Christey v. United States

841 F.2d 809, 1988 WL 16100

• Court: Court of Appeals for the Eighth Circuit
• Decided: March 2, 1988
• Docket: No. 86-5433
• Status: Published

Opinions

JOHN R. GIBSON, Circuit Judge.

The sole issue before us is whether taxpayers, members of the Minnesota Highway Patrol, are entitled to deduct as ordinary and necessary business expenses under § 162(a)¹ of the Internal Revenue Code expenses incurred for restaurant meals while on duty. The Internal Revenue Service disallowed the deduction, but the district court² concluded that such expenses were deductible under § 162(a) and therefore the taxpayers were entitled to refunds for the 1981 and 1982 tax years. On appeal the government argues that the taxpayers’ meal expenses are not business expenses, but personal expenses not deductible under § 262 of the Internal Revenue Code. We affirm the judgment of the district court.

Steven L. Pillsbury and Karl W. Chris-tey ³ are employed as state troopers by the Minnesota State Highway Patrol. The Patrol is charged by law with enforcing traffic laws, investigating traffic accidents, directing and controlling traffic, providing information and assistance to the public, and cooperating with other law enforcement agencies in apprehending violators of criminal laws. See Minn.Stat. § 299D.03, subd. 1 (1986). The normal working day for troopers is between 8V2 and 9 hours, although a shift may stretch into 12 hours. Troopers are also subject to call 24 hours a day.

As a requirement of their job, troopers must comply with the rules and regulations contained in the General Orders of the Patrol. These orders address in detail the conduct required of troopers while on duty. General Order R 77-20-008 (“the General Order”) provides troopers with specific instructions concerning meal breaks while on duty. The General Order requires that troopers “eat their meals in a public restaurant adjacent to the highway whenever practical” and “report by radio when they eat and * * * advise the telephone number or the code number of the restaurant where they are eating.” The restaurant must be open to the public and may not serve liquor. The Order prohibits troopers from eating meals at home during working hours and has been interpreted to prohibit troopers from bringing meals from home and eating in their patrol cars. The Order also details the time at which troopers may eat, the time allowed for a meal, and the number of troopers who may eat together. Failure to adhere to these instructions renders troopers subject to reprimand.

As set forth in the General Order, the principal purpose of these requirements “is to promote public safety and obedience to the law through the physical presence of troopers in uniform and to facilitate, through availability to the public, the reporting of accidents and the dissemination of information with reference to the traffic and motor vehicle laws of the state.” The Order also ensures that meal breaks taken by the troopers are designated and staggered in order to maintain maximum coverage of patrol areas with minimal call response time.

There was testimony that during meals troopers are subject to calls for emergencies and other Patrol business to which they must respond immediately. Troopers are also subject to interruptions from the general public who are seeking information about road conditions, weather, traffic laws, and other subjects relating to trooper responsibilities. Thus, troopers are frequently interrupted during their meals and are often unable to finish meals for which they have paid.⁴

The Christeys claimed a deduction of $926.66 for the meals Officer Christey purchased while on patrol in 1981 and a deduction of $880.28 for those purchased in 1982. The Pillsburys claimed a deduction of $944 for the meals Officer Pillsbury purchased while on patrol in 1981 and a deduction of $968 for those purchased in 1982. Both taxpayers claim the deductions as ordinary and necessary business expenses under I.R.C. § 162(a). After the I.R.S. disallowed the deductions, both taxpayers paid the taxes due and filed timely claims for refund, which the I.R.S. denied. These suits for refund in federal district court followed. The district court determined that Pillsbury’s and Christey’s expenses for meals while on duty were deductible as “ordinary- and necessary” business expenses under the general provision of § 162(a) of the Internal Revenue Code. The court found that Pillsbury and Chris-tey were “subject to * * * duty-related restrictions and requirements concerning their meals while on duty,” and that their meals were taken “for the convenience and benefit of the patrol.” Accordingly, the court held the taxpayers were entitled to deduct the cost of meals purchased while on duty under § 162(a).

