Unpublished Disposition, 940 F.2d 1533 (9th Cir. 1991)

No. 90-70349.

United States Court of Appeals, Ninth Circuit.

Before WILLIAM A. NORRIS and DAVID R. THOMPSON, Circuit Judges, and KING,^** 

MEMORANDUM^*** 

Bruce Cavana appeals the decision of the United States Tax Court that he was not entitled to deduct food and lodging expenses for 1984 and 1985 pursuant to 26 U.S.C. § 162(a) (2). We have jurisdiction under 26 U.S.C. § 7482(a) and we affirm.

Appellant is a heavy equipment operator. On his federal income tax returns for 1984 and 1985, he reported his address as 4609 Buckingham Way, Sacramento, California. The house at that address is occupied by appellant's mother and owned by his mother and brother. Appellant has no financial or legal interest in the house.

During 1984 and 1985, appellant worked only in Palo Alto, Mountain View, and Watsonville, California, none of which is in the Sacramento area. During periods of unemployment, appellant lived in his mother's house and shared expenses with her. When employed outside the Sacramento area, appellant rented rooms in lodging houses near his work sites. On his 1984 and 1985 federal income tax returns, appellant claimed employee expense deductions in the amounts of $6,243.27 and $6,981.00 respectively.

Section 162(a) (2) of the Internal Revenue Code (26 U.S.C.) allows taxpayers to deduct "traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business." The Tax Court, relying on our decision in James v. United States, 308 F.2d 204 (9th Cir. 1962), held that appellant was not "away from home" within the meaning of this section.

* Our decision in James governs this case. In James, which dealt with Sec. 162(a) (2)'s predecessor in the Internal Revenue Code, we noted that Congress' purpose in allowing this deduction is to mitigate the burden on taxpayers who are compelled to duplicate expenses or to pay higher prices for food and shelter because they are traveling. James, 308 F.2d at 206. We held, therefore, that "a taxpayer has a 'home' [for the purposes of this section] only when it appears that he has incurred substantial continuing living expenses at a permanent place of residence." Id. at 208.

Appellant correctly points out that we recognized two justifications for the deduction in James. First, we noted that a taxpayer who maintains a home while traveling duplicates expenses. Id. at 207. Appellant does not argue that he was duplicating expenses while he was away from Sacramento. He shared expenses with his mother only when he was living with her during periods of unemployment. When he was not in Sacramento, appellant apparently paid nothing to his mother.

Appellant relies instead on James' second justification for the deduction: "the assumption that food and shelter cost more while traveling." Id. at 207; Blue Brief 12; Grey Brief 2. Appellant testified that it cost him only $200 a month to live in Sacramento and $680 a month to live away from Sacramento. Grey Brief 2. The flaw in appellant's argument is his assertion that under this second rationale one need not incur "substantial continuing living expenses at a permanent place of residence." Blue Brief 12. James explicitly stated that this second rationale "supports a reading of the Section as requiring maintenance of a substantial permanent abode at which taxpayer could live at a lesser expense if not required to travel. If a taxpayer has no such home, and obtains his food and shelter at public restaurants and lodgings even if not traveling, the increase in the cost of these items attributable to travel is at least substantially less." Id. at 207 (emphasis added). If the fact that life on the road is more expensive was enough by itself to entitle a taxpayer to this deduction, we would have reached a different result in James. But in James we held that a traveling salesman who was always on the road was not entitled to the deduction.

If a traveling salesman who is always on the road is not entitled to the deduction, appellant is not. The requirement that a taxpayer incur "substantial continuing living expenses" in order to claim the deduction ensures that the benefits of the deduction will go to those who most need the relief. Appellant may live more inexpensively when he is between jobs than the traveling salesman in James. We cannot hold that appellant's good fortune also entitles him to a windfall under the tax code. Unless appellant's sharing of expenses with his mother constitutes "substantial continuing expenses at a permanent place of residence," appellant did not have a "home" to be away from and his expenses are not deductible.¹ 

II

Having concluded that the Tax Court correctly interpreted James, we turn to whether appellant has met the requirement of substantial continuing expenses under James. The Tax Court concluded that he had not. This determination is essentially a question of fact and will be overturned only if it is clearly erroneous. Frank v. United States, 577 F.2d 93, 97 (1978). Appellant was not in any substantial way responsible for maintaining the house that he claimed as his "home." His expenditures were neither substantial nor continuous. We cannot say, therefore, that the Tax Court's determination that appellant was not "away from home" within the meaning of the statute was clearly erroneous.² 

For the reasons stated herein, the decision of the Tax Court is

AFFIRMED.