1973 U.S. Tax Ct. LEXIS 140">*140
Petitioner was employed as a comptroller. Prior to the amendment of
60 T.C. 108">*108 Respondent determined a deficiency in the income tax liability of petitioners for the taxable year 1968 in the amount of 60 T.C. 108">*109 $ 2,853.63. Certain concessions having been made, the issues remaining for decision are: (1) Whether petitioners are entitled to deduct under
1973 U.S. Tax Ct. LEXIS 140">*143 FINDINGS OF FACT
Some of the facts have been stipulated; the stipulation of facts, together with the exhibits attached thereto, is incorporated herein by this reference.
Petitioners Leonard C. and Dolores M. Black timely filed a joint income tax return for the year 1968 with the district director of internal revenue, Philadelphia, Pa. Petitioners' legal residence at the time of the filing of the petition herein was Jenkintown, Pa. Dolores M. Black is a party herein only by reason of having filed a joint return with her husband, Leonard C. Black, and the latter will hereinafter be referred to as petitioner.
During the first 2 months of 1968 petitioner resided at 299 Melmore Street, Tiffin, Ohio, and was employed as a comptroller by the ITT Corp. in its Abrasive Products Division in Tiffin.
Petitioner was transferred to the comptroller's position at ITT's Nesbitt Co., Environmental Products Division, in Philadelphia, Pa., on March 3, 1968, and on April 10, 1968, petitioner sold his residence in Tiffin and moved his family and his family's belongings permanently from that area. He paid a real estate brokerage commission of $ 1,578 due as the result of the sale of his residence in 1973 U.S. Tax Ct. LEXIS 140">*144 Tiffin.
On April 30, 1968, petitioner purchased his new residence at 1088 Dixon Lane, Jenkintown, Pa. In purchasing that residence petitioner paid a $ 340 Pennsylvania real estate transfer tax.
On September 17, 1968, petitioner signed an "Executive Assessment and Sponsored Career Advancement Program" agreement with Frederick Chusid & Co. (Chusid) and paid Chusid $ 1,875 in four monthly installments during 1968. Under this agreement Chusid, for up to 8 months from the date of signing, September 17, 1968, was to provide consulting services and assistance in securing petitioner a new position.
In August 1970 petitioner began employment with Circle F Industries in Trenton, N.J. In 1969, petitioner's last year with ITT, he received total compensation of $ 27,136, comprised of $ 23,136 salary and 60 T.C. 108">*110 a $ 4,000 bonus. Petitioner accepted a job at Circle F Industries even though it paid him less money per year than did his job with ITT because the long range possibilities were much more promising than his future prospects at ITT. Chusid played no direct part in petitioner's obtaining new employment at Circle F.
In his return for the taxable year 1968 petitioner deducted his commission1973 U.S. Tax Ct. LEXIS 140">*145 expense, the real estate transfer tax expense, and the fees paid to Chusid. Respondent in his notice of deficiency increased petitioner's taxable income to reflect the disallowance of these deductions.
OPINION
The first issue is whether petitioner is entitled to deduct as an ordinary and necessary business expense the commission paid to a real estate broker on the sale of petitioner's residence in Tiffin.
Prior to January 1, 1970, the commission paid on the sale of a house was an offset item in determining the gain from the sale of an old residence for purposes of section 1034. It was used to determine the amount realized on the sale, see
Pub. L. 91-172, 83 Stat. 577, amended
1973 U.S. Tax Ct. LEXIS 140">*146 60 T.C. 108">*111 The amended
Petitioner apparently relying on the rationale of our
In determining whether this is an ordinary and necessary expense of petitioner's business, the focus must be on the relationship between the requirements of petitioner's trade or business and his decision to sell his house. That decision was solely personal. Petitioner's employment required nothing more than that he move to Pennsylvania and work. Petitioner's status as an employee was in no way affected by his ownership or nonownership of a house in Ohio. Indeed, the present1973 U.S. Tax Ct. LEXIS 140">*147 case does not even present a problem which might require us to seek out the "dominant motive" of the expenditure, as suggested by both concurring opinions in
To be sure there is some degree of proximate relationship between petitioner's status as a transferred employee and the costs of selling his old home. However, this relationship is insufficient upon which to base a deduction for an item as an ordinary and necessary expense incurred in carrying on a trade or business. "Proximate cause * * * has little place in tax law."
Since the expense in question is not the allowable type of expense deductible under
The second issue for consideration is whether a Pennsylvania real 60 T.C. 108">*112 estate transfer tax incurred by petitioner in purchasing his home in Jenkintown is a tax deductible item under
Again, petitioner is precluded from claiming the benefits of
1973 U.S. Tax Ct. LEXIS 140">*149 The Pennsylvania real estate transfer tax as imposed by
Petitioner has not been able to fit the tax in question in any of the enumerated categories. Petitioner on his return deducted the tax as a 60 T.C. 108">*113 personal property tax as found within1973 U.S. Tax Ct. LEXIS 140">*151 164(a)(2). The definition of a personal property tax as found in
Nor can the tax in question qualify as a real property tax as cited in
The only other remotely possible applicable subsection of
The final issue is whether petitioner is entitled to a deduction under
Petitioner signed an agreement with Chusid in September of 1968. In August of 1970, long after his rights to Chusid's services had run out, petitioner began working at the Circle F Industries in Trenton. Chusid played no direct part in petitioner's obtaining this new employment.
The respondent contends that since the employment fee was not at all responsible for petitioner
1. All section references are to the Internal Revenue Code of 1954 unless otherwise indicated.↩
2.
(a) Deduction Allowed. -- There shall be allowed as a deduction moving expenses paid or incurred during the 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.
(b) Definition of Moving Expenses. -- (1) In general. -- For purposes of this section, the term "moving expenses" means only the reasonable expenses -- * * * * (E) constituting qualified residence sale, purchase, or lease expenses. (2) Qualified residence sale, etc., expenses. -- For purposes of paragraph (1)(E) the term "qualified residence sale, purchase, or lease expenses" means only reasonable expenses incident to -- (A) the sale or exchange by the taxpayer or his spouse of the taxpayer's former residence (not including expenses for work performed on such residence in order to assist in its sale) which (but for this subsection and subsection (e)) would be taken into account in determining the amount realized on the sale or exchange,
The legislative history provides a more detailed description of qualified residence sale expenses:
"Qualified residence sale, purchase, or lease expenses constitute the third additional category of moving expenses for which a deduction is to be allowed. Qualified residence sale and purchase expenses are reasonable expenses incident to the sale or exchange by the taxpayer or his spouse of the taxpayer's former residence and expenses incident to the purchase by the taxpayer or his spouse of a new residence in the general location of the new principal place of employment. The sale-related expenses include a
3.
(a) General rule. -- Except as otherwise provided in this section, the following taxes shall be allowed as a deduction for the taxable year within which paid or accrued: (1) State and local, and foreign, real property taxes. (2) State and local personal property taxes. (3) State and local, and foreign, income, war profits, and excess profits taxes. (4) State and local general sales taxes. (5) State and local taxes on the sale of gasoline, diesel fuel, and other motor fuels.
4.
Every person who makes, executes, delivers, accepts or presents for recording any document or in whose behalf any document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction or any part thereof, or for or in respect of the vellum parchment or paper upon which such document is written or printed, a State tax at the rate of one (1) percentum of the value of the property represented by such document, which State tax shall be payable at the time of making, execution, delivery, acceptance or presenting for recording of such document. * * *↩