The district court’s conclusion that the taxpayers’ meal expenses qualify as ordinary and necessary business expenses is a question of fact and will not be set aside unless clearly erroneous. Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1200, 4 L.Ed.2d 1218 (1960); Commissioner v. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 254, 88 L.Ed. 171 (1943); Long v. Commissioner, 277 F.2d 239, 240-41 (8th Cir.1960). A finding is “clearly erroneous” when, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (defining clearly erroneous standard as set forth in Fed.R.Civ.P. 52(a)). If the district court’s account of the evidence is plausible in light of the record viewed in its entirety, this court may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Id. at 574, 105 S.Ct. at 1511.

Section 262 disallows the deduction of “personal, living, or family expenses * * * except as otherwise expressly provided in this chapter.”

Section 162(a) expressly provides a deduction for all the “ordinary and necessary expenses paid or incurred * * * in carrying on any trade or business, including * * * (2) traveling expenses (including amounts expended for meals * * * while away from home).”

The government does not challenge the factual findings of the district court but argues that the court erred in concluding that the taxpayers are entitled to deduct meal costs incurred while on patrol duty under the general permission of § 162(a). They contend that the cost of meals is a personal expenditure and that the district court should have applied § 262 to disallow the deduction.⁵

In support of their contention that meal expenses are nondeductible personal expenses, the government particularly relies on two United States Supreme Court cases. United States v. Correll, 389 U.S. 299, 88 S.Ct. 445, 19 L.Ed.2d 537 (1967) and Commissioner v. Kowalski, 434 U.S. 77, 98 5.Ct. 315, 54 L.Ed.2d 252 (1977).⁶ Neither of these cases, however, addresses the issue of whether meal expenses may be deducted as “ordinary and necessary” business expenses under the general provision of § 162(a). Correll, supra, concerned the deductibility of meal expenses as “traveling expenses" under § 162(a)(2), while Kowalski, supra, concerned the exclusion from gross income under § 119 of a cash meal allowance. Indeed, the Court in Kow-alski acknowledged that the deductibility of trooper meal expenses under the general provision of § 162(a) was not under consideration. 434 U.S. at 81 n. 9, 98 S.Ct. at 318 n. 9.

It is beyond question that the cost of one’s meals is ordinarily a personal expense which is nondeductible under § 262. Treas.Reg. § 1.262-l(b)(5) (1987). However, under certain limited circumstances, such expenses may be deducted under the general provision of § 162(a);⁷ “that which may be a personal expense under some circumstances can when circumscribed by company regulations take on the color of a business expense,” Sibla v. Commissioner, 611 F.2d 1260, 1262 (9th Cir.1980). Accord Cooper v. Commissioner, 67 T.C. 870 (1977), aff'd sub nom Sibla v. Commissioner, 611 F.2d 1260 (9th Cir.1980); Walsh v. Commissioner, 52 TCM (CCH) 1344 (1987); Belt v. Commissioner, 47 T.C.M. (CCH) 1433 (1984). In Sibla, supra, the taxpayers, Los Angeles firemen, were permitted to deduct under § 162(a) the cost of their participation in a mandatory mess plan, organized pursuant to a desegregation plan.⁸ The firemen were required to pay a per diem amount for participation in the mess even if they brought their own meals or for some other reason did not eat the meals prepared in the mess. The Ninth Circuit held that the taxpayers’ share of expenses of the mandatory organized mess was deductible as an ordinary and necessary business expense under § 162(a).⁹ We therefore reject the government’s argument that the district court erred in failing to apply § 262.

Additionally, the government contends that even if § 162(a) applies, the restrictions on the manner in which the taxpayers could take their meals while on duty were not so significant that they transformed an essentially personal expense into a business expense. They reason that the restrictions are no different from those placed upon other taxpayers who have to work during meals and are subject to interruptions. Further, the happenstance that the Patrol may derive incidental benefit from troopers’ public visibility and their accessibility during meals does not operate to exclude taxpayers' meal expenses from personal or living expenses.

