                  T.C. Summary Opinion 2005-70



                     UNITED STATES TAX COURT



                ROBERT LYLE VERITY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2483-04S.             Filed June 6, 2005.



     Robert Lyle Verity, pro se.

     Steven I. Josephy, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time that the petition was filed.1   The decision to




     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 1999
and 2000, the taxable years in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
                              - 2 -

be entered is not reviewable by any other court, and this opinion

should not be cited as authority.

     Respondent determined deficiencies in petitioner’s Federal

income taxes for the taxable years 1999 and 2000 of $13,907 and

$6,046, respectively.

     After the parties’ concessions,2 the issue for decision is

whether petitioner is entitled to deductions claimed on Schedules

C, Profit or Loss from Business, for the years in issue,

including an additional deduction for lodging of $3,211 not

previously claimed on his Schedule C for 2000.   We hold that he

is not.

     Adjustments to the amount of petitioner’s itemized

deductions, self-employment tax, self-employment tax deduction,

and personal exemption are purely computational matters, the

resolution of which is dependent on our disposition of the

disputed issues.



     2
        Petitioner concedes: (1) He is not entitled to Schedule
C deductions of $9,714 for 1999; (2) he is not entitled to a
deduction for travel expenses of $3,324 for 2000; (3) he received
unreported Schedule C gross receipts of $7,178 in 1999; (4) he
received unreported wages of $11,835 in 1999; (5) he is not
entitled to a loss on the sale of his personal residence of
$2,044 for 1999; and (6) he is not entitled to a deduction for
contributions to a retirement plan of $11,535 for 2000.
Respondent concedes that: (1) Petitioner is entitled to a
reduction of capital gain reported on the sale of his personal
residence of $815 for 1999; (2) he is entitled to a reduction of
gain reported on the sale of a depreciable asset of $1,414 for
2000; and (3) he is entitled to an additional Schedule E
deduction for rental expenses of $7,199 for 1999.
                               - 3 -

                            Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     At the time that the petition was filed, petitioner resided

in Aurora, Colorado.

     From 1996 through March 1999, petitioner maintained his

personal residence at 5523 Malta Street, Aurora, Colorado (Aurora

home).   At the end of March 1999, petitioner sold the Aurora home

and moved to Australia at the beginning of April 1999.    After he

sold the Aurora home, petitioner moved his personal belongings

into storage.

     In addition to the Aurora home, petitioner owned a

condominium in a three-story multiunit complex at Beaver Creek

West, a resort community in Avon, Colorado, which he purchased on

December 6, 1996.   The condominium was 1,600 square feet with

three bedrooms and three bathrooms.    Since purchasing the

condominium, petitioner has paid a management company to operate

the condominium as a fully furnished short-term daily rental

property.   Petitioner stayed at the condominium for 5 days at the

end of March 1999 between the time he sold the Aurora home and

moved to Australia.

     Petitioner is a computer consultant.    He conducts his work

through his self-employed business named Unix 2000, LLC. (Unix).
                              - 4 -

At all relevant times, petitioner’s business address was 2800 S.

Syracuse 8-108, Denver, Colorado (Syracuse address), and

petitioner maintained a business bank account in Colorado.     The

nature of petitioner’s work is administering large scale computer

systems at the software level, which petitioner generally

performs from a remote location such as his home.    Occasionally,

petitioner works on site at various companies setting up the

system’s hardware.

     As part of expanding his business, petitioner desired to

develop consulting work with companies in Australia.

Petitioner’s goal was to set up the system hardware and then

contract to administer the machine remotely.    To that end,

petitioner became involved with Consultants Exchange AustralAsia

(CXC), which is an international contractor management company

that matches independent contractors with global companies.

Through CXC, petitioner entered into an employment contract with

Getnere Pty Ltd. (Getnere), an outsourcing agency in Australia.

Under this contract, Getnere agreed to employ petitioner on a

full-time basis not to exceed 6 months duration, beginning on

April 27 through October 27, 1999.    Getnere, however, employed

petitioner only from April through July 1999.    While with

Getnere, petitioner was contracted out to IBM and Hewlett

Packard.
                                - 5 -

     Petitioner had purchased a round-trip ticket with a fixed

return date of or about March 2, 2000.    Petitioner obtained a 1-

year business visa, which required him to depart Australia every

3 months for a short period.3   When he arrived in Australia,

petitioner opened a bank account at an Australian bank.4

Petitioner, however, received payment for his consulting services

performed in Australia by wire transfer to his business bank

account in Colorado.

