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Liljeberg v. Commissioner of Internal Revenue Service

United States Court of Appeals, District of Columbia Circuit

November 2, 2018

Richard Liljeberg, Appellant
v.
Commissioner of Internal Revenue Service, Appellee

          Argued September 11, 2018

          On Appeal from the Decision of the United States Tax Court

          Leigh D. Roadman argued the cause for appellants. With him on the briefs were Daniel T. Hartnett and Steven S. Brown.

          Norah Bringer, Attorney, U.S. Department of Justice, argued the cause for appellee.

          On the brief were Richard Farber and Regina S. Moriarty, Attorneys. Travis A. Greaves, Deputy Assistant Attorney General, entered an appearance.

          Before: Rogers and Pillard, Circuit Judges, and Sentelle, Senior Circuit Judge.

          OPINION

          ROGERS.CIRCUIT JUDGE

         This is an appeal from the decision of the Tax Court denying a deduction on income earned by three foreign nationals who participated in the State Department's Summer Work Travel Program in 2012. The Internal Revenue Service denied appellants' claimed tax deduction for travel and living expenses incurred "while away from home in the pursuit of a trade or business," 26 U.S.C. § 162(a)(2). The Tax Court affirmed because appellants' travel and living expenses were not so incurred but arose from a personal choice to participate in the Summer Work Travel Program rather than the demands of their (temporary) employers. We affirm.

         I.

         The State Department administers the Exchange Visitor Program, which designates sponsors "to provide foreign nationals with opportunities to participate in educational and cultural programs in the United States and return home to share their experiences." 22 C.F.R. § 62.1(b) (2012); see Mutual Educational and Cultural Exchange Act of 1961, Pub. L. No. 87-256, 75 Stat. 527 (codified as amended at 22 U.S.C. § 2452). One component of the Exchange Visitor Program is the Summer Work Travel Program, which provides "foreign students who are enrolled full-time and pursuing studies at accredited post-secondary academic institutions . . . with the opportunity to work and travel in the United States" for a period of up to four months, during their summer vacations. 22 C.F.R. § 62.32(b), (c). Income earned is subject to federal income taxes. 26 U.S.C. § 871(b)(1), (c). To participate in the Summer Work Travel Program, a student must obtain a nonimmigrant visa, known as a "J visa," 22 C.F.R. § 62.1(b), which, as relevant here, is issued to "an alien having a residence in a foreign country which [the person] has no intention of abandoning," 8 U.S.C. § 1101(a)(15)(J).

         Appellants are foreign nationals who participated in the Summer Work Travel Program in the summer of 2012. (1) Richard Liljeberg is a citizen of Finland who worked as a lifeguard at Noah's Ark in Wisconsin as part of the Program. Liljeberg sought to deduct "$995 for airfare to and from the United States, $500 for the cost of the program, $35 for the cost of his J-1 Visa, and $170 for insurance." Before participating in the Program, he was a full-time university student in Finland, where he lived with his mother and worked at a company called ISS Security. Upon returning to Finland, Liljeberg "lived alone in [a] rental home" and "did not return to work at ISS Security." (2) Anna Zolotareva is a citizen of Russia who "worked as a housekeeper at the Roche Harbor Resort in San Juan Island, Washington." She sought to deduct $1, 100 in travel expenses. Before participating in the Program, Zolotareva was a full-time university student in Russia, where she lived with her parents. Upon her return to Russia, she lived with her parents. (3) Enda Conway is a citizen of Ireland who "worked as a server at Gosman's Dock Restaurant in Montauk, New York." He sought to deduct $2, 000 in travel expenses and $1, 157 in meals and entertainment expenses. Conway was a full-time university student in Ireland in 2012 and "maintain[ed] his home in Ireland" in 2012 by "pay[ing] his phone bill, gym membership, and money to his mother." Conway did not work in Ireland in 2012.

         The Internal Revenue Service ("IRS") issued notices of deficiency to appellants for their 2012 federal income taxes, reflecting denials of the claimed deductions under 26 U.S.C. § 162(a)(2) for travel and living expenses incurred as a result of their participation in the Summer Work Travel Program. Appellants petitioned for redetermination of their deficiencies, and the Tax Court affirmed. Appellants' 2012 expenditures for travel and living expenses were not "away from home" under § 162(a)(2), the Tax Court ruled, because they lacked "a business reason to maintain a distant, separate residence" away from their principal place of employment and so could not claim a personal residence as a tax home. Tax Ct. Op. 24 (citing Wirt v. Comm'r, 55 T.C.M. (CCH) 1369, 1371 (1988); Tucker v. Comm'r, 55 T.C. 783, 786 (1971)). As "full-time students from abroad who came to the United States to work for a single summer before returning to their home countries," appellants had no "business connections with their respective home countries." Id. at 26. Nor did their status as "J visa" holders render them at home in their home countries for purposes of the deduction inasmuch as a person's "residence" under immigration law is "not necessarily coterminous" with a taxpayer's "home" under § 162(a)(2). Id. at 27. Noting that there was "no requirement at law that [a Summer Work Travel Program] participant maintain a second abode in his home country," the Tax Court concluded appellants did not incur additional travel and living expenses "because of the exigencies of [their] trade or business." Id. at 28. Rather, "those expenses were by their personal choice and not by a dictate of their employers or the law." Id. at 29. This appeal followed.

         II

         Appellants contend they were "away from home" under 26 U.S.C. § 162(a)(2) based on a private letter ruling by the IRS and IRS guidance purportedly indicating that foreign students holding student visas may deduct travel expenses. They also point to the requirement that "J visa" recipients have an abode in their home countries which they have "no intention of abandoning." Appellants' Br. 33. Appellants further contend that because their employment was temporary, they were not required to show their expenses were incurred due to business exigencies. But even if required to make such a showing, appellants contend they satisfy the business ...


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