The district court, however, reasoned that the number of duty-related restrictions and requirements concerning their meals “effectively extended the performance of the troopers’ duties from patrol cars on highways to tables in restaurants.” Under these circumstances, the court concluded that the troopers’ meal expenses were “ordinary and necessary” expenses. We do not believe this conclusion is clearly erroneous. This is not a case in which the taxpayers are attempting to deduct the cost of their meals merely because they are working overtime, Coombs v. Commissioner, 608 F.2d 1269 (9th Cir.1979), or working through their meal break, see Antos v. Commissioner, 35 T.C.M. (CCH) 387 (1976), aff'd 570 F.2d 350 (9th Cir.1978) (unpublished opinion), or where business activities make meals at home inconvenient. Fife v. Commisioner, 73 T.C. 621 (1980). Nor is this a case in which the sole restriction on the taxpayer is where he may eat his meal. See, e.g., Walsh v. Commissioner, 52 TCM (CCH) 1344 (1987); Moscini v. Commissioner, 36 T.C.M. (CCH) 1002 (1977); Kammerer v. Commissioner, 35 T.C.M. (CCH) 30 (1976). The restrictions here and their cumulative effect are substantial.¹⁰ The troopers must eat at certain times and places. The troopers remain on duty throughout their meals. They may not bring a meal from home or return home to eat their meal. As part of their job the troopers are required during their meal break to be available to the public not only to respond to emergencies but to provide any information the public may seek. Thus, they are frequently interrupted during meals and are subject to being called away from a meal for an emergency, whether they have eaten what they have paid for or not.¹¹

In light of the circumstances of this ease, we believe the district court’s conclusion that the meal expenses which the taxpayers incurred while on duty in 1981 and 1982 were deductible as ordinary and necessary expenses under § 162(a) is not clearly erroneous. Accordingly, the district court’s judgment is affirmed.

1 .Under § 2 of the Tax Reform Act of 1986, Pub.L. No. 99-514, 100 Stat. 2085, the Internal Revenue Code of 1954 is redesignated the Internal Revenue Code of 1986. The period at issue in this case antedates the 1986 Act. Accordingly, references herein shall be to the Internal Revenue Code of 1954.

2 . The Honorable Paul A. Magnuson, United States District Judge for the District of Minnesota.

3 . Holly L. Pillsbury and Kathleen M. Christey are also parties to this suit solely by virtue of having filed joint income tax returns with their spouses for the years in issue.

4 . In fact, after review of his radio log, Officer Pillsbury testified that he had been called out from meal breaks during 42 percent of his shifts in 1981 and during 50 percent thereof in 1982. Officer Christey testified that he has never consumed a meal while on duty without interruption.

5 . In the district court proceedings, the government contended that the troopers’ meal expenses were not deductible under the specific provisions regarding meals of § 162(a)(2) or excludable under § 119, and thus could not be deducted under the general provision of § 162(a). However, by referring to United States v. Correll, 389 U.S. 299, 88 S.Ct. 445, 19 L.Ed.2d 537 (1977), and Commissioner v. Kowalski, 434 U.S. 77, 98 S.Ct. 315, 54 L.Ed.2d 252 (1977), the government implicitly raised the argument that § 262 precludes deductibility of meal expenses unless a deduction is specifically provided for. Similarly, the district court in its discussion of Correll recognized that the meal expenses under consideration in Correll were personal living expenses, generally non-deductible under § 262 rather than deductible traveling expenses under § 162(a)(2). The district court concluded that Correll did not foreclose a holding that meal expenses are deductible under the general provision of § 162(a). Contrary to the argument advanced in the dissent, it is apparent that the district court rejected the applicability of § 262 when it concluded the expenses were properly deductible under § 162(a).

6 . An earlier decision of this court, United States v. Morelan, 356 F.2d 199 (8th Cir.1966), held that the subsistence allowance received by Minnesota state highway patrolmen was excludable from gross income under § 119, or in the alternative, deductible as a traveling expense under § 162(a)(2). Kowalski effectively overrules the first holding of Morelan, id, at 82, 98 S.Ct. at 318, and Correll, the second, id. at 304, 88 S.Ct. at 448.

