence deductible. Such an interpretation would give effect to the
congressional policy of allowing a deduction for expenses dictated
by the needs of the taxpayer's employment.
In this case, there can be no question that the expenses were
incurred in the pursuit of the taxpayer's employment, and that
respondent could not move his residence to Iwakuni. There can be no
question that the expenses were motivated by "[t]he exigencies of
business, rather than the personal conveniences and necessities of
the" respondent.
Commissioner v. Flowers, supra, at
326 U. S. 474.
I cannot see how the result is changed simply because respondent is
a member of the armed services. The fact that Congress has afforded
members of the military special allowances is no indication that
Congress intended
Page 386 U. S. 299
that they not be allowed to deduct "ordinary and necessary"
expenses incurred while away from their residence. Respondent
received the same pay and basic allowances while in the Far East as
he did while residing with his family in the United States. T here
was no increase to help defray the increased expenses incurred by
him while required to live away from his family.
[
Footnote 2/1]
Section 162 of the Internal Revenue Code of 1954 provides in
relevant part:
"(a) IN GENERAL. -- There shall be allowed as a deduction all
the ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business, including
--"
"
* * * *"
"(2) traveling expenses (including the entire amount expended
for meals and lodging) while away from home in the pursuit of a
trade or business. . . ."
[
Footnote 2/2]
". . . assume that a farmer has a herd of hogs. Each year he
selects certain young to be bred. After each sow has one litter,
she is turned out to be conditioned for slaughter. The profits on
the sale of the pigs unbred are taxable as ordinary income. But the
profits on the sale of the pigs bred once are taxable as capital
gains. They have been held as business properties producing other
pigs. The fact that all the pigs are equally destined to be sold
and eaten is unimportant."
Eisenstein, The Ideologies of Taxation 174 (1961).