Attorney-at-Law

“WHAT IS TEMPORARY BECOMES INDEFINITE” – PART DEUX

In Uncategorized on 04/08/2019 at 16:36

Once again we have the travelin’ man unable to deduct his expenses for trekking from home to work. Michael E. Brown, of Michael E. Brown And Miriam L. Mercado-Brown, 2019 T. C. Memo. 30, filed 4/8/19, is a “concierge CFO.” He’s an IC CPA and finance dude, who in the years at issue, left his home in GA, but fetched up four days a week in Pennsauken, NJ, before returning to the Peach State and his nearest and dearest for the weekend.

No substantiation issue with the expenses, so all Judge James B (“Big Jim”) Halpern has is whether Mike was temporary or indefinite. It matters, and for IC’s it will continue to matter. EEs have to wait for 2026. And it’s facts-and-circumstances. See my blogpost “What is Temporary Becomes Indefinite,” 2/15/18.

Mike had more than a dozen clients over the years, but for the years at issue it was an outfit called AFR that had Mike on the road. He did have two (count ‘em, two) other clients he reported on separate Sched Cs, but had only $7 in travel for one and zero travel for the other.

Mike testified that, with an internet connection and his trusty computer, he could work anywhere mostly, but AFR needed him in Pennsauken.

“As we understand it, Mr. Brown is in essence a business consultant who, over the years, has had numerous clients for his concierge CFO business.  Often, he has had more than one client at once.  Many, if not most, of his clients did not require him to be present on, or, indeed, spend much time at, their business premises.  Such is a wonder of the information age.  But AFR was different.” 2019 T. C. Memo. 30, at p. 11.

Judge, I’ve sometimes said that I could do 90% of my work in a yurt in Mongolia, if I had climate control, a solid secure internet connection, and my MacBook Pro.

Mike’s deal with AFR was three years, cancelable on five days’ notice. He had to be on-premises four days per week. He kept his family in GA.

Remember, if your work is temporary, that is, reasonably expected to be of very short duration, your tax home never migrates to your workplace, so your tax home and real home remain the same. And you can deduct travel expenses.

“At trial, Mr. Brown suggested that, because, under the agreement, AFR could terminate his engagement at will, his engagement by it was temporary (implying that, because the engagement was temporary, Pennsauken never became his tax home).  And while petitioners do not pursue that argument on brief, the fact that the agreement, although terminable by either party, was to last for three years is indicative that Mr. Brown could not have expected his work for AFR in Pennsauken to be temporary; i.e., he could not have expected it to be concluded within a reasonably short period.” 2019 T. C. Memo. 30, at p. 12.

For the second of the years at issue, Mike claims he negotiated with AFR, so he could spend alternate two-week periods in Pennsauken and in AFR’s GA office. Thus, he didn’t work a full year in Pennsauken. But Mike testified that, for 17 months, he was in a hotel room every week. And produced no evidence about his two-week rotations, thus getting a negative inference.

And Mike didn’t have a home office in GA, and evidence of his off-line business activity is scanty.

“AFR was the sole source of Mr. Brown’s business income.  He spent the majority of his time (four days a week) in Pennsauken, working for AFR.  While he may have engaged in activities with respect to his concierge CFO business while at home on long weekends in Atlanta, he did not describe any client meetings in Atlanta or otherwise describe work assignments or business-related tasks that necessitated his being in Atlanta to accomplish them.  Petitioners have not persuaded us that… he worked for multiple clients at various locations.” 2019 T. C. Memo. 30, at p. 14.

Mike wants Judge Big Jim to look at the Big Picture. For 15 (count ‘em, 15) years, Mike traveled all over the place, so he never had a permanent tax home other than GA.

Judge Big Jim isn’t a traveler. “We Do Not Take a Long-Term View.” 2019 T. C. Memo. 30, at p. 15. Mike’s tax home for the years at issue was Pennsauken. No deductions.

Mike does get the accuracy chops, though; he’s a CPA with a master’s degree in finance, and should know “the dubiousness of petitioners’ reporting position.” 2019 T. C. Memo. 30, at p. 20.

 

 

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