     On April 16, 1999, petitioner and Melissa Lynch (Ms. Lynch)

entered into a residential tenancy agreement to rent a furnished

three-bedroom apartment located at 31/51 The Crescent Manly in

Manly, Sydney, Australia.   The term of this lease agreement was 6

months, beginning on April 22 through October 21, 1999.

     In June 1999, petitioner switched to another outsourcing

agency called e-TECH Pty Ltd. (e-TECH).   On June 21, 1999, e-

TECH, UNIX (as the subcontractor), and petitioner (as the

assigned worker) entered into a subcontractor agreement wherein

e-TECH agreed to provide petitioner’s services to Hewlett Packard

Australia Limited.   The term of this agreement was 3 months,

beginning on July 5 through October 11, 1999.   This contract was

renewed and continued until petitioner’s departure from Australia


     3
        For these departures, petitioner went to New Zealand,
Fiji, and Singapore.
     4
        After returning to the United States, petitioner did not
close this account.
                               - 6 -

in March 2000.   While with e-TECH, petitioner was contracted out

to Hewlett Packard and Johnson & Johnson Medical.

     On August 21, 1999, petitioner and Ms. Lynch entered into a

residential tenancy agreement to rent a residence at 5/13 George

Street, Manly.   The term of this lease agreement was 6 months,

beginning on September 1, 1999, through March 2, 2000.

     On March 2, 2000, petitioner returned to the United States

and stayed at the condominium for 11 days.5   Thereafter, he moved

to an apartment in Denver, Colorado, to work on another

consulting contract.

     During 1999 and 2000, petitioner spent approximately 330

consecutive days outside of the United States.   Petitioner

returned to Australia in September and October 2000 to perform

additional consulting services for Australian companies.

     Petitioner filed Forms 1040, U.S. Individual Income Tax

Return, for each of the years in issue.   On each return,

petitioner listed his address as the Syracuse address.

Petitioner attached to each return, inter alia, a Schedule C and

a Schedule E, Supplemental Income and Loss.

     On each Schedule C, petitioner identified his business name

as Unix, his principal business or profession as “Admin & Co” for



     5
        In addition, petitioner stayed at the condominium as
follows: (1) 40 days in 2003; (2) 19 days in 2002; (3) 14 days
in 2001; (4) 69 days in 1998; (5) 18 days in 1997; and (6) during
Christmas in 1996.
                                - 7 -

1999 and as “computer programming” for 2000, and his business

activity code as 541510, signifying computer systems design and

related services.   On each Schedule C, petitioner listed his

business address as the Syracuse address.      Schedules C reflected

expenses of $11,712 and $152,416 for 1999 and 2000, respectively.

Expenses consisted of automobile expenses, depreciation,

insurance, other interest, legal and professional services,

office expense, rent or lease of vehicles, machinery and

equipment, supplies, taxes and licenses, travel, meals and

entertainment, and other expenses.      “Other expenses” included

bank charges, telephone, other business telephone, continuing

education and training expenses, contract labor, fees, Internet

charges, dues and subscriptions, storage costs, Web site

maintenance, parking fees, postage, tolls, taxis, lodging, and

miscellaneous.

     On each Schedule E, petitioner identified the Avon

condominium as rental real estate property.      Schedules E

reflected expenses of $23,900 and $12,567 for 1999 and 2000,

respectively.    The expenses consisted of management fees,

mortgage interest, repairs, supplies, taxes, and utilities.

     In the notice of deficiency, respondent disallowed, as

relevant herein, the following:
                                 - 8 -

                Expense                   1999         2000
          Lodging                        $17,523        $195
          Meals and entertainment          5,151         554
          Miscellaneous                    2,245         -0-
          Car expenses                      -0-        1,026
          Car lease                         -0-          437
               Total                      24,919       2,212

                            Discussion

     Generally, the Commissioner’s determinations are presumed

correct, and the taxpayer bears the burden of proving that those

determinations are erroneous.6    Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933).   Moreover, deductions are a matter of

legislative grace, and the taxpayer bears the burden of proving

he or she is entitled to any deduction claimed.       INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, supra.

This includes the burden of substantiation.7       Hradesky v.

Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).

     Section 162(a)(2) allows a taxpayer to deduct traveling

expenses, including amounts expended for meals and lodging, that

are paid or incurred while “away from home” in the pursuit of a


     6
        We render a decision on the merits based on the
preponderance of the evidence, without regard to the burden of
proof under sec. 7491(a).
     7
        For 1999, respondent determined that petitioner
substantiated payment of the deductions at issue. For 2000, we
conclude on the basis of the record that petitioner substantiated
all of the deductions claimed. Accordingly, substantiation is
not in issue.
                               - 9 -

trade or business.   For purposes of section 162(a)(2), a taxpayer

shall not be treated as being temporarily away from home during

any period of employment if such period exceeds 1 year.    Sec.

