                         T.C. Memo. 2008-111



                       UNITED STATES TAX COURT



                    MIKE KURTZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3130-06.                 Filed April 22, 2008.



     Gregory L. White, for petitioner.

     Lisa M. Oshiro, for respondent.



                         MEMORANDUM OPINION


     COHEN, Judge:    Respondent determined deficiencies of $10,823

and $16,899 in petitioner’s Federal income taxes for 2001 and

2002, respectively.

     After concessions by the parties, the sole issue remaining

for decision is whether petitioner is entitled to deductions of

the full Federal per diem rates for meals and incidental expenses
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(M&IE) or whether those deductions are limited to 50 percent of

the applicable M&IE rates for the years in issue.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

                            Background

     This case was submitted fully stipulated under Rule 122.

The relevant stipulated facts are incorporated as our findings by

this reference.   Petitioner resided in Florida at the time he

filed his petition.   However, the parties agree that petitioner’s

tax home for the years in issue was Dutch Harbor, Alaska.

     During the years in issue, petitioner worked as an engineer

on commercial fishing vessels operated off the coast of Alaska.

In 2001 petitioner worked as an independent contractor on the

Storm Petrel, a fishing vessel owned by a subsidiary of Icicle

Seafoods, Inc. (Icicle).   In 2002 he worked as an independent

contractor on the Poseidon, a fishing vessel owned by Poseidon

Fisheries, L.L.C. (Poseidon Fisheries).

     In 2001 and 2002 the Storm Petrel and the Poseidon both

engaged in regular patterns of commercial fishing activity.    The

vessels would harvest fish in the Bering Sea, off the coast of

Alaska.   They would then transport the fish to a fish processor.

These fishing trips normally lasted 4 or 5 days, but occasionally
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lasted more than 1 week.    While he was working aboard the Storm

Petrel or the Poseidon during the years in issue, the companies

petitioner worked for purchased, prepared, and served meals to

petitioner and other crew members.

     In 2001 petitioner worked a total of 231 days aboard the

Storm Petrel.     The Storm Petrel’s home port in 2001 was Dutch

Harbor, Alaska.    During 2001 petitioner received compensation

from Icicle equal to 5 percent of the catch from the Storm

Petrel.   Icicle deducted $25 per day from petitioner’s

compensation for food expenses.    In 2002 he worked a total of 145

days aboard the Poseidon.     The Poseidon’s home port in 2002 was

also Dutch Harbor, Alaska.    During 2002 Poseidon Fisheries also

deducted $25 per day from petitioner’s compensation for food

expenses.   Poseidon also calculated petitioner’s compensation in

2002 with reference to the Poseidon’s catch.     Petitioner was not

reimbursed for meals or incidental expenses incurred while

working on either the Storm Petrel or the Poseidon during the

years in issue.

     On Schedule C, Profit or Loss From Business, of his 2001

return, petitioner deducted $8,763 for supplies and $31,205 for

other expenses as follows:
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          Type of expense                  Amount deducted

            Provisions                          $22,705
            Cannery expense                       8,500

On Schedule C of his 2002 return, petitioner again deducted

$8,763 for supplies and $44,070 for other expenses as follows:

          Type of expense                  Amount deducted

            Provisions                         $27,550
            Cannery expense                      8,500
            Telephone                            1,840
            License                                180
            Repairs                              6,000

It is unclear from the record how petitioner calculated any of

these expenses or what amount he deducted on his returns for the

years in issue for meals and incidental expenses.

                              Discussion

     Section 162(a)(2) permits taxpayers to deduct all ordinary

and necessary business expenses paid or incurred during the

taxable year and specifically includes traveling expenses

(including amounts expended for meals and lodging other than

amounts that are lavish or extravagant under the circumstances)

while away from home in the pursuit of a trade or business.    The

parties agree that petitioner may calculate his deductions for

meals and incidental expenses using the Federal M&IE rates

applicable to Dutch Harbor, Alaska, for the days he was working

on the Storm Petrel or the Poseidon during the years in issue.

However, respondent argues that petitioner’s allowable deduction
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for meals is limited to 50 percent of the portion of the per diem

rate allocated to meal expenses.

     Although ordinary and necessary business expenses are

generally deductible under section 162, section 274(n)(1)(A)

provides that the amount allowable as a deduction for any meal

expense is limited to 50 percent of the amount of the expense

that would otherwise be allowable.      Section 274(n)(2)(E) provides

an exception to the 50-percent limitation on the deductibility of

meal expenses when the expense is for meals required by any

Federal law to be provided to crew members of a commercial

vessel.