7 .In fact, the government in Moss v. Commissioner, 758 F.2d 211, 212 (7th Cir.), cert denied, 474 U.S. 979, 106 S.Ct. 382, 88 L.Ed.2d 335 (1985), conceded that meals are deductible under § 162(a) when they are ordinary and necessary business expenses even if they are not within the express permission of any other provision. The court nevertheless disallowed the meal deduction finding that an attorney’s share of his law firm’s daily luncheon expense at an area restaurant was not a "necessary” business expense. See also Hankenson v. Commissioner, 47 T.C.M. (CCH) 1567 (1984); See generally Treas.Reg. 1.262-l(b)(5) which provides: "Except as otherwise permitted under section 162, 212, or 217 the costs of the taxpayer’s meals not incurred in traveling away from home are personal expenses” (emphasis added).

8 . Cf. Alvarado v. Commissioner, 49 T.C.M. (CCH) 967 (1985), aff'd 781 F.2d 901 (5th Cir.1986) (unpublished opinion) (fireman’s payments to common mess plan nondeductible under § 162(a) where payments were not required by the employer, taxpayer did not have to pay for unfinished meals, and mess was organized by the employees themselves for their own convenience); accord Duggan v. Commissioner, 77 T.C. 911 (1981); Banks v. Commissioner, 42 T.C. M. (CCH) 1016 (1981).

9 . The court also held that such expenses were excludable from gross income under § 119. Since the meals in this case were not furnished on the employer’s premises, § 119 does not apply to this case. Kowalski, 434 U.S. at 84, 98 S.Ct. at 320.

10 . Cf. Duggan v. Commissioner, 77 T.C. 911 (1981); Hammond v. Commissioner, 49 T.C.M. (CCH) 1562 (1985), aff’d 785 F.2d 304 (4th Cir.1986) (unpublished opinion); Moscini v. Commissioner, 36 T.C.M. (CCH) 1002 (1977); Borsody v. Commissioner, 35 T.C.M. (CCH) 214 (1976); Matteson v. Commissioner, 33 T.C.M. (CCH) 479 (1974), aff’d without discussion of this issue, 514 F.2d 43 (8th Cir.1975); Weissfisch v. Commissioner, 33 T.C.M. (CCH) 391 (1974); Moffit v. Commissioner, 31 T.C.M. (CCH) 910 (1972).

11 . Many expenses are simultaneously business and personal expenses. This is plain enough with regard to a meal; most people would eat a meal even if they did not work. Although an argument can thus be made for disallowing any deduction for meals or allowing a deduction only for the amount the expenditure exceeds “that ordinarily required for such purposes when at home,” neither of these positions have been adopted by the Internal Revenue Code. See Correll, 389 U.S. at 301 n. 6, 88 S.Ct. at 446 n. 6; Moss, 758 F.2d at 212-13. For example, a taxpayer who takes a client out to lunch can deduct the expense of his own lunch, provided the expense is "different from or in excess of that which would have been made for the taxpayer’s personal purposes.” Moss, 758 F.2d at 213, quoting Sutter v. Commissioner, 21 T.C. 170, 173 (1953). (The Tax Reform Act of 1986 enacted some restrictions on the deductibility of these expenses. See, e.g., I.R.C. § 274 (1986)). In this case, the troopers must either eat at a public restaurant in accordance with the General Order, or forego a meal altogether. For most individuals, working an 8V2 to 9 hour shift removes the meal from a question of personal choice. Once a trooper has decided to eat, the state dictates that the trooper eat at a public restaurant, at a certain time, with a specified number of other troopers. The requirements of the job result in frequent purchases of meals or parts of meals that occupational duties require to be abandoned. Thus, this regulation effectively requires the troopers "to spend amounts different from or in excess of amounts they would have spent for their own personal purposes.” See Sutter, 21 T.C. at 173.