Commissioner v. Stidger

Background

A Marine Corps captain was ordered to serve 15 months at a base in Iwakuni, Japan, while his wife and children stayed in California because dependents were not allowed at that post. He claimed $650 in meal costs for the months he lived at Iwakuni as a business travel deduction on his tax return. The IRS disallowed the deduction, the Tax Court agreed, but the Ninth Circuit reversed, treating the taxpayer’s family residence as his “home.” The Commissioner asked the Supreme Court to resolve a split among appeals courts.

Reasoning

The main question was whether the captain was legally “away from home” when he ate meals at his permanent duty station. The Court emphasized long-standing administrative rules and military practices that treat a service member’s permanent duty station as his tax “home.” It noted Congress’s separate system of tax-free allowances for quarters, subsistence, and per diem, and said those allowances, plus military definitions of “permanent change of station,” support treating the duty station as home. Because the meals were incurred while the officer was at his permanent post, the Court held they were personal living expenses, not deductible travel costs, and reversed the lower court.

Real world impact

Service members assigned to permanent duty stations where dependents cannot live will generally not be able to deduct meal costs as travel expenses. Those personnel instead rely on statutory tax-free allowances and per diem rules. The decision resolves conflicting court rulings and clarifies how the tax code applies to military assignments.

Dissents or concurrances

A dissent argued “home” should mean the taxpayer’s family residence and that an officer barred by orders from moving his family should be allowed the deduction. The dissent stressed fairness given the officer’s unchanged pay and basic allowances.