     Petitioner asserts that he qualifies for the exception under

section 274(n)(2)(E) and may deduct the full M&IE per diem rates

applicable to Dutch Harbor, Alaska, for the days he was working

in 2001 and 2002.   He argues that 18 U.S.C. section 2191 (2000),

a criminal statute prohibiting cruel treatment of seamen, is a

Federal law that requires food or beverages to be provided to all

crew members on U.S. vessels.   Therefore, petitioner contends

that he qualifies for the exception under section 274(n)(2)(E)

and may deduct the full M&IE per diem rates for the days he was

working aboard the Storm Petrel and the Poseidon during the years

in issue.

     Title 18 U.S.C. section 2191 provides as follows:

     Whoever, being the master or officer of a vessel of the
     United States, on the high seas, or on any other waters
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     within the admiralty and maritime jurisdiction of the
     United States, flogs, beats, wounds, or without
     justifiable cause, imprisons any of the crew of such
     vessel, or withholds from them suitable food and
     nourishment, or inflicts upon them any corporal or
     other cruel and unusual punishment, shall be fined
     under this title or imprisoned not more than five
     years, or both. [Emphasis added.]

Petitioner interprets the prohibition against withholding food

from crew members, an express form of cruel and unusual

punishment under the statute, as a Federal law establishing an

affirmative duty of the master, officer, and owner of a vessel to

provide food or beverages to crew members on any U.S. vessel,

including fishing vessels like the Storm Petrel and the Poseidon.

     The scope and purpose of 18 U.S.C. section 2191 is to

protect seamen from cruel and unusual punishment such as

flogging, beating, unjust imprisonment, and other forms of severe

physical mistreatment.   In this context, the criminal prohibition

against withholding food and nourishment from a sailor cannot be

interpreted as the imposition of an affirmative duty to provide

food or beverages to all seamen.   See H. Conf. Rept. 100-1104

(Vol. II), at 134-135 (1988), 1988-3 C.B. 473, 624-625 (“The

percentage reduction rule does not apply to an otherwise

allowable deduction for expenses of food or beverages that (1)

are required by Federal law (46 U.S.C. sec. 10303) to be provided

to crew members of a commercial vessel, or (2) are provided to

crew members of a commercial vessel operating on the Great Lakes,

the St. Lawrence Seaway, or the U.S. inland waterways that is of
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a kind that would be required by Federal law to provide food or

beverages to crew members if operated at sea.       (Thus, for

example, the provision for full deductibility would not apply

with respect to fishing boats or foreign vessels operating on the

inland waterways.)” (Emphasis added.)).

     Moreover, there is a separate statutory provision that

imposes an affirmative duty to provide adequate nourishment to

seamen, but it specifically excludes fishing vessels from its

application.   Title 46 U.S.C. section 10303 (2000) provides in

relevant part:

     (a) A seaman shall be served at least 3 meals a day
     that total at least 3,100 calories, including adequate
     water and adequate protein, vitamins, and minerals in
     accordance with the United States Recommended Daily
     Allowances.

     *           *        *            *        *           *

     (c) This section does not apply to a fishing or whaling
     vessel or a yacht.

     Petitioner argues further that maritime common law requires

that food or beverages be provided to the crew of fishing

vessels.   Petitioner generally claims that maritime law requires

all vessels to be “seaworthy”, and that “seaworthiness” includes

an obligation that adequate food be furnished to crew members.

However, 46 U.S.C. section 10901 (2000), which addresses

proceedings on unseaworthiness, specifically states that it is

not applicable to fishing or whaling vessels or yachts.         Thus,

regardless of whether the “seaworthiness” doctrine includes an
                               - 8 -

obligation to provide food to crew members, such doctrine is not

applicable to fishing vessels like the Storm Petrel and the

Poseidon.   Furthermore, Federal law specifically tailored to

fishing voyages is codified in 46 U.S.C. sections 10601 through

10603 (2000) and does not contain any requirement that seamen

employed on fishing vessels be provided with food or beverages.

     Petitioner has not shown that he qualifies for any exception

to the 50-percent limitation on deductions for food or beverage

expenses under section 274(n)(1)(A).   Thus, petitioner’s

deductions for meal expenses in the years in issue are limited to

50 percent of the applicable per diem rates.   In reaching our

holding, we have considered all arguments made, and, to the

extent not mentioned, we conclude that they are irrelevant, moot,

or without merit.

     To reflect the foregoing and the stipulation as to other

adjustments,


                                         Decision will be entered

                                    under Rule 155.