162(a).   Section 262(a), however, disallows deductions for

personal, living, or family expenses.   There are three criteria

for determining whether travel expenses are deductible:    (1) The

expense must be reasonable and necessary; (2) they must be

incurred “while away from home”; and (3) they must be incurred in

pursuit of a trade or business.   Commissioner v. Flowers, 326

U.S. 465, 470 (1946).

     For income tax purposes, the term “home” in section

162(a)(2) means a taxpayer’s “tax home”; i.e., the taxpayer’s

principal place of employment and not where the taxpayer’s

personal residence is located, if different from the principal

place of employment.8   Mitchell v. Commissioner, 74 T.C. 578, 581

(1980); Daly v. Commissioner, 72 T.C. 190, 195 (1979), affd. 662

F.2d 253 (4th Cir. 1981); Kroll v. Commissioner, 49 T.C. 557,

561-562 (1968).   An exception to this rule exists when a taxpayer

accepts employment away from the taxpayer’s personal residence

and such employment is temporary rather than indefinite.



     8
        The vocational “tax home” concept was first construed by
this Court in Bixler v. Commissioner, 5 B.T.A. 1181, 1184 (1927),
and has been steadfastly upheld by this Court. See, e.g., Horton
v. Commissioner, 86 T.C. 589 (1986); Leamy v. Commissioner, 85
T.C. 798 (1985); Foote v. Commissioner, 67 T.C. 1 (1976); Kroll
v. Commissioner, 49 T.C. 557 (1968).
                               - 10 -

Peurifoy v. Commissioner, 358 U.S. 59, 60 (1958).    Under this

exception, a taxpayer’s “tax home” becomes the vicinity of the

taxpayer’s primary personal residence in a “real and substantial

sense”.   Id.; see Deamer v. Commissioner, T.C. Memo. 1984-63,

affd. 752 F.2d 337 (8th Cir. 1985); Rohr v. Commissioner, T.C.

Memo. 1982-117.    Employment is considered temporary only if its

termination can be foreseen within a reasonably short period of

time, but such temporary employment may become indefinite if it

is expected to last for a substantial, an indefinite, or an

indeterminate duration, or due to changed circumstances or the

passage of time.   Norwood v. Commissioner, 66 T.C. 467, 469-470

(1976); Kroll v. Commissioner, supra at 562.    Whether a job is

temporary or indefinite depends on the facts and circumstances of

each case.    Peurifoy v. Commissioner, supra at 60-61.

     The purpose of the deduction for “away from home” expenses

is “to mitigate the burden of the taxpayer who, because of the

exigencies of his trade or business, must maintain two places of

abode and thereby incur additional and duplicate living

expenses.”    Kroll v. Commissioner, surpa at 562.   An obvious

precondition to a taxpayer’s being away from home is that the

taxpayer have a home.   See Bochner v. Commissioner, 67 T.C. 824,

828 (1977).   This means that the taxpayer must have incurred

substantial continuing living expenses at a permanent place of

residence and must also have paid the expenses incurred in
                               - 11 -

connection with his or her business while on the road.    See

Brandl v. Commissioner, 513 F.2d 697, 699 (6th Cir. 1975), affg.

T.C. Memo. 1974-160; see also James v. United States, 308 F.2d

204 (9th Cir. 1962); Bochner v. Commissioner, supra.     Where the

taxpayer maintains two residences for his own convenience,

however, such cost would be considered personal in nature and not

deductible.   Sec. 262; Commissioner v. Flowers, supra at 474.       In

the event that a taxpayer does not have a fixed personal

residence, the taxpayer is considered an “itinerant”, and the

taxpayer’s tax home follows the taxpayer to each place of

employment.   See Michel v. Commissioner, 629 F.2d 1071, 1073-1074

(5th Cir. 1980), affg. T.C. Memo. 1977-345.

A.   Temporary Versus Indefinite Employment

     We first decide whether petitioner’s employment in Australia

was temporary or indefinite.   Petitioner contends that he

intended to work in Australia only temporarily to establish

business contacts such that he could continue consulting for such

companies remotely from Colorado.   In contrast, respondent

contends that petitioner’s employment in Australia was

indeterminate because petitioner anticipated staying in Australia

beyond 1 year, if he had work.   We disagree with respondent.

     Petitioner purchased a round-trip ticket to Australia good

for only 1 year, which he, in fact, used to return to the United

States within approximately 11 months.   In addition, he entered
                                - 12 -

into short-term employment contracts; the Getnere contract was

only for 3 months and the e-TECH contract was initially for 3

months, but it was extended for an additional 5 months.

