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Individual’s Time at New Job Too Short to Deduct Moving Expenses

APR. 14, 2021

Erinn Theresa Doyle et vir v. Commissioner

DATED APR. 14, 2021

Erinn Theresa Doyle et vir v. Commissioner

Commissioner of Internal Revenue,

United States Tax Court
Washington, DC 20217


Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is

ORDERED that the Clerk of the Court shall transmit herewith to the parties a copy of the pages of the transcript of the trial in this case before Chief Special Trial Judge Lewis R. Carluzzo at San Antonio, Texas, containing his oral finds of fact and opinion rendered at the trial session at which the case was heard.

In accordance with the oral findings of fact and opinion, decision will be entered for respondent.

Lewis R. Carluzzo
Chief Special Trial Judge

Served 04/14/21

Bench Opinion by Judge Lewis R. Carluzzo

March 4, 2021

THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral finding of fact and opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152.

This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 174. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority, and pursuant to section 7463(b) the decision entered in this case shall not be treated as precedent for any other case.

Erinn Theresa Doyle and David Devon Doyle each appeared unrepresented by counsel. Roberta Shumway appeared on behalf of respondent.

In a notice of deficiency dated January 21, 2020 (notice), respondent determined a $7,495 deficiency in petitioners' 2017 Federal income tax.

The issue for decision is whether petitioners are entitled to a deduction for moving expenses.

Some of the facts have been stipulated and are so found. At the time the petition was filed, petitioners place of residence was Florida.

Petitioners own a house in California and were living there with their child at the beginning of 2017. At the time Mr. Doyle worked as an electrician and Mrs. Doyle was employed with the Naval Hospital, Camp Pendleton in its radiology department. Sometime in early 2017 Mr. Doyle was offered a position and hired by the State of Hawaii as an electrician. Soon thereafter he moved to Hawaii to start working there. Petitioners' car and other household items soon followed.

Mrs. Doyle and petitioners' child remained in California. They intended to move to Hawaii later in 2017 to join Mr. Doyle, but as often happens in life things did not go as planned. Mr. Doyle's employment with the State of Hawaii lasted only for a short period. It began on March 1 of 2017 and ended on June 23rd, 2017. He resigned from the job and decided to move back to California for a number of personal reasons, including (1) his belief that certain atmospheric conditions and the frequency of earthquakes presented an unfit environment for his family (as it turned out the area suffered a natural disaster after he left), (2) petitioners' attempt to sell their California house failed, and (3) Mrs. Doyle's decision to remain in California in order to care for her father. When Mr. Doyle returned to California in June 2017, he did not have a job waiting for him.

Petitioners' timely filed 2017 Federal income tax return was prepared by a paid income tax return preparer. The adjusted gross income shown on their return includes a "above the line" deduction of $28,466 for moving expenses. The form 3903, Moving Expenses, attached to the return shows transportation and storage of household goods expenses of $21,570 and travel expenses of $6,896.

In the notice respondent disallowed petitioners' moving expense deduction. Another adjustment made in the notice is computational and need not be addressed. As a general rule, and as the Court has observed in opinions too numerous to count, the commissioner's determination of a taxpayer's liability in a notice of deficiency is presumed correct and the taxpayer bears the burden of proving that the determination is erroneous. Rule 142(a) Welch v. Helvering, 290 U.S. 111, 115 (1933).

Furthermore, as we have often observed, tax deductions are a matter of legislative grace and the taxpayer bears the burden of proving entitlement to any deduction claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).

Section 217(a) allows as a deduction "moving expenses paid or incurred during a taxable year in connection with the commencement of work by the taxpayer as an employee or as a self-employed individual at a new principal place of work." Section 217(b) generally defines the term "moving expenses" as the reasonable expenses of moving household goods and personal effects from the former residence to the new residence and related travel. The deduction here in dispute includes not only items considered as moving expenses within the meaning of section 217, but other types of expenses as well that would more properly be considered nondeductible personal expenses. At trial petitioners recognized the distinction, but under the circumstances the distinction really makes little difference.

Section 217(c) imposes conditions that taxpayers must satisfy to be eligible to claim a deduction for moving expenses. As relevant here, one condition requires that during a 12-month period immediately following the taxpayer's arrival in the general location of the taxpayer's new principal place of work, the taxpayer be employed full-time in that general location for at least 39 weeks. See section 217(c)(2)(A).

This requirement does not apply "if the taxpayer is unable to satisfy such condition by reason of involuntary separation (other than for willful misconduct) from the service of, or transfer for the benefit of an employer after obtaining full employment in which the taxpayer could reasonably have been expected to satisfy such condition". Section 217(d)(1)(B).

As noted, Mr. Doyle's job in Hawaii lasted from March 1 through June 23, 2017, well short of the 39-week requirement referenced in section 217(c)(2). Furthermore, although his decision to terminate his employment in Hawaii and return to California was well founded, his reasons for doing so were personal and the termination of his employment was not "involuntary" so as to allow for an exception to the 39-week rule provided in section 217(d)(1). Returning to California to start a new job was not among his reasons. Consequently the portion of moving expenses allocable to Mr. Doyle's return to California cannot be deducted, because he did not return there "in connection with the commencement of work at a new principal place of work". Section 217(a).

At trial it became clear that petitioners do not dispute respondent's disallowance of their moving expense deduction on technical grounds. Instead they are looking for the Court to allow for an exception to the 39-week rule under the circumstances of their case. They are looking for "leniency", as they put it. Whether it's called leniency, or equity, or fairness, or sympathy, in effect they are asking that the Court rule in a manner inconsistent with the results demanded by the application of a clear statutory scheme, in this case section 217, to an undisputed set of facts. This the Court cannot do.

While we appreciate and commend petitioners for the decisions, they made in order to ensure and protect the security and health of the members of their family, we are bound in this case, more appropriately constrained, at least with request to some of the expenses involved in the moving expense deduction to apply the law as written. Consequently, respondent's disallowance of the moving expense deduction here in dispute is sustained.

To reflect the foregoing. Decision will be entered for respondent. This concludes the Court's bench opinion in this case.

(Whereupon, at 10:13 a.m., the above-entitled matter was concluded.)

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