Petitioner also entered into short-term lease agreements for 6

month durations. Respondent, however, argues that petitioner

would have stayed in Australia if he had work.     Admittedly,

petitioner testified at trial that his contracts could be

extended and that if he had additional work, he could have

obtained another visa to stay in Australia.     Notwithstanding, the

fact of the matter is that petitioner’s e-TECH contract was not

extended, he did not receive additional work, and he immediately

returned to the United States in less than 1 year.     In light of

the nature of his business and the foreign location where he

performed his work, termination of petitioner’s employment could

be foreseen within a reasonably short period of time.

Accordingly, we conclude that petitioner’s employment in

Australia was temporary under the facts and circumstances of this

case.

B.   Tax Home

        We next decide where petitioner’s tax home was for the

relevant period.     Petitioner contends that his tax home was his

condominium in Avon, Colorado.     In support of his contention,

petitioner relies on the following factual predicate:     (1)

Petitioner lived in the condominium before departing to
                               - 13 -

Australia; (2) he kept all his personal belongings in storage in

Colorado; (3) he maintained Unix’s “business headquarters” and

bank account in Colorado, which indicate his personal desire to

return to Colorado; and (4) he lived in the condominium when he

returned from Australia.    On the other hand, respondent contends

that Australia was petitioner’s tax home.    We agree with

respondent.

     There is ample evidence in the record to support the

conclusion that petitioner’s condominium in Avon, Colorado, did

not constitute his primary personal residence.    Petitioner lived

in the condominium for only 5 days before departing the United

States in 1999 and only 11 days after he returned from Australia

in 2000.    It appears that petitioner resided in the condominium

in 1999 for 5 days because it was between the time that he sold

the Aurora home, in which he resided for approximately 3 years

before departing the United States, and his departure to

Australia.    In fact, petitioner did not move any of his personal

belongings into the condominium, but rather placed them in

storage.9    In 2000, petitioner resided in the condominium between

the time he returned from Australia and moved into an apartment

in Denver, Colorado.    Living temporarily in the condominium for 5


     9
        Petitioner testified at trial that he kept some personal
belongings in the condominium. We note, however, that petitioner
maintained the condominium as a fully-furnished rental property.
As such, petitioner did not move his personal belongings from the
Aurora home to the condominium before relocating to Australia.
                              - 14 -

and 11 days in 1999 and 2000, respectively, hardly constitutes

classifying it as his primary personal residence.

     At trial, petitioner provided conflicting testimony about

his intent with regard to the condominium.   First, petitioner

testified that the condominium was his “second home” when he

owned the Aurora home, then it was his “home” after he sold the

Aurora home, and, finally, it was his “retirement home”.     Thus,

we are unable to conclude that the condominium was his home in

the real and substantial sense before he left for Australia,

during his stay in Australia, and after his return from

Australia.

     Petitioner argues, however, that he paid living expenses for

both the condominium and the apartments in Australia during the

relevant time period.   We decline to find that the expenses

petitioner paid with regard to the condominium constitute

duplicate living expenses.   At all times, the condominium has

always been petitioner’s rental property, which he reports as

such on Schedule E.   Petitioner continued to pay the same

management fees since he has owned the condominium, including

during the time he resided in the Aurora home and in Australia.

These expenses constitute investment expenses in rental property

rather than “substantial continuing living expenses” for purposes

of section 162(a)(2).   Simply put, petitioner’s labeling of the
                              - 15 -

condominium as his “home” does not satisfy the requirements of a

tax home within the meaning of section 162(a)(2).

     On the basis of the record, petitioner was an itinerant for

purposes of section 162(a)(2).   Therefore, his place of residence

follows him to his place of employment.    See Michel v.

Commissioner, 629 F.2d at 1073-1074.     Although petitioner may

have maintained his “business headquarters” in Colorado and had

all his compensation wired to his business bank account in

Colorado, his principal place of employment was in Australia.

Indeed, all of the expenses at issue were incurred for

petitioner’s consulting services performed in Australia, not in

Colorado.   Accordingly, we conclude that petitioner’s tax home,

for purposes of section 162(a)(2) for the relevant time period,

was Australia.   We thus sustain respondent’s determination.

                            Conclusion

     We have considered all of the other arguments made by

petitioner, and, to the extent that we have not specifically

addressed them, we conclude that they are without merit.

     Reviewed and adopted as the report of the Small Tax Case

Division.
                               - 16 -

     To reflect our disposition of the disputed issues, as well

as the parties’ concessions,



                                    Decision will be entered

                               under Rule 155.
